Medicare 101
Medicare 101: a plain-language guide.
What each part of Medicare covers, the two main ways to get it, when you can enroll, and the words you’ll hear along the way.
The basics
The four parts of Medicare
Part A: Hospital insurance
Inpatient hospital stays, skilled nursing care after a hospital stay, hospice and some home health care. Most people pay no premium for Part A.
Part B: Medical insurance
Doctor visits, outpatient care, lab tests, preventive services and medical equipment. Most people pay a monthly premium.
Part C: Medicare Advantage
Private plans that bundle Parts A and B, usually with drug coverage and extra benefits.
Advantage guide →Part D: Drug coverage
Prescription drug plans from private insurers, stand-alone or included in an Advantage plan.
Part D guide →
Your two paths
Original Medicare or Medicare Advantage?
| Original Medicare or Medicare Advantage? | Original Medicare | Medicare Advantage |
|---|---|---|
| Who runs it | The federal government | Private insurers approved by Medicare |
| Doctors | Any provider that accepts Medicare | Usually a network |
| Referrals | Not needed | Sometimes needed (HMOs) |
| Drug coverage | Add a Part D plan | Usually included |
| Yearly out-of-pocket limit | None; Medigap can fill the gaps | Yes, every plan has one |
| Dental, vision, hearing | Generally not covered | Often included |
You can switch between them during enrollment periods. Outside New York and a few other states, buying Medigap later may require health questions.
Deadlines
Medicare enrollment periods
- Around 65
Initial Enrollment Period
Seven months: the 3 months before the month you turn 65, your birthday month, and the 3 months after. Sign up early so coverage starts on time.
- Jan 1 – Mar 31
General Enrollment Period
Missed Initial Enrollment and don’t qualify for a Special Enrollment Period? Sign up for Part A or B here. Coverage starts the month after you sign up, and late penalties may apply.
- Oct 15 – Dec 7
Annual Enrollment Period
Join, switch or drop a Medicare Advantage or Part D plan. Changes take effect January 1.
- Jan 1 – Mar 31
Medicare Advantage Open Enrollment
If you’re in an Advantage plan, you can switch to another Advantage plan or go back to Original Medicare and join a Part D plan, once.
- When life changes
Special Enrollment Periods
Moving, losing employer coverage, entering or leaving a nursing home, or qualifying for Medicaid or Extra Help can open a window to make changes.
- 1.About 3 months before your birthday month, decide whether to enroll in Parts A and B. If you already get Social Security benefits, you’ll usually be enrolled automatically.
- 2.If you or your spouse still work, ask the employer’s benefits office whether you can delay Part B without a penalty.
- 3.Make a list of your doctors, prescriptions and pharmacy.
- 4.Choose your path: Original Medicare with Medigap and Part D, or a Medicare Advantage plan.
- 5.Mind your Medigap Open Enrollment window. It starts when your Part B starts.
- 6.Enroll in drug coverage on time to avoid the Part D late enrollment penalty.
Glossary
Medicare words, defined
- Premium
- The amount you pay each month to have coverage.
- Deductible
- What you pay for covered care or drugs before your plan starts to pay.
- Copayment
- A fixed amount you pay for a service, such as $20 for a doctor visit.
- Coinsurance
- A percentage of the cost you pay, such as 20% of the Medicare-approved amount.
- Out-of-pocket maximum (MOOP)
- The most you’ll pay in a year for covered in-network services in a Medicare Advantage plan.
- Formulary
- A plan’s list of covered prescription drugs, grouped into cost tiers.
- Network
- The doctors, hospitals and pharmacies that contract with a plan.
- HMO
- A plan type that generally requires network providers and referrals to see specialists.
- PPO
- A plan type that also covers out-of-network care, at a higher cost, usually without referrals.
- Special Needs Plan (SNP)
- A Medicare Advantage plan for people with Medicaid, certain chronic conditions, or who live in a nursing home.
- Medigap
- Private insurance that helps pay costs Original Medicare doesn’t, like coinsurance and deductibles.
- Creditable coverage
- Drug coverage expected to pay at least as much as standard Part D. Having it lets you delay Part D without a penalty.
- Extra Help
- A program that lowers Part D costs for people with limited income and resources.
- IRMAA
- An extra amount added to Part B and Part D premiums for people with higher incomes.
- Excess charges
- Up to 15% above the Medicare-approved amount that doctors who don’t accept assignment may charge.
- Prior authorization
- Approval needed from the plan before it covers certain services or drugs.
- Star rating
- Medicare’s 1-to-5-star score for plan quality and service.
FAQ
Common questions
Is Medicare free at 65?
Most people don’t pay a premium for Part A because they or a spouse paid Medicare taxes while working. Part B and most other coverage have monthly premiums.
What’s the difference between Medicare and Medicaid?
Medicare is federal health insurance for people 65 and older and some younger people with disabilities. Medicaid is a joint federal and state program for people with limited income and resources. Some people qualify for both.
Do I have to sign up for Medicare if I’m still working?
Not always. If you have coverage through a current employer, yours or your spouse’s, you may be able to delay Part B without a penalty. The rules depend on the employer’s size, so check before you decide.
What happens if I miss my enrollment deadline?
You may have to wait for the General Enrollment Period, and you could pay a late enrollment penalty for as long as you have Part B or Part D.
Rather have someone walk you through it?
A licensed agent can answer your questions and compare plans with you. Free.