What Is Medicare? 4 Essential Questions, Answered

What Is Medicare? 4 Essential Questions, Answered

Understand the basics—so you can get the coverage you want.

If you’ll soon be turning 65, you’re probably starting to think about Medicare, the federal health insurance program currently covering more than 55 million Americans. As with most insurance plans, understanding a new policy can be a complicated task. So, before you become bogged down with details, here’s an overview of the essentials—what everyone needs to know about this coverage.

Who’s eligible for Medicare?
Medicare is health insurance generally available to US citizens and many legal residents who are at least 65 years of age. However, it’s also available for adults with certain disabilities, as well as people who have been diagnosed with End-Stage Renal Disease (ESRD), defined as permanent kidney failure requiring dialysis or a transplant.

What kinds of plans are available?
To date, there are two main ways to receive Medicare coverage:

  • Original Medicare is comprised of two parts. Part A is hospital insurance, which covers in-patient hospital care, care in a nursing facility, hospice care and some home health care. Part B is medical insurance, and covers outpatient hospital care, preventative services and medical supplies. There is usually a cost for each service. Most people have both Plan A and Plan B.
  • Medicare Advantage Plan, often referred to as Part C, is health insurance offered by a private company that works with Medicare, and gives you coverage comparable to Plan A and Plan B. Plans include Health Maintenance Organization (HMO) Plans and Preferred Provider Organization (PPO) Plans. Medicare Advantage may also help cover vision, dental and prescription drugs.

Some adults will also opt for additional coverage, including Part D prescription drug coverage, or Medicare Supplement Insurance, also known as Medigap. These will cover costs not paid for by Original Medicare or a Medicare Advantage Plan.

How much does it cost?
Since the majority of Americans have paid Medicare taxes over the years, you and your spouse will likely not have to pay a monthly premium for Part A, which is also referred to as “premium-free Part A.” This benefit also applies if only your spouse paid Medicare taxes while working. If you are required to purchase Part A, it will cost either $232 (if you paid Medicare taxes for 30-39 quarters) or up to $422 (if you paid Medicare taxes for less than 30 quarters) per month.

Everyone needs to pay a monthly premium for Part B, which is determined by your income. To figure out your cost, Medicare uses the modified adjusted gross income reported on your tax return from two years prior to enrollment. In 2018, the standard premium amount is $134. (The five financial tiers can be found on

People receiving Social Security, Railroad Retirement Board or Office of Personnel Management benefits will not receive a bill, but will have Part B premiums deducted from their benefits.

When and how do you actually sign up?
If you’re turning 65 and already receive Social Security benefits, or if you’re under 65 and living with a disability or have been diagnosed with certain chronic conditions (including ESRD), you will be automatically enrolled in Medicare.

You may sign up on your own If you’re not automatically enrolled. Adults turning 65 have a seven-month enrollment period, which begins three months before their 65th birthday, continues the month of their 65th birthday and runs through the three months following their 65th birthday. If you wait too long to enroll, you may be required to pay a penalty fee, along with having a gap in coverage. Even if you are still working and insured by your employer during this time, you may want to enroll in Part A. Speak to someone in your human resources department for guidance. If you miss the enrollment window due to special circumstances, you may be eligible to enroll during a Special Enrollment Period.

Want to change your Medicare plan? You may do so during the yearly open enrollment period. In 2018, this runs from October 15 through December 7. For more information on enrollment, as well as Medicare eligibility, payment and plans, visit the federal government’s website at

Medically reviewed in March 2020.

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