Medicare

Key Takeaways

• Medicare is a federal health insurance program for people aged 65+ and certain younger individuals with disabilities
• It consists of four parts: A (hospital), B (medical), C (Medicare Advantage), and D (prescription drugs)
• Most people don’t pay a premium for Part A if they’ve worked enough quarters
• Part B has a monthly premium based on income
• Use our Health Insurance Calculator to plan for Medicare costs

What is Medicare?

In plain English: Medicare is the U.S. federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease. It has different parts that cover hospital stays, medical services, prescription drugs, and more.

Medicare is funded by payroll taxes, premiums paid by beneficiaries, and general revenue from the federal government.

How Medicare Works

Funding Sources

Medicare is funded by three main sources:

• Payroll Taxes: Paid by employees and employers
• Beneficiary Premiums: Paid by Medicare recipients for Parts B and D
• General Revenue: From the federal government

Enrollment

You’re automatically enrolled in Medicare Parts A and B when you turn 65 if you’re already receiving Social Security benefits. Otherwise, you need to sign up during your Initial Enrollment Period, which starts three months before your 65th birthday.

Plan Type	Provider Choice	Referral Needed?	Premium Level
HMO	In-network only	Yes	Lower
PPO	In & out of network	No	Higher
EPO	In-network only	No	Medium
POS	In & out of network	Yes for specialists	Medium

Medicare Parts

• Part A (Hospital Insurance) — Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
• Part B (Medical Insurance) — Covers doctor visits, outpatient care, preventive services, and durable medical equipment.
• Part C (Medicare Advantage) — Private plans that combine Parts A and B, often include prescription drug coverage.
• Part D (Prescription Drug Coverage) — Covers prescription medications through private plans.

Eligibility

You may be eligible for Medicare if you meet one of these criteria:

• Age 65+: Individuals who are US citizens or permanent residents
• Under 65 with Disabilities: Individuals receiving Social Security Disability Insurance for 24 months
• End-Stage Renal Disease: Individuals with permanent kidney failure requiring dialysis or transplant
• Lou Gehrig’s Disease: Individuals with ALS automatically eligible

Medicare vs. Medicaid

Medicare is a federal program primarily for seniors and disabled individuals, while Medicaid is a joint federal-state program for low-income individuals and families. Some people qualify for both programs (dual eligibility).

Estimate Your Medicare Costs

Planning for Medicare expenses? Try our Health Insurance Calculator to understand your potential premiums, deductibles, and out-of-pocket costs.

Frequently Asked Questions (FAQ)

Q: When should I sign up for Medicare?

A: Your Initial Enrollment Period starts three months before your 65th birthday and ends three months after. If you miss this window, you may face late enrollment penalties.

Q: Do I need Medicare if I have employer-sponsored insurance?

A: It depends on your situation. If you’re still working and have group health coverage, you may be able to delay Medicare enrollment without penalty.

Q: What’s the difference between Original Medicare and Medicare Advantage?

A: Original Medicare (Parts A and B) is run by the government. Medicare Advantage (Part C) is offered by private insurance companies and often includes extra benefits like dental, vision, and prescription drug coverage.

Q: Does Medicare cover long-term care?

A: Medicare covers limited skilled nursing facility care and home health care, but generally does not cover custodial care or long-term nursing home stays.

Authority Sources

• Medicare.gov - Official U.S. government Medicare website
• Centers for Medicare & Medicaid Services (CMS)
• U.S. Department of Health and Human Services (HHS)
• Social Security Administration
• CMS (Centers for Medicare & Medicaid Services) - U.S. federal health programs
• IRS (Internal Revenue Service) - Health savings account rules and tax penalties
• HHS (U.S. Department of Health and Human Services) - Health insurance marketplace

Related Terms

Health Insurance ACA (Affordable Care Act) Copay Coinsurance Medicaid