What Is Medicare, and How Does It Work?
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Medicare is the federal government health insurance program for Americans age 65 and older and younger people living with certain illnesses or disabilities. Medicare has four parts — Part A, Part B, Part C and Part D — that offer specific coverage and vary in cost:
Part A covers hospital care and related services.
Part B covers doctor appointments and outpatient medical care.
Part C (Medicare Advantage) covers the same benefits of Parts A and B but is offered by private insurers.
Part D covers prescription drugs.
Here’s what you should know about Medicare coverage and how it works.
Medicare eligibility
You’re eligible for Medicare if:
You’re 65 or older and a U.S. citizen or permanent resident.
You’re younger and living with a qualifying disability or condition, such as end-stage renal disease (ESRD) or amyotrophic lateral sclerosis, also called ALS or Lou Gehrig’s disease.
People who receive Social Security Disability Insurance (SSDI) usually become eligible for Medicare after a two-year waiting period. Those with ESRD (permanent kidney failure) are enrolled based on specific kidney and dialysis requirements, and those with ALS are eligible the month disability benefits begin.
What is Original Medicare?
Original Medicare includes Medicare Part A and Medicare Part B, which are managed by the federal government. People can see any doctor that accepts Medicare and only a few services might require preauthorization.
How Original Medicare works:
It includes Medicare Part A and Part B.
You must buy Part D prescription drug coverage separately, as well as Medicare Supplement Insurance (Medigap), if you want the coverage provided by those plans.
There is no out-of-pocket limit unless you have a Medigap plan to help cover your costs.
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What is Medicare Part A?
Medicare Part A covers inpatient care in a hospital or skilled nursing facility, although not custodial or long-term care. Part A also helps pay for hospice care and some home health care.
How Medicare Part A works:
Most people don’t pay a premium if they or their spouse paid Medicare taxes for at least 10 years.
There’s an annual deductible of $1,676 in 2025.
You’ll pay coinsurance for inpatient hospital care: $0 for the first 60 days (once you've paid your Part A deductible), $419 per day in 2025 for the 61st through 90th day of hospitalization, and more after that.
If you don’t get Part A for free, you’ll pay up to $518 per month in 2025.
What is Medicare Part B?
Medicare Part B covers doctor visits and other medically necessary services and supplies. That includes preventive services or health care to prevent illness, as well as ambulance services, durable medical equipment, mental health coverage and a few types of outpatient prescription drugs.
How Medicare Part B works:
The premium is at least $185 per month in 2025.
There's an annual deductible of $257 in 2025.
You'll pay 20% coinsurance for Medicare-approved services.
There could be a permanent penalty if you sign up late for Part B.
Single people with adjusted gross incomes over $106,000 and married couples filing jointly with AGIs over $212,000 pay the income-related monthly adjustment amount (IRMAA).
If you don’t sign up for Part B when you’re first eligible and don’t have group health insurance from a large employer, then sign up later, you’ll pay a permanent penalty of 10% of the standard premium for each 12-month period that you delayed. You can avoid the penalty if you had health insurance through your job or your spouse’s or partner's job when you first became eligible. You must sign up within eight months of when that coverage ends.
What is Medicare Advantage (Medicare Part C)?
Medicare Advantage, also known as Medicare Part C, is a health plan offered by private insurance companies that provides the benefits of Part A and Part B and usually Part D (prescription drug coverage), as well as some additional benefits.
How Medicare Advantage works:
It includes all the benefits of Part A and Part B (but you still have to pay your Part B premium).
It usually includes Part D, as well as extra benefits like some dental and vision coverage.
Monthly premiums vary, but could be $0.
Your out-of-pocket limit could be as high as $9,350 in 2025.
Medicare Advantage plans are typically HMOs or PPOs.
They provide coverage only in certain local areas, from certain networks of doctors and hospitals.
They generally require preauthorization and referrals.
What is Medicare Part D?
Medicare Part D helps cover the cost of prescription drugs, both generic and brand name. Plans are offered by private insurers and require a monthly premium.
How Medicare Part D works:
The average total monthly premium is $46.50 in 2025.
As with Part B, people with higher incomes pay more for Part D.
There's typically a penalty if you don't sign up when you're first eligible.
The Part D late penalty is 1% of the national base beneficiary premium, which is $36.78 in 2025, multiplied by the number of months you're late enrolling after you go without creditable drug coverage for 63 days.
What is Medigap (Medicare Supplement Insurance)?
Medigap, or Medicare Supplement Insurance, is an additional health insurance policy you can buy from a private insurer to help pay your share of the costs not covered by Medicare Part A and Part B. This includes deductibles, coinsurance and some health care if you travel outside the U.S.
How Medigap works:
There are 10 types of Medigap plans with letter names available in most states.
Plans are standardized, so Plan G in Texas offers the same base benefits as Plan G in Virginia, although prices may differ.
You must have Medicare Part A and Part B to buy a Medigap policy.
You can't have Medicare Advantage and Medigap at the same time.
Do you have to pay for Medicare?
Medicare does come with costs:
Part of Medicare | Monthly cost |
|---|---|
Part A (hospital insurance) | Typically $0. |
Part B (medical insurance) | Typically $185 in 2025. |
Part C (Medicare Advantage) | $17, on average, in 2025. |
Part D (prescription drugs) | $46.50, on average, in 2025. |
Medigap | Varies by plan. |
When can you enroll in Medicare?
If you’re already getting Social Security when you turn 65
You’ll be automatically enrolled in Medicare Part A and Part B.
You must sign up for Part D unless you get a notice that you qualify for Extra Help, in which case you’ll be automatically enrolled in a drug plan unless you’ve already joined one.
If you’re not yet getting Social Security when you turn 65
You must sign up for Medicare through the Social Security Administration website.
Typically, you should do this during your initial enrollment period to avoid penalties.
If you want Medigap
Sign up during the six-month Medigap open enrollment period, which starts the month you are age 65 or older and enrolled in Part B. The private insurers who provide Medigap plans are required to take you if you sign up during that period. Otherwise, there is no guarantee they will sell you a Medigap plan, or they could charge you more for a plan.
If you want to change your coverage later, there's an annual Medicare open enrollment period from Oct. 15 to Dec. 7. (If you have Medicare Advantage, you can also make a change during Medicare Advantage open enrollment from Jan. 1 to March 31 each year, or within the first three months of getting Medicare.)
How do you enroll in Medicare?
If you’re enrolling yourself, you can sign up in one of two ways:
Sign up for Medicare online at Social Security’s site.
Call Social Security at 800-772-1213.
💬 From our Nerds: Can you keep your doctor on Medicare?
"If you have Medicare Part B, you can see any health care provider who accepts Medicare and who is accepting new Medicare patients. You’ll want to ask your doctor if they can take you as a new Medicare patient.
“If you join a Medicare Advantage plan, you’ll generally need to get care from doctors and hospitals that are in your plan’s network. Before signing up for a plan, ask your doctor if they’re in-network with that insurance.”
— Kate Ashford, lead writer covering Medicare
What doesn't Medicare cover?
Medicare doesn’t cover most dental care, hearing aids, eyeglasses, dentures, and overseas medical care, among other things. Medicare also doesn’t cover long-term care. (The federal health program Medicaid pays for long-term care, but is typically reserved for those with low income and little savings.)
Some common expenses that aren’t covered include:
Most dental care.
Most foot care, unless related to diabetes or medically necessary due to injury or disease.
Cosmetic surgery.
Massage therapy.
The right choices for you will depend on your circumstances. For guidance, reach out to your local State Health Insurance Assistance Program (SHIP), which you can locate at shiphelp.org.
Medicare.gov is the official site for Medicare. You can browse the site, live chat with someone from Medicare or call 800-MEDICARE (800-633-4227, TTY 877-486-2048). You can also visit Medicare's help page to find local organizations that can help.
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