Summary: Medicare is a federal health insurance program provided to U.S. citizens who qualify. Understanding how Medicare works and the coverage it provides can help ensure you meet your healthcare needs. In this article, we’ll explain how Medicare works and what you can do to prepare yourself to sign up. Estimated Read Time: 7 mins
Medicare offers health insurance benefits, funded by the federal government, to U.S. citizens who qualify. The program helps cover healthcare services like hospital stays, doctor visits, prescription drugs, and preventive care for those 65 and over or those under 65 who qualify based on disability status or certain diagnosis.
Medicare can be broken down into three simple sections: Medicare parts, Medicare eligibility, and Medicare costs. By learning the basics of Medicare, you can better understand which options are best for you and your health.
Medicare, like any health coverage, can seem confusing and overwhelming for those who are new to the program. Educating yourself on the basics of Medicare can help you avoid surprise costs and ensure you have the coverage you need. Below we’ll guide you through what you need to know about Medicare.
There are four main parts to Medicare: Parts A, B, C, and D. Learn more about these parts here.
Learn about Medicare eligibility to ensure coverage and avoid late enrollment penalties.
Medicare costs change annually. Learn about deductibles, monthly premiums, and copays.
What is Medicare
Medicare is a federal health insurance program in the United States offered to individuals who are 65 and older or those who have certain disabilities. This program is run by the Centers for Medicare & Medicaid Services and is helps pay for many, but not all, healthcare costs. Medicare is funded through general revenue, payroll taxes, and monthly premiums.
“Having health insurance that meets your needs is one of the most essential aspects of aging” Says David Haas, CTO of ApplyforMedicare.com. He continues “the advancements in healthcare technology today are revolutionize the industry. But that also means costs for services are increasing. Without proper insurance, like Medicare, in place, seniors may not be able to afford life saving treatment or everyday care.”
Understanding Medicare begins with learning the four parts of Medicare: Part A, Part B, Part C, and Part D. Medicare Part A and Part B make up “Original Medicare”, Medicare Part C is also known as Medicare Advantage, and Medicare Part D helps cover your prescription drug costs.
- Medicare Part A, hospital insurance, helps cover hospital inpatient care, skilled nursing facility care, hospice, and home healthcare.
- Medicare Part B, medical insurance, helps cover doctors visits, outpatient care, durable medical equipment, and preventative care.
- Medicare Part C, Medicare Advantage plans, are Medicare-approved plans offered by private insurance companies. These all-in-one plans often combine Parts A and B benefits, and often include Part D benefits.
- Medicare Part D, prescription drug coverage, is issued by private insurance companies and helps cover the cost of prescription drugs.
There are also Medicare Supplement Plans, also known as Medigap. Medigap plans cover the “gaps” in Original Medicare, such as copayments, coinsurance, and deductibles. There are 10 lettered Medigap plans available, such as Plan G or Plan N and two high-deductible plans that offer Medigap benefits at a lower monthly premium than the standard plans.
All Medigap Plans are provided by private insurance companies. These plans are standardized, which means each plan type offers the same benefits regardless of carrier. Though the plans offer the same benefits, you’ll still want to compare carriers because their premiums and rate increase history may vary.
Original Medicare consists of Medicare Part A and Part B and provides benefits for approved health care services and supplies. Original Medicare can be used at any doctor or hospital anywhere in the U.S. that accepts Medicare. While enrolled in Original Medicare, you can choose to enroll in a separate Medicare Drug Plan (Part D), or Medicare Supplement Insurance (Medigap).
Medicare Advantage (Part C)
Medicare Advantage Plans, also known as Medicare Part C Plans, cover your healthcare benefits in place of Medicare Part A and Part B. If you enroll in a Medicare Advantage Plan, it will become your primary coverage. These plans provide Original Medicare coverage, with additional benefits to provide you an all-in-one coverage solution. There are several types of Medicare Advantage Plans, and different providers may offer different benefits based on your location.
Whether you choose to have Original Medicare or a Medicare Advantage Plan depends on your individual healthcare needs. The best option is the one that works best for you and your health.
Learning how Medicare works will help ensure you understand when and how to get your Medicare coverage. Below we’ll briefly explain what you need to know about Medicare and how it works.
Ashlee Zareczny, the Medicare educator for ApplyforMedicare.com, provides insights on the importance of understanding how Medicare works. She states “Medicare is not the same as your typical employer or group insurance coverage. When seniors apply for Medicare coverage it is so important that they understand their benefits, coverage, and financial responsibilities to ensure they do not receive any unexpected medical bills.”
She continues “While it isn’t mandatory, I highly urge anyone new to Medicare to do their research online, attend webinars, or read the Medicare & You handbook.”
Most people become eligible for Original Medicare at age 65. In some cases, an individual may be eligible under the age of 65 if they received Social Security Disability benefits for 24 months or have been diagnosed with Amyotrophic Lateral Sclerosis (ALS) or End Stage Renal Disease (ESRD).
When you are eligible for Medicare, you will either be automatically enrolled, or you will have to sign up through the Social Security Administration. If you’re already receiving Social Security or Railroad Retirement Board (RRB) benefits, you’ll be automatically enrolled in Medicare Parts A and B.
If you’re close to 65 but not receiving Social Security or RRB benefits, you will have to sign up for Medicare manually. You can sign up online, over the phone, or in person at your nearest Social Security office.
The timeframe when you first become eligible for Medicare is known as the Initial Enrollment Period (IEP). If you don’t sign up for Medicare during the Initial Enrollment Period, there may be penalties when you enroll in the future. If you miss your IEP, there are additional Medicare enrollment dates where you can get coverage, these include the General Enrollment Period and Special Enrollment Periods if you qualify.
If you plan on getting coverage through a Medicare Advantage Plan or a Medicare Supplement plan, you will need to have Medicare Parts A and B before you can enroll in additional coverage.
When signing up for a Medicare Advantage plan or a Medicare Supplement plan, you’ll need your Medicare Beneficiary Identifier number and the start dates for your Part A and B coverage. It’s important to remember that Medicare Advantage plans are offered by private providers, so not all plans will be the same. Compare plans in your area to find the one that has the right coverage for you.
When you enroll in Medicare, you will be mailed your Medicare Card, also known as your Red, White, & Blue card. For those automatically enrolled in Medicare, you may receive your Medicare card up to three months before your 65th birthday. The card will include your name, Medicare Beneficiary Identifier (MBI) number, and the coverage start dates of your Parts A and B benefits.
If you are enrolled in Original Medicare, you’ll want to carry this card in your wallet; you’ll need to show it to health care providers when you get services. If you enroll in a Medicare Part C plan, you will receive a separate card from your provider to use instead of your Red, White, and Blue card. However, if you have a Medicare Advantage Plan, make sure to store your Medicare Card somewhere safe, in case you need to switch plans or return to Original Medicare in the future.
If you need to replace a damaged or lost Medicare Card, you can visit Medicare.gov to print or order a replacement card.
Making decisions about your healthcare can be stressful. Start thinking about Medicare early so you can be better prepared for when you become eligible. Below are some questions to start thinking about:
- Eligibility – When will you become eligible for Medicare? Knowing when you’re eligible will help you avoid gaps in coverage and penalties for late enrollment.
- Enrollment – Will you be automatically enrolled in Medicare, or do you have to sign up? Remember, you sign up for Medicare through the Social Security Administration.
- Coverage – What Medicare coverage is best for your health? Consider your healthcare needs and your budget.
How to Learn More About Medicare Basics
This Medicare 101 online guide is a great place to start when beginning to research and understand Medicare. If you’re interested in learning more about Medicare, our library of Medicare articles offer more in-depth information on a variety of Medicare topics.
Another great resource, Medicare and You is the official Medicare handbook provided by the U.S. government. This booklet is available in both digital, print, and audio forms and offers extensive information on Medicare coverage.
Having a fundamental understanding of Medicare helps you make informed decisions about your healthcare coverage.
Medicare and You, Medicare. Accessed June 2023.
Your Medicare Card, Medicare. Accessed June 2023.
When to Sign up for Medicare, Social Security Administration. Accessed June 2023.
Understanding Medicare Advantage Plans, Medicare. Accessed June 2023.