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What Is Medicare?

What Is Medicare?
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Published on November 4, 2022
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Medicare is a federal health insurance program for people ages 65 and older, as well as for those with certain disabilities. Currently, more than 68 million Americans are enrolled in the program.

Navigating the ins and outs of Medicare can be tricky, though, mainly because there are multiple parts to the program, each covering certain aspects of your care. To fill the gaps in your coverage, “You need to navigate supplemental benefits and prescription drug plans,” says Jennifer Wolff, PhD, of the Johns Hopkins Bloomberg School of Public Health. “It’s far trickier than choosing an employer-sponsored health plan.”

Once you understand the basics, you’ll feel more confident about making coverage decisions.

How Does Medicare Work?

Medicare is a health insurance program that’s funded by the federal government. What makes Medicare different from employer-based plans is that hospital coverage, physician services, and prescription coverage are split into separate parts. Each of these parts can have different enrollment deadlines, costs, and requirements.

Unlike standard health insurance plans, which bundle everything together, Medicare requires you to select and combine different pieces of coverage to meet your needs. There’s also Medicare Advantage (Part C), which is an alternative to Medicare that’s offered by a private insurance company.

Who Qualifies for Medicare?

Medicare is available for people ages 65 and older. However, you may be eligible at a younger age if you have a qualifying disability, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s disease. Your eligibility for Medicare is not based on your finances.

What Are the Different Parts, and Do I Need Them?

Medicare has four parts, each of which covers certain aspects of your healthcare:

  • Part A: Hospital insurance
  • Part B: Medical insurance
  • Part C: Medicare Advantage
  • Part D: Prescription drug coverage

Medicare Parts A and B together are known as Original Medicare, and Part D is a supplemental drug coverage program. (Medicare Advantage provides all of Parts A and B, usually Part D, and potentially other benefits. It will be covered in another section.)

Medicare Part A: Hospital Insurance

Medicare Part A covers inpatient hospital care, skilled nursing care, hospice care, and some home healthcare services.

It’s a good idea to sign up for Medicare Part A as soon as you turn 65, even if you (or your spouse) have health insurance from a job. Some employers require you to take Part A when you’re eligible for it — and they may not cover your healthcare costs if you don’t.

Medicare Part B: Medical Insurance

Medicare Part B covers doctors’ visits, outpatient care, medical equipment, and preventive services such as annual checkups, glaucoma screenings, mammograms, vaccines, and screenings for various cancers.

You can choose to sign up for Part B after you (or your spouse) stop working or lose health insurance coverage. If you have health insurance through an employer, you should check with them to see if you have to enroll in Part B, since some employers require their employees to take Part B as soon as they’re eligible. If you don’t have other insurance, you must sign up for Part B as soon as you’re eligible, or you will have to pay a penalty.

Medicare Part D: Prescription Drug Coverage

Medicare Part D covers the cost of prescription medications and certain vaccines.

 
Enrollment in Part D is voluntary, but unless you have additional health insurance coverage — from an employer, for example — you’ll likely want to sign up. Part D can help offset the cost of prescription drugs, and delaying your enrollment can result in a permanent financial penalty (an extra 1 percent per month).

How Much Will It Cost Me?

Medicare isn’t free — something that often takes people by surprise, says Josh Hodges, chief customer officer at the National Council on Aging. The cost can vary based on income, location, and coverage choices, but here’s the general breakdown for the monthly premiums in 2025:

  • Part A: Usually free
  • Part B: Starts at $185 monthly
  • Part D: Averages $46.50 monthly, with a $2,000 annual out-of-pocket maximum

Along with monthly premiums, Medicare Parts A, B, C, and D may also have deductibles and copays.

To help pay for these out-of-pocket expenses, many people with Medicare choose to have supplemental coverage, such as Medigap (see below). People with limited income can also be eligible for assistance programs such as the Medicare Part D Extra Help program, which helps pay for the costs of prescription drugs, says Kata Kertesz, JD, the managing policy attorney for the Center for Medicare Advocacy. There’s also the Medicare Savings Program, which helps pay for Part A and Part B, and the Qualified Medicare Beneficiary Program Group, which provides Part A and Part B premiums and cost sharing to low-income Medicare beneficiaries.

What Is Medigap Coverage?

Because Original Medicare has no out-of-pocket maximum and requires you to pay 20 percent of medical costs, many people purchase supplemental insurance called Medigap. These policies, sold by private insurers, help cover Medicare’s deductibles, copays, and coinsurance. Premiums vary by plan type, location, and insurer, but they averaged around $217 a month in 2023.

Where and How Do I Sign Up?

There are a few different ways to sign up for Medicare, depending on whether you have disabilities, are retired, or are still working:

  • If you have ALS or ESRD, you’ll automatically be enrolled in Medicare Part A and Part B; if you receive Social Security disability benefits, you’ll be automatically enrolled after 24 months.

  • If you receive Social Security benefits between the ages of 62 and 65, you’ll be automatically enrolled in Medicare Part A and Part B when you turn 65.
  • If you apply for Social Security benefits when you turn 65, you can sign up for Medicare at that time.
  • If you’re still working and want to delay your Social Security benefits, you can apply online for Medicare or may be able to wait until you retire.

You can sign up for Medicare online at SSA.gov/Medicare/sign-up, or call 1-800-772-1213.

You can only enroll in Medicare at certain times, including:

  • Initial Enrollment Period: This seven-month period includes the three months before your 65th birthday, your birthday month, and three months after. This is usually the first chance to sign up for Medicare.

  • General Enrollment Period: This period lasts from January 1 to March 31. If you missed your Initial Enrollment Period, you can enroll during the General Enrollment Period.
  • Special Enrollment Period: You can sign up for Medicare at any time if you lose your existing coverage, such as Medicaid or an employer’s coverage.

  • Open Enrollment Period: If you already have Medicare, you can change coverage from October 15 to December 7.

How Does Medicare Work if I Have Retiree Insurance?

If your former employer offers retiree health coverage, it will work together with Medicare to pay for your healthcare. Usually, Medicare pays first while retiree insurance kicks in to help pay for deductibles, copays, and coinsurance.

Retiree health coverage may also include coverage for vision, dental, and over-the-counter medications that Medicare doesn’t cover. Sometimes, retiree health coverage provides the same value as Medicare drug coverage, so you may not need to sign up for Part D. Check with your plan first though; in some cases, signing up for Part D will cause you to lose your retiree coverage.

What Is Medicare Advantage?

Medicare Advantage (Part C) plans bundle all your Medicare coverage into one private insurance plan. Most Medicare Advantage plans combine Parts A, B, and D coverage with additional benefits like dental, vision, hearing, and fitness programs. While every Medicare Advantage plan must offer coverage that’s at least as good as original Medicare, plans differ in their costs, rules, and provider scope.

For example, most Medicare Advantage plans require prior authorization for certain services and have fewer healthcare providers and hospitals in network.

 “Medicare Advantage plans vary tremendously across the country, and what you ultimately choose often depends on your health needs,” says Wolf.

How Do I Know if My Current Doctors Will Accept Medicare?

Most U.S. doctors accept Medicare.

To find a list of doctors in your area who take Medicare — and therefore, agree not to bill you for more than the approved Medicare amount for your visit or procedure — you can use Medicare's find and compare tool. Select “Doctors & clinicians” from the menu on the left side of the page. Look for providers noted as charging the Medicare-approved amount.

You can also call the doctor’s office directly or call Medicare at 1-800-633-4227.

What Is a Medicare Secondary Payer?

If you have Medicare and another type of health insurance (like retiree coverage or Medicaid), there’s an order to how bills get paid.

 The “primary payer” pays first, up to the limits of its coverage, then the “secondary payer” jumps in to help cover the remaining balance.
While Medicare is often the primary payer, there are times when another insurer must pay first, making Medicare the secondary payer. Medicare will pay second if:

  • You work at a company with 20 or more employees (or are covered through spouse’s employer’s plan)
  • You’re 65 years old, have a disability, and work at a company with 100 or more employees
  • You’re within the first 30 months of end-stage renal disease treatment
  • Workers’ compensation is paying
  • You were in an auto accident (no-fault or liability insurance) and their insurance company is paying
  • You have COBRA (only in certain situations)

The Takeaway

  • Medicare is a federal health insurance program for people ages 65 and older, or those with a qualifying disability, end-stage renal disease, or amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.
  • Original Medicare (Parts A and B) covers hospital stays and doctor visits, while Medicare Advantage (Part C) bundles these benefits with extras like dental care. Part D covers prescription drugs.
  • Missing the enrollment deadlines for Parts A, B, or D can result in permanent premium penalties.
  • You’ll most likely enroll in Medicare during the initial enrollment period, which starts three months before your 65th birthday and ends three months afterward.

Common Questions & Answers

What’s the difference between Medicare and Medicaid?
Medicare is a federal health insurance program for people ages 65 and older, as well as people with certain disabilities, regardless of income. Medicaid is a joint federal and state health insurance plan for people with limited incomes, regardless of age.
Yes. While Part A is usually premium-free if you worked enough years, Part B has a monthly premium that is typically deducted from Social Security. Parts C and D also have monthly premiums that vary by plan.
To qualify for Medicare, you must be at least 65 years old, or be under the age of 65 and have a qualifying disability, end-stage renal disease, or amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.

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Sarah Goodell, MA

Sarah Goodell, MA

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Sarah Goodell is a health policy consultant with over 25 years of experience. She is currently working as an independent consultant focusing on the Affordable Care Act, Medicare, health financing, and health delivery systems.

She previously served as director of the Synthesis Project, funded by the Robert Wood Johnson Foundation. At the Synthesis Project she managed projects on a variety of topics, including risk adjustment, Medicaid managed care, hospital consolidation, the primary care workforce, care management, and medical malpractice.

Prior to her work as a consultant, Ms. Goodell spent five years as a policy analyst in the Office of the Assistant Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services. Her work at ASPE focused on private insurance and patient protections, including external appeals processes and privacy.

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Holly Pevzner

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Holly Pevzner is a writer who specializes in health, nutrition, parenting, and pregnancy. She is currently a staff writer at Happiest Baby. Her work, including essays, columns, features, and more, spans a variety of publications, websites, and brands, such as EatingWell, Family Circle, Fisher-Price, Parents, Real Simple, and The Bump. Pevzner has written several monthly health columns, including for First for Women and Prevention magazines. She previously held senior staff positions at Prevention, Fitness, and Self magazines, covering medical health and psychology. She was also a contributing editor at Scholastic's Parent & Child magazine.

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