What you should know
  1. You must be a United States citizen or permanent legal resident and at least 65 years old or have a qualifying disability to be eligible for Medicare insurance.
  2. Medicare coverage is available in one of two basic ways, either Original Medicare or Medicare Advantage.
  3. Medicare Advantage plans are growing in popularity. About 40% of Medicare enrollees choose to receive their Medicare benefits through a Medicare Advantage Plan.
  4. It’s important to understand the different parts of Medicare and know when you can enroll.

Original Medicare is the U.S.’s federal health insurance program offered by the government to seniors and younger people with disabilities. Medicare is administered by the Centers for Medicare and Medicaid Services (CMS). The Social Security Administration (SSA) processes Medicare applications, enrollment, and premium payments. Original Medicare offers basic health services to more than 60 million seniors and younger people with disabilities.

You must be a U.S. citizen or green card holder who is at least 65, deemed disabled, or have a qualifying chronic medical condition to be eligible for Medicare. Original Medicare is accepted by more than 93% of health care providers in the U.S., who provide a range of services for qualifying people, from inpatient hospitalization care to outpatient services and prescription drug coverage.

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Medicare Parts

Medicare coverage is available in one of two basic ways, either Original Medicare or Medicare Advantage. Original Medicare consists of two parts, called A (hospital insurance) and B (medical insurance), which provide health care coverage for many inpatient and outpatient services.

Medicare Advantage, Part C, combines Original Medicare benefits into a single plan option and are provided through private insurance companies. Medicare Advantage health care plans are becoming more popular. Roughly 40% of 2020 Medicare enrollees chose to receive their benefits under Part C. The Congressional Budget Office (CBO) forecasts that 51% of all recipients will have opted into privately issued Medicare Advantage plans by the end of 2030. Medicare Part D provides prescription drug coverage.

What is Medicare Part A?

Medicare Part A is the basic Medicare inpatient benefit that almost every beneficiary gets upon reaching age 65. Part A plans are primarily hospital insurance, covering much of the cost of overnight hospitalization for plan participants and any medically necessary health care delivered during a hospital stay, such as IV drugs and surgery. Covered Part A services include:

  • Inpatient care in a hospital
  • Rehab services in a skilled nursing facility
  • Nursing home care
  • Hospice care
  • Home health care

Seniors in the U.S. are eligible for Medicare Part A on their 65th birthday, and the vast majority of older adults are automatically enrolled in the plan. Part A is offered without any monthly premium to seniors who have earned at least 40 work credits during their working lives. As of 2021, the Social Security Administration assigns a maximum of one credit for each quarter worked, in which the declared income was more than $1,510. Workers in most industries become eligible for no-cost Medicare Part A after 10 years of holding a job and contributing to Social Security via paid Medicare taxes. Seniors who don’t have the work credits to qualify for zero-premium Part A can still usually buy into a plan, though the premium cost may be high – some people with zero work credits pay a premium up to $499 a month, as of 2022.

What is Medicare Part B?

Medicare Part B is the Original Medicare outpatient benefit. Because Part B plans charge a monthly premium, enrollment is optional for eligible seniors; although penalty rates may be charged for enrollment outside of designated sign-up periods.

Part B pays for a wide variety of products and services for most beneficiaries, but most covered items fall under one of two categories: preventative or medically necessary. Preventative services cover some health screenings and immunizations, such as flu shots, which are almost always delivered at no cost.

Medicare recipients pay a monthly premium for Part B coverage as well as a share of the cost for medically necessary services. In 2022, the standard Part B premium is $170.10 a month, and the Part B annual deductible is $233. Medically necessary items and services include, but aren’t limited to:

  • Outpatient visits for minor surgery or clinical office visits
  • Medical research and experimental drug trials
  • A limited number of drugs, such as those a doctor would administer during an office visit
  • Durable medical equipment (DME), such as walkers, wheelchairs, and prosthetics
  • Disposable medical equipment, such as bandages and diabetes supplies
  • Some medical transportation to and from providers
  • Some long-term residential care and home health care

What is Medicare Part C?

Medicare Part C is another name for Medicare Advantage. This health care coverage option combines Original Medicare Parts A and B into a single health care plan offered by a private medical insurance company. By law, all authorized Part C plans must cover the same benefits as Parts A and B, although many plans also offer extra services not provided under Original Medicare. These typically include prescription drug coverage, plus eye exams and some dental coverage. A Medicare Advantage plan typically charges a low or $0 monthly premium. Medicare Advantage plans shouldn’t be confused with Medigap policies, which are supplemental plans that cannot be sold to Part C beneficiaries.

What is Medicare Part D?

Medicare Part D is the prescription drug plan that went into effect in 2006. Part D is an optional benefit that roughly two-thirds of Original Medicare beneficiaries buy as a stand-alone policy. Under most plans, seniors can pay a monthly premium that varies between plans as well as an annual deductible. Most Medicare recipients can get their Part D premium deducted automatically from their Social Security check each month.

What is Medigap insurance?

Medigap is the common name of a family of Medicare supplemental health insurance programs. The policies offered by Medigap close the gap between what Original Medicare pays and the remaining cost that would otherwise be passed along to the beneficiary in the form of copays, deductibles, and coinsurance. Standardized Medicare Supplement Insurance (Medigap) policies are issued by private companies, but costs vary significantly by company and by geographic area. In general, enrollees pay a monthly premium, along with the $233 Part B deductible. When medical care is needed, the provider bills Medicare for all services, up to the maximum coverage limit. After this limit is reached, the Medigap policy pays up to 100% of all additional health care costs. Some Medigap policies also pay for services Medicare doesn’t cover, such as medical care delivered outside of the country.

What isn’t covered by Medicare?

As broad as Medicare coverage can be, they don’t pay for everything. Services not covered by Medicare include:

  • Eye exams and most vision care, such as glasses and contact lenses.
  • Dental exams and care, except what is necessary for medical reasons, such as reconstruction after an injury or oral surgery.
  • Elective procedures, such as plastic surgery in most cases.
  • Alternative therapy, such as homeopathy, acupuncture, and reflexology.
  • Experimental procedures and some off-label drugs.

Coverage details can vary by area and by plan provisions. Always check with a plan representative to find out whether a service is covered.

How do I enroll in Medicare?

In some cases, seniors will be enrolled in Medicare automatically, including:

  • Those receiving Social Security benefits or U.S. Railroad Retirement Board (RRB) benefits (at least four months prior to start)
  • Those under the age of 65, but have a Social Security Disability Insurance (SSDI) for 24 months
  • Those who have amyotrophic lateral sclerosis (ALS) or Lou Gehrig’s disease or end-stage renal disease (ESRD)

If you don’t fall in one of those categories, then you’ll have to enroll in Medicare on your own if you’re about to turn 65 or are already 65, but not receiving Social Security benefits. You can enroll by calling (800) 633-4227 or by visiting a local Social Security office. Eligible seniors can also sign up for Medicare coverage online.

Various Medicare programs maintain enrollment periods when recipients can sign up, switch plans, or cancel coverage with no penalty. Signups outside of these open enrollment windows may be subject to penalty premium rates and, in some states, coverage for late enrollments may be denied for pre existing conditions.

Medicare Enrollment Periods

  • Initial Enrollment Period (IEP): This is the seven-month period that starts three months before you turn 65, the month you turn 65, and ends three months after you turn 65. During this initial enrollment period, you may sign up for the Original Medicare Part A and Part B, plus a Medigap and Part D plan.
  • Initial Coverage Enrollment Period (ICEP): This period is for those enrolling in a Medicare Advantage plan (Part C) and, for most people, this happens at the same time as when they enroll in Original Medicare — the IEP.
  • Annual Enrollment Period (AEP): During this period, Medicare Advantage-eligible beneficiaries may enroll, disenroll, or switch Medicare Advantage or Part D prescription drug plans. The period runs from October 15 to December 7 each year with coverage beginning on January 1 in the new year.
  • General Enrollment Period (GEP): From January 1 to March 31, Medicare Advantage Plan members can switch Medicare Advantage plans or disenroll during this period.
  • Special Enrollment Period (SEP): Under special circumstances, you can enroll in Medicare outside the required timeframes. Some of these circumstances which may trigger a special enrollment period include losing employer-paid health insurance coverage (or group health plan), you turned 65 abroad, you were released from an institution, or were a victim of fraud.
  • Open Enrollment for Medigap: You can enroll in Medigap during your IEP, or during the six-month open enrollment period that starts when your Part B coverage begins and you’re at least 65 years of age.
Roseann Birch
Medicare consultant

Roseann Birch has worked in the insurance industry for more than 35 years. In 2006, she moved to selling insurance and, by 2009, Birch made Medicare her area of expertise after observing the struggles of older adults to understand Medicare. Although many adults age 65 and older are eligible for Medicare, nearly just as many don’t understand how it works.

Birch has learned the ins and outs of Medicare and its variations and supplements to help beneficiaries and their families understand benefits. She finds there is often misinformation and makes it her mission to clear up the confusion so that everyone can enjoy the full extent of Medicare benefits.