Jane Dotson
Medicare is a health insurance program provided by the United States government. It covers health insurance for over 65 million people, with most enrollees aged 65 and older. Medicare is different from private insurance in that it does not offer plans for couples or families. There are several parts to Medicare, including Part A (Hospital Insurance), Part B (Medical Insurance), and Part D (drug coverage). Medicare Advantage (Part C) is an alternative to Original Medicare, which includes Parts A and B, and sometimes Part D. There are also supplemental coverage options, like Medigap, which help pay out-of-pocket costs. Medicare has multiple sources of financing, including the U.S. Treasury, payroll taxes, and premiums paid by beneficiaries.
| Characteristics | Values |
|---|---|
| Type of Program | Federal health insurance program |
| Who is Eligible | People aged 65 and over |
| Who is Also Eligible | People under 65 with certain disabilities or conditions, including permanent kidney failure, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig's Disease) |
| Parts | Part A, Part B, Part C, Part D, and Medigap |
| Part A Coverage | Hospitalization, home or skilled nursing, and hospice |
| Part B Coverage | Medical insurance |
| Part C Coverage | Hospital and medical costs |
| Part D Coverage | Prescription medications |
| Medigap | Extra insurance bought from a private company to help pay Original Medicare costs; generally requires Part A and Part B |
| Medicare Advantage | Medicare-approved plan from a private company that offers an alternative to Original Medicare for health and drug coverage; requires Part A and Part B |
| Additional Coverage | Vision, hearing, dental services, and drug coverage can be added |
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What You'll Learn
Medicare Part A
Part A is available to individuals who are 65 or older, and those who are younger than 65 but have a disability. To be eligible for premium-free Part A, an individual must have worked and paid Medicare taxes for at least 10 years (40 quarters) or be eligible based on their spouse's work. Those who do not meet these criteria may still be eligible for Part A by paying a monthly premium. The cost of the premium depends on how long the individual or their spouse worked and paid Medicare taxes. For those who paid Medicare taxes for at least 30 quarters, the monthly premium is $285. If an individual paid Medicare taxes for fewer than 30 quarters, or they have certain disabilities and have reached their benefit limit, the monthly premium is $518.
Individuals who are already receiving monthly Social Security or Railroad Retirement Board (RRB) benefits at least four months before turning 65 will automatically receive premium-free Part A when they turn 65. Those who are not receiving these benefits must file an application for Medicare by contacting the Social Security Administration. Part A coverage begins the month the individual turns 65, provided they file an application within six months of their 65th birthday. If the application is filed more than six months after turning 65, Part A coverage will be retroactive for six months.
It is important to note that Medicare Part A coverage changes annually, and there may be out-of-pocket costs for individuals beyond what is covered by Part A. These costs can include deductibles, coinsurance, copayments, and premiums. For example, in 2025, the deductible for an inpatient hospital stay is $1,676. Medicare Part A covers the first 60 days of an inpatient stay, but individuals must pay $419 for each additional day between days 61 and 90. If the inpatient stay extends beyond 90 days, Medicare provides 60 reserve days, costing $838 per day. Part A also covers skilled nursing home stays, with a copayment of $209.50 per day from days 21 to 100. It is important for individuals to stay updated with each year's new premiums and deductibles and be aware of any potential out-of-pocket costs.
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$12.86 $14.99
Medicare Part B
Most people pay a premium for Part B, although some people may be eligible for premium-free Part B under certain conditions. For example, individuals receiving monthly Social Security or Railroad Retirement Board (RRB) benefits at least four months before turning 65 are entitled to premium-free Part B. Additionally, individuals receiving regular dialysis treatments or a kidney transplant, who have filed an application for Medicare, and meet specific conditions may be eligible for premium-free Part B.
If you have been covered by an active employer group health plan (either yours or your spouse's) since turning 65, you can enroll in Part B during a Special Enrollment Period without penalty. This period allows you to apply any time of the year.
If you have Part B and Medicare Supplement Insurance (Medigap), your Medigap plan may cover the cost of insulin (up to $35 or less) if you use an insulin pump covered under Part B's durable medical equipment benefit. Additionally, when Federal Employee Health Benefits (FEHB) plans and Part B are used together, the FEHB plan may cover the coinsurance for Part B, which is typically 20% of eligible outpatient medical expenses.
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Medicare Part C (Medicare Advantage)
Medicare Part C, also known as Medicare Advantage, is a type of Medicare health insurance plan offered by private companies approved by Medicare. These companies include Humana and Anthem Blue Cross and Blue Shield, which offer plans such as HMO, PPO, D-SNP, C-SNP, I-SNP, and/or PDP.
Medicare Advantage plans provide Part A (Hospital Insurance) and Part B (Medical Insurance) coverage, as well as additional benefits not typically included in Original Medicare. These extra benefits may include routine dental, vision, and hearing care, as well as health and wellness programs. Some plans also include Medicare Part D prescription drug coverage, known as MAPD plans.
The cost of Medicare Advantage plans can vary depending on the specific plan and company. The plans may have different out-of-pocket costs, copays, and deductibles, and may also have different rules for how you access services. For example, you may need a referral to see a specialist or be required to use only specific doctors or facilities within the plan's network.
Medicare Advantage plans offer flexibility and customization to meet individual healthcare needs. They are a good option for those who require more coverage than what is provided by Original Medicare, especially in areas like dental, vision, hearing, and prescription drugs.
If you are already enrolled in Original Medicare and want to switch to a Medicare Advantage plan, you can do so during the Medicare Annual Enrollment Period (AEP) from October 15 to December 7. If you are already enrolled in a Medicare Advantage plan and wish to switch to a different one, you can make this change during the same period.
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Medicare Part D
Under Part D, drug benefits are provided by private insurance plans that receive premiums from both enrollees and the government. These plans typically pay most of the cost for prescriptions, although they are reimbursed for much of this cost through rebates paid by manufacturers and pharmacies. Enrollees cover a portion of their drug expenses through cost-sharing, the amount of which depends on the retail cost of the drug, the rules of their plan, and their eligibility for Federal income-based subsidies.
Part D benefits are provided through private plans approved by the federal government, with the number of plans offered varying by geography. Enrollees can compare premiums, covered drugs, and cost-sharing policies when selecting a plan. Medicare offers an interactive online tool to help enrollees compare coverage and costs for all plans in their geographic area. This tool allows users to input their medications and receive personalized projections of their annual costs under each plan option.
In 2019, about three-quarters of Medicare enrollees obtained drug coverage through Part D, with program expenditures totaling $102 billion. Part D finances more than one-third of retail prescription drug spending in the United States. To enroll in Part D, beneficiaries must also be enrolled in either Part A or Part B of Medicare. They can participate in Part D through a stand-alone prescription drug plan or through a Medicare Advantage plan that includes prescription drug benefits.
The average monthly Part D premium across all plans was $27 in 2020, although premiums vary depending on whether the plan is stand-alone or bundled with a Medicare Advantage plan. Standalone plans may also have an annual deductible, copays, and coinsurance. The Extra Help program is available for those with limited incomes and resources to lower or cut Part D costs, providing assistance with prescription drug costs such as deductibles and copays.
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Medigap
Medicare is the US health insurance program for people aged 65 or older, or those with permanent kidney failure or who receive disability benefits. There are four types of Medicare coverage, known as "parts". Medicare Supplement Insurance, or Medigap, is an additional insurance policy that can be purchased from a private health insurance company to supplement Original Medicare. Medigap policies help to pay for some of the healthcare costs not covered by Original Medicare, including certain vision, hearing, and dental services, as well as travel coverage outside of the US.
To be eligible for Medigap, individuals must generally have Original Medicare, including Part A (Hospital Insurance) and Part B (Medical Insurance). It is important to note that Medigap policies do not cover long-term care, such as nursing home stays, prescription drugs, or private-duty nursing. Medigap policies are standardized and regulated by Federal and state laws, ensuring that all insurance companies offer the same benefits, with price being the only differentiating factor.
When purchasing a Medigap policy, it is essential to do so within six months of enrolling in Part A and Part B to avoid potential penalties or higher costs. Medigap policies are guaranteed renewable as long as the premium is paid, and coverage will continue annually. However, in some states, insurance companies may refuse to renew Medigap policies purchased before 1992.
It is worth noting that Medigap policies do not cover spouses, and each individual must purchase their own policy. Additionally, Medigap policies do not include Medicare drug plans. If individuals wish to add drug coverage, they can join a separate Medicare drug plan, which is optional and available to all Medicare enrollees.
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Frequently asked questions
Medicare is a federal health insurance program for people aged 65 and over.
Some people get Medicare automatically, while others have to actively sign up. If you're 65 or older, your Initial Enrollment Period begins 3 months before your birthday and ends 3 months after; you may have to pay a penalty if you miss this 7-month window. You can apply online or at your local Social Security office.
There are 4 types of Medicare coverage, known as "parts". Part A covers hospitalization, home or skilled nursing, and hospice. Part B covers medical insurance. Part C, also known as Medicare Advantage Plans, is a private insurance option that covers hospital and medical costs. Part D covers prescription medications.
Medicare Supplement Insurance (Medigap) is extra insurance that helps pay your share of costs in Original Medicare. You generally need Part A and Part B to buy a Medigap policy.
Once you've signed up for Part A and Part B, you can choose between Original Medicare and Medicare Advantage. You can use your ZIP code to find a Medicare-certified provider near you.
