Alyssa Lane
Medicare is a federal health insurance program for individuals aged 65 and over, as well as some younger people with disabilities. There are two main ways to get Medicare coverage: Original Medicare and Medicare Advantage Plans. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance), while Medicare Advantage Plans are offered by private companies and may include additional benefits such as drug coverage (Part D). Medicare health plans are categorized into several types, including Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Individuals with Medicare and other health insurance policies, such as group health plans or Medicaid, can coordinate their benefits to ensure adequate coverage.
| Characteristics | Values |
|---|---|
| Type | Federal health insurance |
| Eligibility | Anyone 65 and older, and some people under 65 with certain disabilities or conditions |
| Parts | Part A (Hospital Insurance) and Part B (Medical Insurance) |
| Additional Parts | Part C (Medicare Advantage Plan) and Part D (Prescription Drugs) |
| Supplemental Coverage | Medicare Supplement Insurance (Medigap), coverage from a former employer or union, or Medicaid |
| Medicare Advantage Plans | Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Special Needs Plans (SNPs), Medicare Medical Savings Accounts (MSAs), Private Fee-for-Service Plans (PFFS) |
| Medicare Drug Plans | Run by private insurance companies that follow rules set by Medicare |
| Medicare and Other Insurance | Each type of coverage is called a "payer" and coordinates payment through a "primary payer" and "secondary payer" |
| Medicare Assistance | Contact your local State Health Insurance Assistance Program (SHIP) for free personalized health insurance counselling |
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What You'll Learn
Original Medicare (Part A and Part B)
Original Medicare is federal health insurance for anyone aged 65 or older and some people under 65 with certain disabilities or conditions. It includes Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).
Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and home health care. Most people get Part A for free, but some have to pay a premium for this coverage. To be eligible for premium-free Part A, an individual must be entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child.
Part B is Medical Insurance. It covers doctors' services, tests, and preventive services. You must pay a premium for Part B coverage. The premium amount is based on your income and other factors. To be eligible for Part B, you must be enrolled in Social Security or have worked the required amount of time under Social Security or the Railroad Retirement Board (RRB).
You can choose to add Medicare drug coverage (Part D) to Original Medicare. Part D helps cover the cost of prescription drugs, including many recommended shots or vaccines. Plans that offer Medicare drug coverage are run by private insurance companies that follow rules set by Medicare.
Medicare Supplement Insurance (Medigap) is extra insurance that you can buy from a private company to help pay your share of costs in Original Medicare. Medigap policies are standardized, and in most states, they are named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, no matter which insurance company sells it. Price is the only difference between policies with the same letter sold by different companies. Generally, you need Part A and Part B to buy a Medigap policy.
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Medicare Advantage (Part C)
Medicare Advantage, also known as Medicare Part C or MA, is one of the two main ways to get your Medicare coverage. It is a health plan offered by private companies approved by Medicare. Medicare Advantage plans provide Part A (Hospital Insurance) and Part B (Medical Insurance) coverage and may offer additional benefits such as vision, hearing, dental, and health and wellness programs.
Medicare Advantage plans can be customized to meet specific needs and treat certain conditions and diseases. For example, some plans include Medicare Part D prescription drug coverage (MAPD plans). These plans can help expand your Medicare coverage beyond Original Medicare.
The cost of Medicare Advantage plans varies depending on the plan and the company. The projected average premium for a Medicare Advantage plan in 2025 is $17 per month, but there may be additional costs such as copays and deductibles.
If you are interested in enrolling in a Medicare Advantage plan, you can do so during your Initial Enrollment Period (IEP) for Medicare, which starts three months before you turn 65 and ends three months after. You can also switch plans during the Medicare Advantage Open Enrollment Period (OEP), which runs from January 1 to March 31.
Medicare Advantage plans offer an alternative to Original Medicare, which is administered by the federal government. With Original Medicare, you pay for services as you receive them, and Medicare covers part of the cost while you pay your share. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance) and covers things like inpatient hospital care, doctors' services, tests, and preventive services.
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Medicare Part D
Medicare is federal health insurance for anyone aged 65 or older and some people under 65 with certain disabilities or conditions. Medicare Part D is an optional federal government program that helps Medicare beneficiaries pay for self-administered prescription drugs. Part D was enacted as part of the Medicare Modernization Act of 2003 and came into effect on January 1, 2006.
Under the program, beneficiaries can participate in Part D through a stand-alone prescription drug plan or through a Medicare Advantage plan that includes prescription drug benefits. Beneficiaries can enroll directly through the plan's sponsor or through an intermediary. To enroll in Part D, Medicare beneficiaries must also be enrolled in either Part A (Hospital Insurance) or Part B (Medical Insurance).
Part D plans typically pay most of the cost for prescriptions filled by their enrollees. However, plans are later reimbursed for much of this cost through rebates paid by manufacturers and pharmacies. Part D enrollees cover a portion of their own drug expenses by paying cost-sharing. The amount of cost-sharing an enrollee pays depends on the retail cost of the filled drug, the rules of their plan, and whether they are eligible for additional Federal income-based subsidies.
The number of offered plans varies geographically, but a typical enrollee will have dozens of options to choose from. Plans are required to submit biweekly data updates that Medicare uses to keep an interactive online tool updated throughout the year. This tool allows for the comparison of coverage and costs for all plans in a geographic area.
In 2020, the average monthly Part D premium across all plans was $27. From 2017 to 2020, despite rising per capita drug spending, premiums decreased by 16%. 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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Medigap (Medicare Supplement Insurance)
Medicare is federal health insurance for anyone aged 65 and over, as well as some people under 65 with certain disabilities or conditions. 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). It covers inpatient hospital care, doctors' services and tests, and preventive services.
Medigap, or Medicare Supplement Insurance, is extra insurance that helps pay for out-of-pocket costs in Original Medicare. You can buy it from a private health insurance company, but you generally must already have Original Medicare (Part A and Part B) to be eligible for a Medigap policy. Medigap policies are standardized, and in most states, they are named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, regardless of the insurance company, and the price is the only difference between policies with the same letter sold by different companies.
If you want to add drug coverage to Original Medicare, you can join a separate Medicare drug plan (Part D). Most Medicare Advantage Plans include Part D coverage, so you cannot join a separate Medicare drug plan. Medicare drug plans are run by private insurance companies and cover a variety of brand-name and generic prescription drugs. Each plan has a list of covered drugs called a "formulary", which varies in cost and specific drugs covered.
If you are under 65, you may not be able to buy a Medigap policy, or you may have to pay more. You should generally buy a Medigap policy within six months of getting Part A and Part B to avoid paying higher rates or being denied coverage.
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Medicaid
As of 2023, Medicaid provided health coverage for over 70 million low-income Americans, with enrollment increasing to 83 million by the start of 2025. Enrollment rates are higher among certain racial and ethnic groups, with over 40% of non-elderly enrollees being people of colour. Medicaid is particularly important in rural areas, where uninsured rates tend to be higher, covering 16% of adults in urban areas compared to 21% in rural areas.
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Frequently asked questions
Medicare is federal health insurance for anyone aged 65 and older, as well as some people under 65 with certain disabilities or conditions.
There are four parts to Medicare: Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage Plans), and Part D (Prescription Drug Coverage).
Original Medicare includes Part A and Part B. It covers things like inpatient hospital care, doctors' services and tests, and preventive services. You pay for services as you get them, and Medicare covers part of the cost.
Medicare Advantage Plans, also known as Part C, are offered by private companies that contract with Medicare. They provide Part A and Part B benefits to people with Medicare.
Medicare Supplement Insurance, also known as Medigap, is extra insurance that helps pay your share of costs in Original Medicare. It is sold by private companies, and you generally need Part A and Part B to buy a Medigap policy.
