What is Medicare?

Medicare Insurance

Medicare is a federal government medical insurance program for seniors and disabled people and covers hospitalizations, outpatient care, and other health care services. Medicare beneficiaries typically pay a monthly premium and out-of-pocket costs when needing care. Medicare is also funded by taxes.

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Medicare Insurance
Medicare Insurance

Who is eligible for Medicare?

Medicare Insurance

Eligibility for Medicare includes:

  • You’re 65 or older.
  • You receive Social Security Disability benefits for at least 24 months.
  • You receive Railroad Retirement Board benefits for at least two years.
  • You have end-stage renal disease or amyotrophic lateral sclerosis (ALS), which is also called Lou Gehrig’s disease.
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Choosing Medicare plans

Medicare beneficiaries can choose between Medicare Advantage and Original Medicare (Parts A and B). Those with Original Medicare can also add Part D prescription drug benefits and Medigap supplement insurance to help pay out-of-pocket costs.

Medicare Advantage is group health plan coverage offered by private insurance companies and provides additional coverage not found in Original Medicare like vision and dental care. Those plans have more restricted networks than Original Medicare, which lets Medicare beneficiaries get care from any provider who takes Medicare.

Your Medicare coverage options

You can choose between Original Medicare and Medicare Advantage when you first sign up for Medicare during the initial enrollment period and during open enrollment. Here are the differences.

Original Medicare
  • Original Medicare includes Medicare Parts A and B and is administered by the Centers for Medicare and Medicaid Services. Part A covers hospital insurance and Medicare Part B covers medical insurance.
  • Beneficiaries with Original Medicare can visit any doctor who takes Medicare.
  • You can also add a Medicare Part D plan, which provides prescription drug benefits.
  • People with Original Medicare can also get Medicare supplement insurance called Medigap, which helps pay out-of-pocket medical expenses.
Medicare Advantage
  • A Medicare Advantage plan combines Part A and Part B and many plans also provide prescription drug benefits.
  • Private insurance companies offer Medicare Advantage plans.
  • Medicare Advantage plans have more restricted provider networks than Original Medicare.
  • These private plans can offer supplemental coverage not found in Original Medicare, including other insurance coverage like vision and dental care.

What Medicare benefits cover

  • Inpatient hospital care
  • Doctor visits
  • Outpatient care
  • Skilled nursing facility
  • Hospice
  • Lab tests
  • Surgery
  • Durable medical equipment
  • Preventive services

What Medicare does not cover

  • Long-term care
  • Dental care
  • Eye exams for glasses and contacts
  • Dentures
  • Cosmetic surgery
  • Hearing aids
  • Acupuncture
  • Routine foot care

Note: Medical Advantages plans may cover some of these services, but Original Medicare does not.

What Medigap policies cover

Private insurance companies offer 10 different Medicare supplement plans. Here’s how the Medigap policies differ.

Medicare Supplement Benefits ABCDF*G*KLMN
Part A Coinsurance and Hospital Costs (Up to an additional 365 days after Medicare benefits are used)
Part B Coinsurance or Copayment 50%75%
Blood (first 3 pints) 50%75%
Part A Hospice care coinsurance or copayment 50%75%
Skilled nursing facility care coinsurance 50%75%
Part A Deductible 50%75%50%
Part B Deductible
Part B Excess Charges
Foreign Travel Emergency Care (up to plan limits) 80%80%80%80%80%80%
Plan pays 100% of the benefit

Frequently Asked Questions

Is it mandatory to go on Medicare when you turn 65?

No, you don’t have to get Medicare coverage when you become 65. However, Part A (hospital coverage) is free for most Americans, so there isn’t an advantage in not accepting Part A coverage. 

You may decide to delay Part B coverage, but you will likely have to pay more for that coverage when you eventually sign up. Medicare may charge a 10% for each year that you don’t sign up for Part B. 

So, if you wait three years to sign up for Part B after becoming eligible, you’ll likely pay 30% higher premiums for Part B. 

What automatically qualifies you for Medicare?

Turning 65 automatically makes you eligible for Medicare coverage. 

Whether you decide to sign up for coverage is up to you.

Should I consider switching Medicare supplement insurance plans?

If you have Original Medicare, you may switch Medicare supplement insurance plans (called Medigap) if you feel another Medigap policy fits your needs better. 

There are 10 types of Medigap policies and all of them help with out-of-pocket costs. However, Medicare supplemental insurance plans differ in specifics and expanded coverage. 

Can you make changes to Medicare after open enrollment?

You can typically change your Medicare coverage only during the initial enrollment period and the open enrollment period also called the general enrollment period.

However, you may qualify for a special enrollment period if you face a qualifying life event that may affect your coverage. A special enrollment period may be needed if you move to another state, lose other health coverage, a spouse dies, or you get divorced.

How do you sign up for Medicare?

People who turn 65 and are collecting Social Security benefits are automatically enrolled in Medicare Part B. If you’re not collecting Social Security benefits yet, you need to enroll online, over the phone, or in person.

Newly eligible Medicare beneficiaries can enroll from three months before the month of their 65th birthday to three months after the 65th birthday. This is called the initial enrollment period.

You should receive your Medicare card during the month before your 65th birthday.

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