What you need to know about Medicare insurance

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Medicare is the  health insurance  program that covers eligible people 65 years and older and others who are eligible based on qualifying conditions.

You can choose how to get your Medicare coverage: Original Medicare (Medicare Part A and Part B) and Medicare Advantage. The option you choose helps determine the coverage, benefits and how much you will pay for premiums and out-of-pocket costs.

Read on to learn more about how Medicare works and which option might be right for you.

What is Medicare health insurance?

Medicare is the federal government health insurance program that primarily serves people over 65, as well as those with qualifying disabilities. The federal government’s Centers for Medicare and Medicaid Services (CMS) administers Medicare and the program is financed by federal taxes and premiums paid by beneficiaries.

Beneficiaries pay premiums and out-of-pocket costs, including copays, deductibles and copayments.

There are two ways to get Medicare: Original Medicare and Medicare Advantage.

Original Medicare includes Part A (medical insurance) and Part B (outpatient insurance). You can also sign up for Part D (prescription drug insurance). People with Original Medicare can additionally get Medicare supplement insurance (Medigap), which helps with premiums and out-of-pocket costs associated with Original Medicare and may provide, “an added layer of flexibility,” says Casey Schwarz, senior counsel, education and federal policy at the Medicare Rights Center.
Medicare Advantage (Part C), which is provided by private health insurance companies, offers all of the benefits of Original Medicare, plus added benefits, such as dental and/or vision. With Medicare Advantage plans offered by private companies, you may have to use providers in the plan’s network.

Key Takeaways

Individuals over 65 and those with qualifying disabilities who are eligible for Medicare can choose between Original Medicare or Medicare Advantage to receive their Medicare coverage.
People with Original Medicare can also add Part D prescription drug benefits. Medicare Advantage usually includes prescription drug coverage as part of plan offerings.
Medicare Advantage is offered by private health insurance companies and often includes additional benefits not found in Original Medicare.
Original Medicare allows Medicare beneficiaries to see any provider that accepts Medicare and Medicare Advantage plans may be limited to the plan’s provider network.

How does Medicare insurance work?

Medicare works largely like other forms of health insurance. Many – but not all – of your health care costs are covered under Medicare.

Medicare coverage is broken into four parts:

Part A — Part A covers hospitalizations, skilled nursing facilities and hospice care. Free for most Americans. However, people who didn’t pay at least 40 quarters of Social Security taxes pay a monthly premium —depending on how many quarters you paid taxes.
Part B — Part B handles physician services, preventive care and outpatient care. Parts A and B are also called Original Medicare. Most Americans pay a standard Part B premium monthly. However, people who make more than $103,000 (or $206,000 for joint tax filers) pay higher premiums in 2024.
Part C — Private insurance companies offer Part C plans, which are called Medicare Advantage. Medicare Advantage provides hospital and medical coverage with additional benefits. Most Medicare Advantage plans provide prescription drug benefits. They may also offer vision, dental and/or fitness benefits. Medicare Advantage plans can also have other additional benefits not covered by Original Medicare. Medicare Advantage plan costs vary greatly by the plan. However, there are plans available with $0 plan premiums. These plans may have higher out-of-pocket costs. Other plans may charge higher premiums but may have more benefits and/or lower out-of-pocket costs.
Part D — Part D is prescription drug coverage for people with Original Medicare. Private companies offer these plans. Private companies charge different premiums for Prescription Drug Plans.

Medicare beneficiaries can choose between Original Medicare or Medicare Advantage to receive Medicare coverage. If they decide on Original Medicare, they can add a Part D plan to help pay for prescription drugs.

Who is eligible for Medicare insurance?

People who are 65 and older are eligible for Medicare. Also, people under 65 with qualifying disabilities and those with ALS or end-stage renal disease are eligible.

As you approach your 65th birthday, Medicare will send you information about how to enroll in Medicare and choose a plan. You have until three months after your birth month when you turn 65 to select a Medicare plan. If your birthday is on the first of the month, your initial enrollment period starts four months before you turn 65 and ends two months after you turn 65 (with coverage starting the first day of the month before you turn 65). According to CMS, “When you apply for retirement or disability benefits from Social Security (or the Railroad Retirement Board), it also serves as your application for Medicare. Once you get approved for Social Security or Railroad Retirement Board benefits, you’ll automatically get Part A coverage (without having to pay a premium for it) once you’re eligible for Medicare.”

Find out more about Medicare eligibility.

When to sign up for Medicare

Some people are enrolled in Medicare automatically. Enrollment is automatic if you’re not yet age 65, but you’re already receiving Social Security or Railroad Retirement benefits.

If you’re disabled, you’re automatically enrolled in both Part A and Part B of Medicare, beginning with your 25th month of disability.

However, if you don’t meet those criteria and are about to turn 65, you have an important choice to make.

“The first thing people need to decide is whether they want to enroll in Medicare when they are first eligible,” Schwarz says.

She notes that in some cases, people may not want to sign up for the full range of Medicare coverage when they become eligible.

For example, those who are still working at age 65 and have health insurance coverage through an employer may not need Medicare Part B – which covers doctor visits and outpatient care – until they retire and no longer have coverage through an employer.

If you didn’t sign up for Part B when you’re first eligible, Medicare may charge a 10% fine on your monthly premium for each 12-month period that you don’t sign up. So, that could mean paying 30% more for Part B if you don’t sign up for Part B after three years of eligibility or if you don’t sign up during a Special Enrollment Period.

Americans that are eligible for Medicare can enroll during their initial enrollment period, which is a 7 month enrollment window that begins three months before they turn age 65 and ends three months after the month they turn 65; coverage starts the month they turn 65 if they signed up in the first 3 months, or the next month if they sign up in the last 4 months. If their birthday is on the first of the month, their initial enrollment period begins 4 months before they turn 65 and ends 2 months after the month they turn 65; generally, their Medicare coverage starts the first day of the month before they turn 65 if they sign up within the first 3 months, or the month after if they sign up during the last 4 months.

If you’re already getting benefits from Social Security or the Railroad Retirement Board (RRB), you’ll automatically get Part A and Part B starting the first day of the month you turn 65. (If your birthday is on the first day of the month, Part A and Part B starts the first day of the prior month.) Or if you’re under 65 and have a disability, you’ll automatically get Part A and Part B after getting 24 months of disability benefits, either from Social Security or certain disability benefits from the RRB. (If you live in Puerto Rico, you don’t automatically get Part B. You must sign up for it.) If you have ALS, you’ll get Part A and Part B automatically the month your Social Security disability benefits begin. If you have End-Stage Renal Disease (ESRD) and want Medicare, you’ll need to sign up for it. Immediate coverage for ESRD patients depends on very specific criteria being met. Review these important FAQs regarding End-Stage Renal Disease (ESRD) on the Medicare.gov website.

To apply for Medicare, contact any Social Security Administration office or fill out an application online on the Social Security website. (If you or your spouse worked for the railroad, contact the Railroad Retirement Board.)

You can call about Medicare options by contacting Social Security’s toll-free number, 1-800-772-1213, or visit the Social Security website.

You can’t enroll in Medicare through your state’s health insurance marketplaces (also known as “exchanges”). The exchanges sell only  individual and non-group health insurance  policies.

What a Medicare health plan covers

Medicare benefits depend on the type of plan.

Original Medicare includes Parts A and B. Part A is for inpatient care, such as hospital, skilled nursing facilities, hospice care and home health care in some instances. Part B covers doctor visits, outpatient care, medical supplies and preventive services. You can also buy a separate Part D prescription drug plan to help pay for prescription drugs.

Another option is selecting a Part C plan, which is also called Medicare Advantage.

“A Medicare Advantage plan has to cover all the same things that Original Medicare covers, but they can have different rules, restrictions, networks, and cost-sharing,” Schwarz says.

Medicare Advantage plans usually combine benefits such as hospital and medical coverage with prescription drugs and telehealth coverage. Those plans may also offer dental, vision, and/or additional benefits not covered by Original Medicare.

Find out more about what Medicare covers and what it doesn’t cover.

What are the parts of Medicare?

There are two typical types of Medicare coverage plans:

Original Medicare. This form of coverage comes in two parts. Part A is hospital insurance, and Part B is medical insurance. Optional add-ons to Original Medicare include Part D, which is Medicare prescription drug coverage, and Medicare Supplement Insurance, also known as a Medigap policy.
Medicare Advantage. Also known as Part C, this type of coverage is often described as an “all in one” package that includes Parts A, B, and (in most cases) D.

Here’s more about each part of Medicare:

What Parts A and B cover

Parts A and B are often called Original Medicare or traditional Medicare. They include hospital and medical insurance.

Medicare Part A is the part of Medicare that covers inpatient care.

“For most people — for everyone who has sufficient Social Security work history — that is premium-free,” Schwarz says.

Examples of Part A coverages include:

Inpatient care in a hospital
Skilled nursing facility care
Nursing home care, but only for inpatient care in a skilled nursing facility that’s not custodial or long-term care
Hospice care
Home health care, but certain restrictions apply

Even if you have insurance from another source, “it almost always makes sense for folks to enroll in Part A” as soon as you are eligible, Schwarz says.

Meanwhile, Part B covers both medically necessary services — such as services or supplies needed to diagnose or treat your medical condition — and preventive services, which cost you nothing as long as you get the services from an approved provider.

Part B usually covers:

Doctor visits
Clinical research
Ambulance services
Durable medical equipment (DME)
Mental health
Outpatient services, but certain restrictions apply
Partial hospitalization
Limited outpatient prescription drugs

Should you sign up for Part B as soon as you are eligible? That depends on your situation, Schwarz says, including:

Whether you will be eligible for a special enrollment period when you decide to enroll later. If not, you will have to wait until the general enrollment period.
Whether you have other insurance that will serve as the primary payer.

What Part C (Medicare Advantage plan) covers

Private insurance companies offer Medicare Part C plans, which are called Medicare Advantage. Medicare Advantage includes hospital and medical coverage with additional benefits.

Most Medicare Advantage plans provide prescription drug benefits. They also may offer vision, dental and/or fitness benefits.

Medicare Advantage plans can also have other additional benefits not found in Original Medicare. Benefits vary by insurance company and plan, so make sure to dig into the benefits information when choosing a Medicare Advantage plan.

What Part D covers

Medicare Part D is prescription drug coverage for people with Original Medicare. Private companies offer these plans.

Original Medicare vs. Medicare Advantage

The answer to which type of Medicare plan is better for you — Original Medicare or Medicare Advantage — depends on what you want from your coverage, what plans your providers accept, where you live and how many insurers offer Medicare Advantage plans in your area.

With Original Medicare, you can go to any doctor, hospital, or another healthcare provider who accepts Medicare. Medicare Advantage usually has more restricted provider networks.

Medicare Advantage offers multiple choices, so you can find the plan that’s right for you. Many Medicare Advantage plans have low or $0 plan premiums.

“Some people are going to feel more comfortable with paying more in premiums to have more flexibility and fewer out-of-pocket costs,” Schwarz says.

By contrast, others prefer to pay less in premiums and to have more out-of-pocket costs if they need additional care because “if they don’t need additional care, then that’s money that they’ve saved,” Schwarz says.

In 2023, a typical beneficiary would have about 4 3 plans to choose from in their area, according to the Kaiser Family Foundation.

Here’s a side-by-side comparison of Original Medicare vs. Medicare Advantage:

Comparing Original Medicare vs. Medicare Advantage	Original Medicare	Medicare Advantage
Premiums and deductibles	Standard for most Americans.	Varies
Costs	Most beneficiaries pay $174.70 monthly for Part B and $0 for premium-free Part A; people with higher incomes pay more for Part B and people who didn’t pay at least 10 years of Social Security taxes may be able to buy Part A.	Vary by individual plan.
Coinsurance	Yes	Yes
Copays	Yes	Yes
Out-of-pocket maximums	No	Yes
Provider network	Any doctor who takes Medicare.	Doctor must take the specific Medicare Advantage plan.
Referral to see specialist	Rare	In most cases, you have to get a referral to see a specialist in HMO and SNP Plans.
Prescription drug benefit	You must buy a separate Part D plan.	Nearly all Medicare Advantage plans offer prescription drug benefits.
Additional benefits like vision and/or dental	No	Yes
Medigap eligibility	Yes	No
Care outside of your state	You can find a provider who takes Original Medicare.	Medicare Advantage may have provider networks; you might not be able to find a provider out-of-state who accepts your plan. Emergency care is usually covered.
Care outside of the U.S.	Doesn’t cover.	Usually doesn’t cover care outside of the U.S.

Find out more about the pros and cons of Medicare Advantage plans.

Which plan is more popular? Insure.com conducted a survey to find out. See the results.

What Medicare does not cover

Medicare has some limits in terms of what it covers. For example, Original Medicare does not cover any of the following:

Long-term care
Most dental care
Eye exams related to prescribing glasses
Dentures
Cosmetic surgery
Acupuncture
Hearing aids and exams for fitting them
Routine foot care

By law, Medicare Advantage Plans must cover all of the services that Original Medicare covers. These plans may also cover many things Original Medicare doesn’t cover, including:

Vision
Hearing
Dental
Wellness programs, such as gym memberships

Medicare Advantage plans also typically cover prescription drugs through Part D.

The type of coverage available varies from plan to plan, however, so shop around.

Frequently Asked Questions

What are the best Medicare plans?

Some Medicare plans shine more brightly than others. The Centers for Medicare and Medicaid Services rates plans on a five-star basis and posts the findings at the Medicare.gov website.

Rankings are based on information from:

Member satisfaction survey
Plans
Health care providers

Each fall, Medicare updates these ratings for the following year. When you search for Medicare Advantage plans, look for a star icon with a “5” inside it to find the highest-rated plans.

Do I have to sign up for Medicare if I have private insurance?

No, you aren’t required to sign up for Medicare if you have private insurance. Your individual circumstances – including the nature of your health coverage — will determine whether this is the right decision for you.

However, if you have coverage through an employer with fewer than 20 employees, you should sign up for Original Medicare when you’re first eligible. In this situation, Medicare pays before your other coverage. If you delay enrolling, you may have to pay a penalty if you enroll later.

If you have individual coverage through a health care marketplace or directly from an insurer, you should sign up for Part A and Part B when you’re first eligible. Once your Medicare coverage begins, you should drop your individual plan coverage.

Can I drop my employer health insurance for Medicare?

Once you’re eligible for Medicare, you can drop your employer’s health insurance coverage. However, this might not be the best decision. In many cases, employer health insurance is as good as – or better than – Medicare coverage.

The nature of your health insurance plan and your own health care needs likely will dictate whether or not it makes sense to leave your employer’s coverage and turn to Medicare.

Source:

Medicare.gov. “Costs.” Accessed November 2023.

Medicare Advantage and Part D plans and benefits offered by the following carriers: Aetna Medicare, Anthem Blue Cross Blue Shield, Aspire Health Plan, Centene Corporation, Dean Health Plan, Devoted Health, GlobalHealth, Health Care Service Corporation, Cigna-HealthSpring, Humana, Molina Healthcare, Mutual of Omaha, Oscar Health Insurance, Premera Blue Cross, Medica Central Health Plan, SCAN Health Plan, Scott and White Health Plan now part of Baylor Scott & White Health, UnitedHealthcare

Disclaimer:

Insure.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage (HMO, PPO, and PFFS) organization with a Medicare contract and/or a Medicare- approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. Enrollment in a plan may be limited to certain times of the year unless you qualify for a Special Enrollment Period or you are in your Medicare Initial Enrollment Period. We do not offer every plan available in your area. Currently we represent 10 organizations which offer 100 products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options. Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Every year, Medicare evaluates plans based on a 5-star rating system

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Chris Kissell

Contributing Researcher

Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.