Jane Dotson
Medicare is a federal health insurance program for people aged 65 and over. Those under 65 may be eligible if they have a disability, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig's Disease). There are two main ways to get Medicare coverage: Original Medicare and Medicare Advantage. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance). Medicare Advantage is a private insurance option that covers hospital and medical costs. Medicare Part D covers prescription medications. Medicare Supplement Insurance (Medigap) is extra insurance that helps pay your share of costs in Original Medicare. Medigap policies are standardized and generally do not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs.
| Characteristics | Values |
|---|---|
| Eligibility | People aged 65 and over |
| People under 65 with a disability, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig’s Disease) | |
| Types of Coverage | Part A (Hospital Insurance) |
| Part B (Medical Insurance) | |
| Medicare Advantage Plan (Part C) | |
| Prescription Medication Coverage (Part D) | |
| Enrollment | Automatic enrollment after 24 months of receiving Social Security disability benefits |
| Immediate enrollment with Social Security disability benefits for ALS | |
| Costs | No yearly limit on out-of-pocket payments without supplemental coverage |
| Supplemental Coverage | Medicare Supplement Insurance (Medigap) |
| Coverage from a former employer, union, military, or veterans' benefits | |
| Medicaid | |
| Drug Coverage | Optional, available to everyone with Medicare |
| Included in most Medicare Advantage Plans | |
| Other | Medicare Savings Programs available based on income and asset limits |
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What You'll Learn
Medicare Part A and Part B
Part B of Original Medicare is Medical Insurance. Together with Part A, it forms the basis of an individual's health coverage. Once signed up for Part A and Part B, individuals can choose to add drug coverage (Part D) or choose a Medicare Advantage Plan, which is an alternative to Original Medicare. Medicare Advantage Plans are Medicare-approved plans from private companies that offer bundled coverage, including Parts A, B, and usually D. In most cases, you can only use doctors within the plan's network.
Medicare Supplement Insurance (Medigap) is extra insurance that can be purchased from a private company to help pay your share of costs in Original Medicare. Generally, you need Part A and Part B to buy a Medigap policy. Some Medigap policies offer coverage when you travel outside the U.S. and may also help with prescription drug costs. However, they generally do not cover long-term care, vision, dental, hearing aids, private-duty nursing, or prescription drugs. If you are under 65, you may not be able to buy a Medigap policy, or you may have to pay more.
Medicare is federal health insurance for anyone aged 65 and older and some people under 65 with certain disabilities or conditions. Individuals with limited incomes and resources may be able to get help from their state to pay for premiums and other costs.
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Medicare Advantage Plan
A Medicare Advantage Plan is one of the two main ways to get your Medicare coverage, the other being Original Medicare. It is sometimes called "Part C" or an "MA plan". Medicare Advantage Plans are offered by Medicare-approved private companies that must follow rules set by Medicare.
To be eligible for a Medicare Advantage Plan, you must have Part A (Hospital Insurance) and Part B (Medical Insurance). Most Medicare Advantage Plans include Part D (drug coverage). In most types of Medicare Advantage Plans, you cannot join a separate Medicare drug plan.
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Special Needs Plans (SNPs)
- Medicare Medical Savings Accounts (MSAs)
- Private Fee-for-Service Plans (PFFS)
Before joining a Medicare Advantage Plan, it is important to talk to your employer, union, or other benefits administrator about their rules. Joining a Medicare Advantage Plan might cause you to lose your employer or union coverage, which could extend to your spouse and dependents.
A Medicare Advantage Plan can disenroll you if you move outside the plan's service area, lose Medicare or Medicaid eligibility, join a drug plan (in some cases), or if the plan's contract with Medicare ends. In these situations, there is a grace period when you will be eligible for a Special Enrollment Period, allowing you to review your options and choose another Medicare health plan or return to Original Medicare.
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Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is extra insurance that you can purchase from a private health insurance company. It helps cover your share of out-of-pocket costs in Original Medicare (Parts A and B). Generally, to be eligible to buy a Medigap policy, you must already have Original Medicare, which includes Part A (Hospital Insurance) and Part B (Medical Insurance). Medigap policies help fill the gaps in coverage by paying for some of the out-of-pocket expenses that Original Medicare doesn't cover.
Medigap policies are standardized, and the benefits offered by each plan are the same across different insurance companies. The plans are usually named by letters, such as Plan G or Plan K, and the only difference between policies with the same letter is the price. Some Medigap policies also offer coverage for emergency medical care when travelling outside the U.S. However, it's important to note that Medigap generally doesn't cover long-term care, such as nursing home stays, or certain specific services like vision, dental, hearing aids, private-duty nursing, or prescription drugs.
When considering purchasing a Medigap policy, it's important to understand the limitations. For example, if you're under 65, there may be restrictions or higher costs associated with buying a Medigap policy. Additionally, Medigap policies don't include prescription drug coverage, so if you require this, you would need to join a separate Medicare drug plan.
To purchase a Medigap policy, you can buy directly from a private insurance company of your choice. The price of the policy may vary, so it's worth shopping around and comparing prices and benefits offered by different insurers. It's also important to ensure that you understand the terms and conditions of the policy, including any exclusions or limitations, before purchasing.
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Medicare Part D
To enrol in Part D, beneficiaries must also be enrolled in either Part A or Part B. They can participate in Part D through a stand-alone prescription drug plan or through a Medicare Advantage plan that includes prescription drug benefits. Enrollees can sign up directly through the plan's sponsor or an intermediary. Medicare Advantage plans often use federal rebates to reduce premiums for drug coverage.
The number of offered plans varies geographically, but enrollees usually have dozens of options. Enrollees can compare premiums, covered drugs, and cost-sharing policies when selecting a plan. Medicare offers an interactive online tool that allows for the comparison of coverage and costs for all plans in a geographic area. This tool lets users input their medications and calculates personalized projections of the enrollee's annual costs under each plan option.
In 2019, about three-quarters of Medicare enrollees obtained drug coverage through Part D, with 47 million beneficiaries enrolled. The average monthly Part D premium across all plans was $27 in 2020. In 2022, costs for stand-alone Part D plans in the 10 major U.S. markets ranged from $6.90 per month (Dallas and Houston) to $160.20 per month (San Francisco).
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Medicare Savings Programs
There are four types of Medicare Savings Programs: QMB, SLMB, QI-1, and QDWI, each with different income and resource eligibility limits. To qualify for a Medicare Savings Program, you must have income and resources below a certain limit, which varies by state and program. These limits go up each year. For example, the resource limits for QMB, SLMB, and QI-1 are $11,160 for one person and $17,470 for a married couple, while the resource limits for the QDWI program are $4,000 for one person and $6,000 for a married couple.
The four MSPs help cover different aspects of Medicare costs. Three of the four MSPs cover the Medicare Part B premium, which is $185 per month in 2025. The QMB program also covers Medicare premiums (Part A, if applicable, and Part B), deductibles, copayments, and/or coinsurance. Enrollment in an MSP also qualifies you for the Medicare Part D Low-Income Subsidy, which helps pay for prescription drugs.
To apply for Medicare Savings Programs, you must contact your state, as these programs are run by individual states. You will need to apply every year to stay in the QI Program. Even if you don’t think you qualify, you should still apply.
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Frequently asked questions
Medicare is a federal health insurance program for people aged 65 and over. If you are under 65, you may be eligible for Medicare if you have a disability, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig's Disease).
There are two main ways to get Medicare coverage: Original Medicare and Medicare Advantage (Part C). Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance). Medicare Advantage is a private insurance option that covers hospital and medical costs.
When deciding on a Medicare plan, consider your specific health needs and financial situation. You may also want to think about whether you prefer the flexibility of Original Medicare or the convenience of a bundled plan like Medicare Advantage.
Yes, there are several options for getting help with Medicare costs. If you have limited income and resources, you may be eligible for assistance from your state or through programs like Extra Help for drug costs. You can also explore Medicare Supplement Insurance (Medigap) or Medicare Advantage Plans, which can help limit your out-of-pocket expenses.
You can apply for Medicare online or through your local Social Security Office. If you are still working at age 65 and not ready to receive Social Security benefits, you can apply for Medicare only. If you receive Social Security disability benefits, you will automatically receive Medicare Parts A and B after 24 months.
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