Understanding Medicare

Medicare can be a confusing topic to understand. There are several different types of plans, a wide range of coverage options and plenty of different factors to consider when learning how your coverage works. But learning the basics of Medicare can help you better understand how your health care works.

Christian Simmons, writer and researcher for RetireGuide
  • Written by
    Christian Simmons

    Christian Simmons

    Financial Writer

    Christian Simmons is a writer for RetireGuide and a member of the Association for Financial Counseling & Planning Education (AFCPE®). He covers Medicare and important retirement topics. Christian is a former winner of a Florida Society of News Editors journalism contest and has written professionally since 2016.

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  • Edited By
    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

    Read More
  • Reviewed By
    Toby Walters, CFA®
    Toby Walters, CFA

    Toby Walters, CFA®

    Chartered Financial Analyst and Paraplanner

    Toby Walters, CFA®, has over 25 years of financial research experience. With a knowledge and understanding of researching and analyzing financial data, he has developed a unique and experienced viewpoint on money matters. He has been a chartered financial analyst since 2003, and most recently a portfolio analyst and paraplanner.

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  • Published: February 4, 2022
  • Updated: October 9, 2023
  • 6 min read time
  • This page features 7 Cited Research Articles
Fact Checked
Fact Checked

A licensed insurance professional reviewed this page for accuracy and compliance with the CMS Medicare Communications and Marketing Guidelines (MCMGs) and Medicare Advantage (MA/MAPD) and/or Medicare Prescription Drug Plans (PDP) carriers’ guidelines.

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How to Cite RetireGuide.com's Article

APA Simmons, C. (2023, October 9). Understanding Medicare. RetireGuide.com. Retrieved July 11, 2024, from https://www.retireguide.com/medicare/basics/

MLA Simmons, Christian. "Understanding Medicare." RetireGuide.com, 9 Oct 2023, https://www.retireguide.com/medicare/basics/.

Chicago Simmons, Christian. "Understanding Medicare." RetireGuide.com. Last modified October 9, 2023. https://www.retireguide.com/medicare/basics/.

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Key Principles

RetireGuide’s mission is to provide seniors with resources that will help them reach important financial decisions that affect their retirement. Our goal is to arm our readers with knowledge that will lead to a healthy and financially sound retirement.

We’re dedicated to providing thoroughly researched Medicare information that guides you toward making the best possible health decisions for you and your family.

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While the experts from our partners are available to help you navigate various Medicare plans, RetireGuide retains complete editorial control over the information it publishes.

We operate independently from our partners, which allows the award-winning RetireGuide team to provide you with unbiased information.

Visitors can trust our inflexibility regarding our editorial autonomy. We do not allow our partnership to influence RetireGuide’s editorial content whatsoever.

Medicare Basics

Medicare is a confusing topic that can spawn many questions. Generally, it is how many older Americans receive their health care in retirement. Medicare was created and provided by the federal government, is available to most Americans when they turn 65 and is designed to help cover their health care needs.

Original Medicare — the type provided by the federal government – consists of Parts A and B. Part A is hospital insurance and will cover your hospital stays, while Part B covers doctor visits, treatments and services.

Separate from Original Medicare is Medicare Advantage, also known as Part C. This type of coverage is provided through private insurers and must include everything Original Medicare covers. Plans often include additional benefits as well, like vision or dental coverage.

Part D prescription drug coverage is also available, either as stand-alone insurance to be paired with Original Medicare or as part of a Medicare Advantage plan.

If you are already drawing Social Security Benefits when you become eligible for Medicare, you will automatically be enrolled in Medicare. If you have not started receiving Social Security benefits, you will have to enroll in Medicare through the Social Security Administration.

But that’s the extent of Social Security’s involvement. Medicare is administered by the Centers for Medicare & Medicaid Services and there are many other distinctions between Medicare vs. Social Security.

Types of Medicare
  • Original Medicare (Parts A and B)
  • Medicare Advantage (Part C)
  • Part D Prescription Drug Coverage

Medicare coverage can change over time, with new areas of coverage being created through a determination process.

Medicare for All

The term “Medicare for All” doesn’t necessarily apply to one thing, but has been used to describe several different bills and legislative movements over the last 20 years. The idea behind Medicare for All is to expand Medicare to the point that it acts as health insurance for all Americans, replacing the private health insurance industry.

There are obvious pros to the idea of blanket health coverage for all Americans, including greater access to care, fewer health expenses and no longer having to consider things like health coverage when changing jobs or careers.

But implementing Medicare for All could also be incredibly expensive and would represent one of the greatest upheavals ever undertaken by the federal government. It’s unclear if the idea of Medicare for All will ever become a reality.

Medicare Providers

Original Medicare is a government program that is provided through the federal government. You typically would have paid into this program by paying Medicare taxes while working, and it is available to most Americans when they turn 65.

Medicare Advantage, on the other hand, is provided by private insurance companies. These insurers contract with the federal government, and their plans must follow the same guidelines. A Medicare Advantage plan will always, at bare minimum, match all the coverage that is included in Original Medicare.

Part D prescription drug plans are also provided through private insurers. These plans can be sold as stand-alone options but are also often sold as part of a Medicare Advantage plan.

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Coordination of Benefits

Coordination of benefits comes into play if you have some other form of health insurance that you are pairing with Medicare. When you have another health insurance option to go along with Medicare, one of your insurances will act as the primary payer.

This means that it will be up first to pay your health care costs, before leftover costs are then passed to your other insurance, which acts as the secondary payer. Remember that this does not mean the secondary payer will automatically pay the rest of your costs or out-of-pocket costs.

If your two health insurance options overlap in what they cover, they will not both pay for the treatment or service you are receiving. Whether Medicare is the primary payer depends on the specific situation and the other type of health coverage you have.

HSA and Medicare

Once you have enrolled in Medicare, you can no longer put money into your Health Savings Account. If you continue to do so anyway, your deposits will be penalized. Keep in mind that you do not have to enroll in Medicare right when you turn 65 if you still have another form of health insurance.

Even though you can’t put money into your HSA anymore after you have Medicare, you can use the money already in your account to help pay for some of your out-of-pocket costs that are left over from your Medicare coverage.

Medicare Star Ratings

Medicare Star Ratings are the easiest way for beneficiaries to compare their options among Medicare Advantage plans and Part D plans. The U.S. Centers for Medicare & Medicaid Services release the ratings each year, which compare private plans.

According to CMS, the ratings take into account the performance of the plan and the experiences of the people who are enrolled in it. Plans are rated on a five-star system with one star being the worst and five stars being the best.

What Do Star Ratings Measure?
  • Performance of the plan
  • Beneficiaries’ experience
  • Plan quality

The Star Ratings offer beneficiaries a simple way to see how different Medicare Advantage plans available to them are performing. But remember that what each plan offers also should play a role in your decision since coverage varies from plan to plan.

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Medicare Rights Center

The Medicare Rights Center is a separate nonprofit organization. It can provide information and education to Medicare beneficiaries, helping them understand their plans, coverage, options and how Medicare works.

Beneficiaries who sign up for Medicare do have rights related to their coverage, and the Medicare Rights Center can help people understand what that means and how it pertains to their specific situation.

Medicare History

Medicare history began when the program was signed into existence in 1965 and began servicing beneficiaries not long after. The program has undergone several significant changes and expansions since it was first introduced.

The first major change came in 1972, when Medicare was first expanded to cover some Americans who are younger than 65 if they have certain disabilities. Today, Medicare is available to Americans who have ALS or end-stage renal disease regardless of their age.

Another massive change came just over 30 years later, when the Medicare Prescription Drug, Improvement, and Modernization Act was signed. This led to the creation of the modern take on Medicare Advantage plans, giving beneficiaries the option to receive coverage through private insurers.

Part D prescription drug plans became available in 2006.

The most recent update in Medicare history came in 2010 with the passing of the Affordable Care Act, which expanded Medicare coverage in some areas.

Facts About Medicare

According to the Centers for Medicare & Medicaid Services, there were 64.9 million Americans enrolled in some form of Medicare in August 2022 — 46% of them in Medicare Advantage plans. That represents nearly 20% of all Americans.

Medicare enrollment has steadily grown throughout the last decade and continues to rise virtually every year.

The average beneficiary has 39 different Medicare Advantage plans available to them, a number that continues to climb each year.

Get Answers to Your Medicare Questions
Last Modified: October 9, 2023

7 Cited Research Articles

  1. U.S. Centers for Medicare & Medicaid Services. (2023). Medicare Monthly Enrollment. Retrieved from https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment/
  2. Freed, M., et al. (2022, August 25). Medicare Advantage in 2022: Enrollment Update and Key Trends. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-enrollment-update-and-key-trends/
  3. Kaiser Family Foundation. (2021, November 2). Medicare Advantage 2022 Spotlight. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2022-spotlight-first-look/
  4. U.S. Centers for Medicare & Medicaid Services. (2021, October 8). CMS Releases 2022 Medicare Advantage and Part D Star Ratings to Help Beneficiaries Compare Plans. Retrieved from https://www.cms.gov/newsroom/press-releases/cms-releases-2022-medicare-advantage-and-part-d-star-ratings-help-medicare-beneficiaries-compare
  5. Kaiser Family Foundation. (n.d.). Total Number of Medicare Beneficiaries. Retrieved from https://www.kff.org/medicare/state-indicator/total-medicare-beneficiaries/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
  6. Medicare Rights Center. (n.d.). Medicare Rights Center. Retrieved from https://www.medicarerights.org/
  7. U.S. Centers for Medicare & Medicaid Services. (n.d.). How Medicare Works With Other Insurance. Retrieved from https://www.medicare.gov/supplements-other-insurance/how-medicare-works-with-other-insurance