More than 60 million Americans get their health insurance through Medicare -- most of whom are senior citizens.

The majority of Medicare beneficiaries have Original Medicare. However, that might not be the case in a decade.

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The Centers for Medicare and Medicaid Services predicted that 42% of Medicare beneficiaries will have a Medicare Advantage plan in 2021.

Here’s what you need to know about Medicare, including the types, costs, benefits, how to sign up and the differences between Original Medicare and Medicare Advantage? 

What is Medicare health insurance?

The federal government’s Centers for Medicare and Medicaid Services administers Medicare.

Medicare is financed by federal taxes and premiums paid by beneficiaries.

Beneficiaries pay premiums and out-of-pocket costs, including Medicare copays, deductibles and copayments. People with Original Medicare can also get Medigap, which helps with premiums and out-of-pocket costs. 

What are Medicare benefits?

Medicare benefits depend on the type of plan.

Original Medicare, which are Parts A and B, cover hospital and physician care. You can also buy a separate Part D prescription drug benefit plan to help pay for prescription drugs. 

Another option is selecting a Part C plan, which is also called Medicare Advantage. Medicare Advantage plans usually combine hospital and physician care with prescription drugs and [telehealth coverage. Those plans also offer dental, vision and other supplemental benefits not found in Original Medicare.

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

What is the Medicare coverage age? 

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

As you approach your 65th birthday, Medicare will send information about how to choose a plan. You have until three months after your birth month when you turn 65 to select a Medicare plan. If you don’t pick one, Medicare will automatically put you in Original Medicare.

Find out more about Medicare eligibility

What are the four parts of Medicare?

Medicare coverage is broken into four parts:

  • Part A -- Part A covers hospitalizations, skilled nursing facilities and hospice care.
  • Part B -- Part B handles physician services, preventive care and outpatient care. Parts A and B are also called Original Medicare.
  • Part C -- Private insurance companies offer Part C plans, which are called Medicare Advantage. Medicare Advantage includes the hospital and physician coverage with supplemental benefits. Most Medicare Advantage plans provide prescription drug benefits. They also offer vision, dental and fitness benefits. Medicare Advantage plans can also have other supplemental benefits not allowed in Original Medicare, such as home health care, adult day care and transportation for non-medical needs.
  • Part D -- Part D is prescription drug benefits for people with Original Medicare. Private companies offer these plans.

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

Original Medicare vs. Medicare Advantage

The answer to which type of plan is better 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 other healthcare provider who accepts Medicare. Medicare Advantage has more restricted provider networks.

Medicare Advantage offers multiple choices so you can find the plan that's right for you. These plans also have lower premiums than Original Medicare. However, Original Medicare generally has lower deductibles. 

People with Medicare have more Medicare Advantage options than a year ago. The average county has 47 Medicare Advantage plan options in 2021, though some rural counties may have few Medicare Advantage choices. 

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

 Original MedicareMedicare Advantage
Premiums and deductiblesStandard for most AmericansVaries
CostsMost beneficiaries pay a combined $148.50 monthly for Parts A and B; people with higher incomes and/or didn't pay 10 years of Social Security taxes pay moreVary by individual plan; the average premium is $21 in 2021, but many plans have zero premiums
CoinsuranceYesYes
CopaysYesYes
Out-of-pocket maximumsNoYes
Provider networkAny doctor who takes MedicareDoctor must take the specific Medicare Advantage plan
Referral to see specialistRareLikely -- especially for an HMO plan
Prescription drug benefitYou must buy a separate Part D planNearly all Medicare Advantage plans offer prescription drug benefits
Supplemental benefits like vision and dentalNoYes
Medigap eligibility YesNo
Care outside of your stateYou can find a provider who takes Original MedicareMedicare Advantage has smaller provider networks; you might not be able to find a provider out-of-state who accepts your plan
Care outside of the U.S.Doesn't cover, but some Medigap plans will help pay for careUsually 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

How much is Medicare?

Medicare costs vary by type of plan.

  • Part A -- Free for most Americans. However, people who didn’t pay at least 40 quarters of Social Security taxes pay a monthly premium -- as much as $458 monthly depending on how many quarters you paid taxes. 
  • Part B -- Most Americans pay a premium of $148.50 monthly. However, people who make more than $87,000 (or $144,000 for joint tax filers) pay higher premiums. 
  • Part C -- Medicare Advantage plan costs vary greatly by the plan. The average Medicare Advantage premium in 2021 is $21. However, many plans offer coverage with no premiums. Other plans charge higher premiums, but with more benefits and lower out-of-pocket costs. 
  • Part D -- Private companies charge different premiums. The average Medicare Part D premium is $30.50 in 2021, but plans can cost less and much more depending on the coverage and out-of-pocket costs.

Medicare plans also have deductibles. A deductible is what you pay for health care services before the plan begins chipping in money. Medicare Advantage and Part D plans’ deductibles vary. Meanwhile, Part A’s deductible is $1,364 and Part B is about $200. Once you reach your Part B deductible, you have to pay 20% of the health care costs while Medicare picks up the rest. 

Find out more about Medicare costs.

What is Medigap?

Medigap helps you pay out-of-pocket Original Medicare costs. It’s a supplemental insurance program and not health insurance.

Original Medicare pays 80% of medical costs after you reach your deductible. You’re responsible for the other 20%. Those costs can add up.

Private companies offer Medigap plans and there are 10 types. Some Medigap plans provide coverage that Original Medicare doesn’t offer, such as helping pay for medical bills for health care received outside the country. Original Medicare doesn’t cover those costs, but some Medigap plans will help pay a portion of the charges.

People with Medicare Advantage aren’t eligible for Medigap.

Here’s more about Medigap and the options.

When is the Medicare enrollment period?

Medicare open enrollment runs from Oct. 15 to Dec. 7. During that time, you can:

  • Switch Medicare Advantage plans
  • Move from Medicare Advantage to Original Medicare
  • Swap Original Medicare for Medicare Advantage
  • Change Part D plans 

There’s also a more limited open enrollment between Jan. 1 and March 31. During that time, you can only:

  • Move from Medicare Advantage to Original Medicare
  • Change Medicare Advantage plans

Those are the only times you can make changes to your Medicare coverage unless you have a qualifying life event that would spark a special enrollment period. These qualifying events include if you move, if your spouse dies or if you lose other health coverage.

Find out more about Medicare open enrollment.

What is the Medicare Plan Finder?

Medicare Plan Finder is an online tool that allows you to compare Medicare plans available in your area.

The Centers for Medicare and Medicaid Services’ tool provides plans’ ratings and estimates for costs, including premiums, deductibles, health and drug costs.

Medicare Plan Finder also asks you questions to help narrow your choices.

When comparing plans, Medicare suggests you consider:

  • Costs 
  • Coverage
  • Your other insurance coverage
  • Doctor and hospital networks
  • Prescription drugs
  • Quality of care
  • Travel

Original Medicare has larger provider and hospital networks than Medicare Advantage plans. For instance, a Medicare health maintenance organization (HMO) may have a limited network and not reimburse you for any care outside of that network. You’ll want to keep that in mind when comparing plans. 

What happens if I wait to enroll in Medicare?

Don't delay signing up for Medicare when you're eligible. If you wait 12 or more months to enroll, your premiums likely will be higher.

Even if you continue to work and have employer-sponsored health insurance after your 65th birthday, you should sign up for Part A of Medicare. Part A might help pay some of the healthcare costs not covered by your employer plan. Typically, the premium is free.

Talk to your benefits manager if you have employer-sponsored coverage to learn whether you should sign up for Part B. The answer will depend on whether your employer-sponsored coverage will be considered secondary coverage to Medicare Part B or primary coverage. Primary coverage pays first, and secondary coverage pays the costs that the primary insurance doesn’t cover. If your employer-sponsored insurance is the secondary coverage, you might need to sign up for Part B. Otherwise, your insurance might pay little or nothing. Find out more about coordination of benefits

Keep in mind that under some circumstances, you'll have to pay an extra 10% per year penalty if you miss the Part B deadline and sign up later. Why would you get penalized for not taking Medicare? Younger seniors have fewer healthcare needs than older seniors. So, delaying Medicare until you're older means you haven't paid in premiums during those years and will have much higher healthcare needs when you're older. 

How to apply for Medicare

Many people are enrolled in Medicare automatically. Enrollment is automatic if you are not yet age 65 and you're already receiving Social Security or Railroad Retirement benefits. 

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

Most people enroll in Medicare in one of two ways. You have an individual enrollment period, which begins three months before you turn age 65 (or right away if you require regular dialysis or a kidney transplant) and continues for seven months. Applying early can help you avoid a possible delay in the start of your Part B coverage.

If you miss your individual enrollment, you will need to wait until the annual Medicare open enrollment period.

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.) If you don't enroll during these 10 months, you'll have to wait until the three months beginning on Jan. 1, and your Part B coverage won't start until July. 

If you have questions about Medicare eligibility or enrollment, call 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, aka exchanges. The exchanges sell only individual and nongroup health insurance policies.

Learn more about how to sign up for Medicare.