What Is Medicare? How It Works And What It Covers (2024)

Medicare is the federal health insurance program for U.S. adults ages 65 and older. However, younger people who have disabilities, such as end-stage renal disease or amyotrophic lateral sclerosis (ALS), may also be eligible to enroll in Medicare.

Original Medicare consists of Part A and Part B. However, Medicare has four parts:

• Medicare Part A (hospital insurance)
• Medicare Part B (medical insurance)
• Medicare Advantage (Part C) provided by Medicare-approved private insurers
• Medicare Part D (prescription drug coverage)

Medicare enrollees in Part A and Part B can also purchase supplemental Medigap insurance to fill in coverage gaps. Medigap plans, which are purchased from private insurance companies, offer additional layers of coverage to avoid hefty out-of-pocket medical expenses.

To qualify for Medicare Part A, you must have worked enough (at least 10 years) to be eligible for Social Security or Railroad Retirement Board (RRB) cash benefits. A person receiving Social Security or RRB benefits for at least four months before turning 65 doesn’t need to apply for Part A; they’re automatically enrolled when they turn 65.

People who aren’t already receiving Social Security or RRB benefits must file an application for Medicare Part A (and Medicare Part B) with the Social Security Administration (SSA).

If you file an application within six months before your 65th birthday, Medicare coverage begins the month you turn 65. If your 65th birthday is on the first of the month, Part A coverage begins on the first day of the month before your birthday. If you apply for Medicare more than six months after your 65th birthday, Medicare coverage is retroactive for six months, meaning coverage can apply to costs incurred six months before your signup date.

Medicare Enrollment Periods

There are three periods during which an eligible individual can enroll in Medicare Part B coverage:

Initial Enrollment Period. This seven-month enrollment period begins three months before the month in which someone turns 65 and extends three months after it.

Annual Enrollment Period. This general enrollment period for all people eligible for Medicare runs from October 15 to December 7 each year.

Special Enrollment Period. When someone leaves their employer-sponsored health coverage, they enter a special enrollment period for Medicare, which begins three months before the month in which they stop working and extends eight months after the month when they stop working.

The initial sign-up period for Original Medicare (Part A and Part B), which lasts for seven months in total, begins three months before you turn 65 and ends three months after the month you turn 65.

If you don’t sign up for Original Medicare during your initial enrollment period, you must wait until Medicare’s general enrollment period, which is January 1 through March 31. Medicare also has special enrollment periods for certain life events, such as losing health insurance provided by a former employer, or missing initial or general enrollment sign-up periods due to exceptional circ*mstances like living in an area where there was a declared emergency.

Medicare’s open enrollment period runs October 15 through December 7. During this period, you can:

• Join, switch or drop a Medicare Advantage Plan or drug coverage.
• Switch from Original Medicare (Part A and Part B) to a Medicare Advantage plan.
• Sign up for Part D or switch drug pans if you’re on Original Medicare.

Medigap open enrollment is the six-month period that starts the first day of the month that you’re 65 or older and signed up for Medicare Part B. Enrolling in a Medigap plan during that time can save money later.

“If you wait too long to enroll [in Medigap], insurance companies earn the right to use medical underwriting [a process by which insurance companies try to determine a person’s health status] to adjust your rates,” says Christian Worstell, a Medicare and health insurance expert based in North Carolina. “This can lead to higher monthly premiums and maybe even a denial of coverage altogether.”

Medigap covers the “gaps” (out-of-pocket costs) of Part A and Part B, such as copays or coinsurance costs. The Medigap plan and Medicare each pay a share of the cost. There are 10 different Medigap plans available, though not all plans are available in every state or region. These plans include:

• Plan A
• Plan B
• Plan C
• Plan D
• Plan F (high deductible)
• Plan G (high deductible)
• Plan K
• Plan L
• Plan M
• Plan N

Medicare Advantage plans are your primary insurance plan and include Part A, Part B and often Part D. Medicare Advantage plans may offer supplemental benefits, such as dental or vision. It’s not possible to have both a Medigap and Medicare Advantage plan, so individuals must decide which plan type best fits their specific health needs.

Medicare Advantage plans typically limit you to a local network of health care providers, says Tanya Feke, M.D., a family physician and Medicare expert based in New Hampshire. “You may pay more, or not have coverage at all, if you go out of the network,” says Dr. Feke.

Medigap plans, however, aren’t limited to in-network providers, as they work with the coverage provided under Medicare Part A and Part .

“Original Medicare is not limited by a local network,” says Dr. Feke. “It covers any doctor or hospital that accepts Medicare. That means you can use your Medigap plan anywhere in the country.”

For more information about Medicare, Medicare Advantage Plans and Medigap plans, visit Medicare.gov and Centers for Medicare and Medicaid Services.

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On Medicare Enrollment's Website

To enroll in Medicare Part A and Part B, apply at:

• Social Security website.
• SSA phone number: 1-800-772-1213. (Teletypewriter users: 1-800-325-0778).
• Your local Social Security office.

New enrollees should receive a welcome package with a Medicare card about two weeks after signing up.

Medicare coverage depends on the parts of Medicare in which you enroll:
Medicare Part A (hospital insurance) covers hospital stays, short-term skilled nursing facility stays, surgery, lab tests, short-term home health care and hospice care.

Medicare Part B (medical insurance) covers for doctor visits and services from other health care providers. Medicare Part B also covers home health care, durable medical equipment (like canes, crutches and walkers) and numerous preventive and screening services.

Medicare Advantage (Part C) plans are available with varying levels of coverage by private insurance companies. These plans provide Part A and Part B coverage, and most include prescription drug coverage. Many Medicare Advantage plans also offer extra benefits for vision, dental and hearing programs, as well as fitness programs. You must have Medicare Part A and Part B to enroll in a Medicare Advantage Plan.

Medicare Part D covers generic and brand-name prescription drugs.

There are medical expenses that Original Medicare doesn’t cover, including:

• Long-term care
• Eye exams for prescription glasses
• Most dental care
• Hearing aids and fitting exams
• Massage therapy
• Concierge care
• Dentures
• Routine physical exams with no treatment or diagnosis for a specific complaint, symptom, illness or injury
• Covered services or items received from an “opt-out” doctor or provider not enrolled in Medicare

Medicare pricing varies based on established income thresholds.

When choosing a Medicare plan of any kind, it pays to read the plan coverage carefully, according to Worstell. “One mistake I see is when someone enrolls in the plan with the lowest monthly premium because they assume it’s the most affordable plan. But that may only be partially true,” he says.

“A plan with a lower premium may have a higher deductible, higher copayments or coinsurance and a higher annual out-of-pocket limit. When considering the affordability of a plan, it’s important to consider all facets of the plan’s costs and not focus solely on the monthly premium.” he adds

Current Original Medicare costs are listed in the table below.