What is Medicare?
Medicare offers affordable coverage for adults over 65 and people with disabilities. The amount you pay for Medicare depends on the part – for example, Medicare Part B currently costs $165 a month. Our experts cover how Medicare works in simple terms, including Medicare Parts A, B, C, and D.
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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
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UPDATED: Feb 28, 2024
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UPDATED: Feb 28, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance providers please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Medicare is a federally-run program that provides health insurance for U.S. citizens over 65 or who have disabilities
- You’ll be automatically enrolled in Medicare Parts A and B when you turn 65 if you receive Social Security benefits
- Medigap and Medicare Parts C and D require eligible adults to enroll with a private insurance company
Medicare offers health insurance coverage to millions of Americans, most of whom are 65 or older. While some Americans are automatically enrolled when they turn 65, that doesn’t apply to everyone.
Medicare is split into different parts which cover different aspects of your health insurance. For example, Medicare Part A covers inpatient hospital expenses, while Part D handles prescription medications. There are several other differences between plans, including Medicare max out-of-pocket costs, copayments, and late enrollment penalties.
Read on to learn more about Medicare and which parts might be best for you. Then, compare rates with as many private insurance companies to find the lowest rates for additional Medicare coverage.
What is Medicare?
Medicare is a federal program that provides health insurance to seniors and younger people with qualifying disabilities. Medicare is made up of four parts:
- Medicare
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- Part A covers hospital visits and inpatient care
- Part B covers doctor appointments and outpatient care
- Part C is also called Medicare Advantage and offers more thorough coverage than Medicare Parts A and B
- Part D covers prescription medications
It may sound simple, but there’s a lot more to understand about Medicare. Read on to explore in more depth what each Medicare part covers.
What is Medicare Part A?
The first part of Medicare coverage is Part A. Part A covers inpatient services and care at a hospital or skilled nursing facility. It does not extend coverage to long-term or custodial care, though. You can also get help paying for some hospice or at-home care. Finally, it covers the drugs you need while you’re in inpatient care. (For more information, read our “Will health insurance pay for hospice?“).
There are two options for how much Medicare costs. If you or a spouse have paid Medicare taxes for at least 10 years, you don’t have to pay a premium for your Part A. If you don’t qualify for premium-free Part A coverage, you’ll pay up to $506 a month.
The 2023 deductible for Medicare Part A is $1,600, and you’ll have to pay a different amount of coinsurance depending on the service you need. For example, you’ll pay $0 for the first 60 days of inpatient care at a hospital. After that, you’ll pay $400 for days 61 to 90, $800 for days 91 to 150, and everything after that.
What is Medicare Part B?
Medicare Part B covers the other half of your health care services. It covers outpatient services and medical supplies. Part B coverage includes:
- Annual exams
- Mental health care
- Prosthetics and orthotics
- Ambulance services
- Laboratory testing
- Medical equipment like wheelchairs
Part B also covers a few outpatient prescriptions, though you’ll need Part D for most medicines.
Medicare Part B costs $165 in 2023. The current deductible is $226, which you only need to meet once a year. Part B has a 20% coinsurance rate. That means you’ll have to pay 20% of anything you’re charged after you’ve met your deductible.
What is the Medicare penalty?
You’ll be eligible to enroll in Medicare when you turn 65, but you don’t have to. However, you’ll pay a late penalty if you fail to sign up after you turn 65 without having comparable insurance. The late penalty you’ll face depends on the part you’re trying to sign up for.
For example, Part B imposes a 10% penalty for every year you could’ve signed up for Medicare but didn’t. That means if you wait three years to sign up for Part B, you’ll face a 30% penalty and have to pay $214.37 a month.
Other parts have different penalties. Part A imposes a penalty of 10% for double the years you don’t sign up for coverage. For example, you’ll pay a penalty for four years if you wait two years to sign up. Medicare Part D has a penalty of 1% every month you don’t sign up.
You won’t incur a penalty if you have health insurance from your job or get coverage through a spouse or partner. If you lose that coverage, you’ll have eight months to sign up for Medicare. After that period passes, you’ll incur penalties.
What is Medicare Part C?
Medicare Part C is a little different than the others. Also called Medicare Advantage, Part C is an optional coverage you can purchase to increase your health insurance.
Part C is sold by private companies, and plans cover the same benefits as Parts A, B, and D. You’ll continue to pay your Part B monthly bill, and you might have to pay extra for Part C. However, many Medicare Advantage plans come without additional monthly fees.
Medicare Advantage plans are good options for people seeking additional coverage, like hearing, vision, and dental care.
Most Medicare Advantage plans have annual limits and out-of-pocket costs. In 2023, you could pay as much as $8,300 from your own pocket. Part C plans are usually either PPOs or HMOs, provide coverage in limited areas, require pre-approval for many procedures, and often charge copays and coinsurance.
What is Medicare Part D?
Medicare Part D covers both brand-name and generic prescription drugs. Part D is also sold through private companies and costs about $31.50 a month in 2023. However, you might pay more if you qualify as a high-income person.
Part D is usually sold in tiers, with higher tiers costing more but covering more expensive drugs. The tiers are as follows:
- Tier 1 has the lowest copayment and covers most generic medicines
- Tier 2 costs a little more but covers preferred brand-name drugs
- Tier 3 has a higher copayment and covers non-preferred, brand-name prescriptions
- The specialty tier comes with the highest copayment but covers the most expensive drugs
In exciting news, anyone with a Part D plan can’t be charged more than $35 for a month’s supply of insulin, and you don’t need to pay a deductible. Even if you buy a 60 or 90-day supply of insulin, you won’t have to pay more than $35 per month.
What is Medigap?
Also called Medicare Supplemental Insurance, Medigap helps pay for the out-of-pocket costs you have to pay for original Medicare. Eligible out-of-pocket costs include coinsurance, deductibles, and health care if you travel outside the U.S. While Medigap plans are valuable, they never cover long-term care, dental, hearing aids, private nursing care, prescription drugs, and vision.
You can buy Medigap plans from private insurance companies. There are 10 Medigap plans available, which range in coverage options. The plan that covers the most is Medigap Plan F. Plan F offers the most coverage you can purchase for a Medicare plan and is the most commonly purchased supplement plan.
Read more: Top Medigap (Medicare Supplement Health Insurance) Coverage: What You Need to Know
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Who qualifies for Medicare?
You can enroll in Medicare when you turn 65. As long as you’re a U.S. citizen or have been a permanent, legal resident for at least five years, you’re eligible for Medicare.
Medicare is also available to people under the age of 65 who have a disability. You’re probably eligible for Medicare if you receive Social Security disability insurance, but you’ll have to pass a two-year waiting period. However, you’ll be automatically enrolled if you have end-stage renal disease. If you have ALS, you’ll have access to Medicare the month your disability begins.
What does Medicare not cover?
While Medicare covers a lot, it doesn’t cover everything. If you rely on Medicare for your health insurance, the following expenses are not covered:
- Dentures
- Dental care not related to inpatient care
- Eye exams and eyeglasses
- Medical care overseas unless you have a Medigap plan
- Hearing aids and related exams
- Massage therapy
- Cosmetic surgery
- Foot care, unless it’s related to diabetes, an injury, or a disease
If you need long-term care, you’ll have to find another way to cover expenses outside of Medicare. Medicare does not cover long-term care for dementia, physical disabilities, behavioral or communication problems, or anything else. If you need help paying for long-term care, Medicaid might be able to help.
How do you enroll in Medicare?
Enrolling in Medicare is a simple process. You’ll be automatically enrolled in Medicare Parts A and B when you turn 65 if you’re receiving Social Security Benefits.
For people who don’t receive Social Security benefits, you can sign up for Medicare through the Social Security Administration website. It’s best to submit your application during the months before you turn 65 to avoid penalties and wait times for your coverage.
It’s important to understand Medicare enrollment periods to avoid late penalties. Once you’re eligible for Medicare, you can enroll during the following periods:
- Initial enrollment: The initial enrollment period lasts seven months — three months before your 65th birthday, the month of your birthday, and three months after. If you’re born on the first of the month, the enrollment period lasts four months before your birthday and two months after.
- General enrollment: Medicare’s general enrollment period lasts from January 1 to March 31 every year. If you sign up during the general enrollment period, your coverage will start the next month.
- Special enrollment: Certain life events, like leaving a job or moving out of a coverage area, trigger a special enrollment period. During this period, you can sign up for or change your Medicare.
If you’re interested in Medicare Part D for prescription drug coverage, you can enroll during the three-month period before your 65th birthday and the three-month period after. If you miss that window, you can add Part D to your coverage during open enrollment, which lasts from October 15 to December 7.
You can sign up for a Medigap plan during the initial six-month period after you enroll in Medicare Part B. During this enrollment period, companies can’t reject you or charge you higher rates if you have a serious medical condition. If you miss this period, you risk paying higher rates or being denied coverage altogether.
How to enroll in Medicare
You don’t need to enroll in Medicare Parts A or B if you’re receiving Social Security benefits. If that doesn’t apply to you, there are three ways to sign up:
- Visit your local Social Security office
- Apply online at the Social Security website
- Call the Social Security phone number
Applying online is usually the easiest method and takes less than 10 minutes. Visiting your local Social Security office is a good option for people who want help. Make sure to give your local office a call before you go since many locations will only see you if you have an appointment.
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What is the difference between Medicare and Medicaid?
While they sound similar, Medicare and Medicaid are separate programs.
Medicare offers affordable health insurance for people over 65 or with a qualifying disability. As a federal program, Medicare is the same throughout the U.S.
Medicaid serves low-income people regardless of age. This assistance program provides health insurance at little to no cost to the Medicaid applicant. Unlike Medicare, Medicaid laws vary by state.
Find the Best Supplemental Medicare Today
Medicare offers valuable health insurance coverage for older adults and people with disabilities. While Parts A and B are run by federal programs, Medigap, Part D, and Medicare Advantage plans are sold through private insurance companies.
You’ll generally see affordable rates no matter which type of Medicare plan you purchase — shopping around can save you even more. To find the lowest Medicare rates, make sure to get quotes from as many companies as possible.
Frequently Asked Questions
What is Medicare in simple terms?
In the simplest terms, Medicare is a federally-run program that provides health insurance to Americans with disabilities or who are over the age of 65.
What is the main purpose of Medicare?
The primary purpose of Medicare is to ensure Americans aged 65 and over have access to the health care they need. This includes coverage for hospital care, doctor visits, and prescription medications.
Is Medicare the same as regular health insurance?
While Medicare covers many of the same things as health insurance, it isn’t quite the same. One of the main differences is that Medicare is individual insurance.
Can I switch from Medicare Advantage to original Medicare?
Yes, you can switch from Medicare Advantage to original Medicare during the Annual Enrollment Period (Oct. 15 – Dec. 7) or the Medicare Advantage Disenrollment Period (Jan. 1 – Feb. 14).
What is the Medicare for All proposal?
Medicare for All proposes a single-payer system, expanding Medicare to provide universal healthcare coverage in the United States.
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Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.