What is Medicare
Medicare is a federal health insurance program primarily for Americans 65 and older, as well as certain younger people with disabilities, funded through payroll taxes and monthly premiums.
Medicare is a federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). It primarily covers Americans aged 65 and older, along with certain younger people with qualifying disabilities or specific conditions like End-Stage Renal Disease (ESRD) or ALS. Medicare is funded through payroll taxes (Part A), beneficiary premiums, and general federal revenues.
As of 2025, Medicare covers approximately 66 million Americans. Unlike Medicaid, Medicare eligibility is based on age and work history — not income.
The Four Parts of Medicare
| Part | Name | What It Covers | Cost (2025) |
|---|---|---|---|
| Part A | Hospital Insurance | Inpatient hospital care, skilled nursing facility, hospice, some home health | $0 premium for most (requires 40 work quarters) |
| Part B | Medical Insurance | Doctor visits, outpatient care, preventive services, durable medical equipment | $185/month standard premium |
| Part C | Medicare Advantage | Combines A + B (often adds D) through private insurers | Varies by plan |
| Part D | Prescription Drug Coverage | Prescription medications through private insurers | Varies (~$35–$60/month average) |
Medicare Part A: Hospital Insurance
Part A covers:
- Inpatient hospital care (with a $1,676 deductible per benefit period in 2025)
- Skilled nursing facility care after a qualifying hospital stay
- Hospice care
- Limited home health care
Most beneficiaries pay no premium for Part A because they (or their spouse) paid Medicare payroll taxes for at least 40 quarters (10 years) of work. Those with fewer work credits pay up to $518/month for Part A.
Medicare Part B: Medical Insurance
Part B covers:
- Physician and specialist visits
- Outpatient procedures and surgery
- Preventive screenings and immunizations (free under Part B)
- Ambulance services
- Mental health care
Part B has a deductible ($257/year in 2025) and 20% coinsurance after the deductible for most services — with no out-of-pocket maximum unless you have supplemental coverage (Medigap).
Medicare Advantage (Part C)
Medicare Advantage plans are offered by private insurance companies and must cover everything Original Medicare (Parts A and B) covers, often bundling Part D drug coverage and adding dental, vision, and hearing benefits. They typically have lower premiums than Original Medicare + Medigap, but restrict care to a plan network (HMO or PPO structure) and may require prior authorization for many services.
Medigap (Medicare Supplement Insurance)
Medigap is private insurance that fills the gaps in Original Medicare — covering the 20% coinsurance, the Part A deductible, and other cost-sharing that Medicare doesn't pay. People with Original Medicare often buy Medigap to cap their out-of-pocket exposure. Medigap doesn't work alongside Medicare Advantage.
Medicare Enrollment
- Initial Enrollment Period: 7-month window around your 65th birthday (3 months before, the month of, 3 months after)
- General Enrollment Period: January 1 – March 31 annually (late enrollment penalties may apply)
- Special Enrollment Period: Available for those with employer coverage until they retire
Late enrollment penalties are permanent. Enrolling in Part B or Part D late adds a percentage to your premium for as long as you're enrolled — so enrolling on time is critical unless you have qualifying employer coverage.
Medicare and Income
Higher-income beneficiaries pay more for Parts B and D through IRMAA (Income-Related Monthly Adjustment Amount). In 2025, individual incomes above $106,000 trigger IRMAA surcharges on top of standard premiums.