What Is Medicare?
Medicare is the federal government’s health insurance program that primarily covers people 65 and older and certain younger people with disabilities or kidney failure. Original Medicare does not cover all medical costs. Medicare Advantage plans stand in the place of Original Medicare or you may opt to stay with Original Medicare and purchase a Medicare Supplement policy.
- Original Medicare (Parts A and B) is a federal health plan that becomes available once you turn 65 years old. Original Medicare does not cover everything. Routine prescription drugs, dental, vision and hearing are a few of the necessary services not covered.
- You generally pay a deductible for your health care before Medicare pays its share. Medicare will then take over and you pay the coinsurance or copayment for covered services and supplies.
- There are optional Medicare plans that you can purchase during select enrollment periods. These plans cover the additional health care costs not covered by Original Medicare. These plans vary by state and include Medicare Advantage plans, supplement insurance (Medigap) and Part D prescription drug coverage.
The United States created Medicare in 1966 as a national health insurance primarily for the nation’s older population. Today, it is administered by the Centers for Medicare and Medicaid Services (CMS). It is the second largest social insurance program in the country, behind Social Security.
Medicare covered 59.9 million Americans and spent $741 billion on their health care in 2018, according to CMS. But people on Medicare still faced out-of-pocket expenses because Parts A and B — known collectively as Original Medicare — don’t cover all medical costs.
Private companies contract with CMS to sell Medicare Advantage plans, also known as Medicare Part C. These plans are an alternative to Original Medicare and offer extra benefits, including vision and dental.
Medicare Supplement insurance, or Medigap, is an addition to Original Medicare that can help offset coverage gaps. Medigap policies are also sold by private insurers.
Understanding Medicare Coverage Plans
Medicare is divided into four parts, named alphabetically from Part A through Part D.
Parts A and B are sometimes referred to as Original Medicare. Parts C and D are newer options. Generally, you can get coverage through Original Medicare or through Medicare Advantage plans if you qualify.
Medicare Advantage plans require that you live in the service area of the plan you want to join.
Medicare Part A
Medicare Part A is hospital insurance. It covers the costs of a hospital or nursing facility stay, but does not cover long-term care.
- Inpatient care in a hospital
- Inpatient care in a skilled nursing facility
- Home health care
- Hospice care
Part A does not cover the costs of treatments you receive while in the hospital. That falls under Part B.
Medicare Part B
Medicare Part B is medical insurance that covers doctor visits. It also covers the costs of what CMS calls medically necessary services and preventative services.
- Medically necessary services include those supplies, tests or other services to diagnose and treat your medical condition.
- Preventative services include health care required to detect and treat a condition early on.
Medicare Part C
Medicare Part C is also called Medicare Advantage, a form of private insurance. Enrollment in Part C is voluntary.
These plans are sold through insurance firms that have contracted with the federal government. All Medicare Advantage plans must provide the same coverage as Medicare Part A and Part B, but other benefits vary from plan to plan.
Most Medicare Advantage plans also offer prescription drug coverage. Medicare Advantage plans may also bundle coverage beyond what Original Medicare plans cover and may include vision, hearing and dental coverage.
Medicare Part D
Medicare Part D covers the cost of prescription drugs and is provided through private insurers. People who enroll in Part D pay a monthly premium. It covers the prescription drugs you buy at your local or mail-order pharmacy.
Most states have more than two dozen private insurers to choose from for Part D coverage.
Medicare Supplement Plans (Medigap)
A Medicare Supplement plan, commonly known as Medigap, is an additional coverage option to Original Medicare.
Medicare Part A and Part B only covers 80 percent of services. Adding a Medigap plan covers the remaining 20 percent, eliminating coinsurance or copayments as well as some additional out-of-pocket costs.
These policies are sold by private insurance companies. You cannot have Medigap coverage with a Medicare Advantage plan.
Who Is Eligible for Medicare?
Not everyone qualifies for Medicare Parts A and B. Still, others may be able to get it if they pay premiums.
- You or your spouse had Medicare-covered government employment.
- You or your spouse has worked long enough (usually 10 years) to qualify for Social Security and paid Medicare taxes.
- You are receiving retirement benefits from Social Security or the Railroad Retirement board. Or you are eligible to receive Social Security or Railroad benefits but you have not filed for them.
If you or your spouse didn’t pay Medicare taxes while working but are a U.S. citizen or legal permanent resident and 65 or older, you may be eligible to buy Medicare Part A coverage.
You can also qualify for premium-free Medicare Part A if you are under 65 and require dialysis or are a kidney transplant patient.
People younger than 65 diagnosed with Lou Gehrig’s disease (ALS) also qualify the first month after they receive disability benefits.
How to Apply for Medicare
If you are already receiving Social Security benefits when you turn 65, you’ll automatically be enrolled in Medicare Part A and B, if you are eligible.
Three Ways to Enroll in Medicare
- Online at the Social Security website. It takes less than 10 minutes, according to the Social Security Administration.
- Call toll free to 1-800-772-1213 from 7 a.m. to 7 p.m., Monday through Friday. Deaf and partially deaf people can call TTY 1-800-325-0778.
- In person at your local Social Security office, but you are required to call first to make an appointment.
Medicare Costs and Fees
There are costs and fees associated with Medicare. These include premiums, deductibles and coinsurance. You may also pay penalties for waiting to enroll in Medicare Part B.
Most people don’t have to pay a premium for Medicare Part A because they paid for it through years of payroll taxes while they worked.
- Premium
- Your monthly payment in exchange for coverage.
- Deductible
- The amount you have to pay for medical care or prescriptions before Medicare Part A, Part B, Part D or your Medicare Advantage plan starts to pay.
- Coinsurance
- A cost you may be required to pay for your share of medical services after paying any deductibles. It’s usually measured as a percentage of the bill.
- Lifetime Reserve Day
- Additional days Medicare pays for when you are in a hospital for more than 90 days. You have 60 of these for your entire lifetime. Medicare pays all covered costs, except coinsurance, for each of these days you use.
The chart below shows how much you would have to pay while on Medicare.
| Part A Premium |
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| Part A Hospital Inpatient Deductible and Coinsurance |
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| Part B Premium |
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| Part B Deductible and Coinsurance |
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| Part C Premium |
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| Part D Premium |
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What Medicare Does Not Cover
Medicare Parts A and B do not cover everything. Medicare Advantage plans may offer extra benefits that Original Medicare does not cover. If there are specific services you want covered, you should consider that when purchasing a Part C plan.
- Long-term (custodial) care
- Most Dental Care
- Dentures
- Routine eye exams for prescription lenses
- Cosmetic surgery
- Hearing aids and hearing aid exams
- Routine foot care
- Acupuncture
The most expensive thing Medicare Parts A and B does not cover is long-term care. Medicaid, another federal health insurance, will sometimes cover these costs, but generally only for low-income Americans with little or no savings.
Frequently Asked Questions About Medicare
Some of the most frequently asked questions about Medicare are about basic services and costs. Here are the most frequently asked questions and some answers.
9 Cited Research Articles
- U.S. Centers for Medicare & Medicaid Services. (2020, November 6). 2021 Medicare Parts A and B Premiums and Deductibles. Retrieved from https://www.cms.gov/newsroom/fact-sheets/2021-medicare-parts-b-premiums-and-deductibles
- U.S. Centers for Medicare and Medicaid Services. (2019, November 29). Trustees Report & Trust Funds. Retrieved from https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds
- U.S. Department of Health and Human Services. (2014, September 11). Who is Eligible for Medicare? Retrieved from https://www.hhs.gov/answers/medicare-and-medicaid/who-is-elibible-for-medicare/index.html
- U.S. Centers for Medicare and Medicaid Services. (n.d.). What’s Medicare? Retrieved from https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare
- U.S. Centers for Medicare and Medicaid Services. (n.d.). What Part A Covers. Retrieved from https://www.medicare.gov/what-medicare-covers/what-part-a-covers
- U.S. Centers for Medicare and Medicaid Services. (n.d.). What Part B Covers. Retrieved from https://www.medicare.gov/what-medicare-covers/what-part-b-covers
- U.S. Centers for Medicare and Medicaid Services. (n.d.). What Medicare Health Plans Cover. Retrieved from https://www.medicare.gov/what-medicare-covers/what-medicare-health-plans-cover
- U.S. Centers for Medicare and Medicaid Services. (n.d.). Is My Test, Item or Service Covered? Retrieved from https://www.medicare.gov/coverage/preventive-screening-services
- U.S. Centers for Medicare and Medicaid Services. (n.d.). What’s Not Covered by Part A & Part B? Retrieved from https://www.medicare.gov/what-medicare-covers/whats-not-covered-by-part-a-part-b