Learn about the different parts and enrollment periods of Medicare.
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.
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.
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:
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.
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:
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.
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.
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.
As broad as Medicare coverage can be, they don’t pay for everything. Services not covered by Medicare include:
Coverage details can vary by area and by plan provisions. Always check with a plan representative to find out whether a service is covered.
In some cases, seniors will be enrolled in Medicare automatically, including:
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.
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.