If you’ve been focused on figuring out your private health insurance options during your working years, you probably haven’t thought much about Medicare and how it works. But as the years tick by and your Medicare days grow closer, you’ll want to get up to speed.
There are lots of nitty gritty details you’ll need to worry about when you’re approaching your retirement years, but for now, here are some foundational facts to help you become conversant about Medicare.
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What exactly is it?
Medicare is a health insurance program facilitated by the federal government, covering people who are aged 65 and older, as well as some younger people who have disabilities or specific medical conditions.
What are the “parts” of Medicare?
You may have heard people talking about Part A or Part B regarding Medicare, so here’s what they are referring to. The Medicare program is broken into four main parts:
- Part A: This insures you for hospital visits as well as stays in skilled nursing facilities or hospice and some home health care. Most people get Part A for free.
- Part B: For all other non-hospital medical care, Part B kicks in to cover 80% of costs. This includes doctor’s visits, outpatient services, etc. There is a monthly cost (premium) for this part; it is $185 for 2025. There’s also an annual deductible, and 20% co-insurance.
Important: Part A and Part B together is known as “Original Medicare.”
- Part C: Commonly called Medicare Advantage, Part C is an alternative option for people who prefer to work with a private insurance company versus the government’s Original Medicare plan. Medicare Advantage plans combine hospital and medical insurance (A plus B), and sometimes, even prescription drugs.
- Part D: This part covers prescription drugs. If you are an Original Medicare recipient, you will need to add on a Part D plan. Some Medicare Advantage plans include Part D, but if not, you can choose one.
- Medigap: Though it’s not technically a “Part” of Medicare, many people get what’s called a Medicare Supplement, or a Medigap plan. As you might recall, Original Medicare covers just 80% of medical expenses; most people get a supplement plan to cover the remaining 20% coinsurance cost. These plans are an additional monthly cost.
Original Medicare vs. Medicare Advantage
Quick recap: Your two main choices are:
- Original Medicare, which is Part A, Part B, and then you will add on a Part D plan, as well as an optional Medicare Supplement plan.
- Medicare Advantage, which includes Part A and B, and sometimes D. A supplement plan is not needed.
Choosing between the two comes down to your specific needs. Original Medicare offers more flexibility since most providers accept it, while Medicare Advantage plans usually limit you to a provider network. Some Medicare Advantage plans can be less expensive, but plan options vary by where you live.
What’s the difference between Medicare and Medicaid?
Now that you have all of that terminology down, you might be wondering how Medicaid fits in. Medicaid is a joint federal and state health insurance program for people with financial need. Being eligible is not based on age, but instead, has to do with income, household size, and other factors like if you are pregnant or disabled.
Some people may be dual eligible for both Medicare and Medicaid. In those cases, Medicaid can cover Medicare expenses and some services not covered by Medicare.
When can you sign up?
Medicare’s “initial enrollment period” is a seven-month span that begins three months before your 65th birthday until three months after your birthday. You sign up through the Social Security Administration. As long as you (or your spouse) paid Medicare taxes for at least 10 years, you are eligible. You must also be a U.S. citizen or legal resident who has lived here for five or more years.
Tip: Don’t miss this window, or you could end up paying higher premiums or other costly penalties. The only exceptions to this timeline are people who may qualify at a younger age if they’ve been receiving Social Security Disability Insurance (SSDI) for 24 months, or if they have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Once you’re ready to dive into more details, such as what Medicare does and doesn’t cover, start with Medicare.gov, the official government site.
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