Your Complete Resource
Understanding
Medicare
Simple answers to complex questions.
Medicare can be confusing — but it doesn't have to be. This guide walks you through everything you need to know, from the basics of Parts A & B to enrollment windows and costs.
Explore the ABCsThe Foundations
The ABCs
of Medicare
Medicare is divided into four parts, each covering different aspects of your healthcare. Understanding what each part covers helps you make the right coverage decisions.
Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Most people don't pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years.
- Inpatient hospital stays
- Skilled nursing facility care
- Hospice care
- Some home health services
- Blood transfusions (after first 3 pints)
Part B covers medically necessary services like doctor visits, outpatient care, preventive services, and medical equipment. A monthly premium applies — the standard amount is set each year by CMS.
- Doctor visits & specialist care
- Outpatient procedures
- Preventive screenings
- Mental health services
- Durable medical equipment
Medicare Advantage plans are offered by private insurance companies approved by Medicare. They bundle Part A, Part B, and usually Part D into one plan — often with additional benefits like vision, dental, and hearing.
- All Part A & B benefits
- Usually includes Part D
- Vision, dental & hearing (varies)
- Fitness benefits (many plans)
- Care coordination
Part D helps cover the cost of prescription drugs. Plans are run by private insurers and each has its own formulary (list of covered drugs). Costs vary by plan — and a late enrollment penalty may apply if you delay signing up.
- Generic medications
- Brand-name drugs (formulary)
- Specialty medications
- Vaccines not covered by Part B
- Mail-order pharmacy options
Who Qualifies
Eligibility
Requirements
Medicare eligibility isn't one-size-fits-all. You may qualify based on age, disability status, or a specific health condition.
U.S. citizens and permanent legal residents age 65 or older who have lived in the U.S. for at least 5 consecutive years are eligible for Medicare.
People under 65 who have received Social Security Disability Insurance (SSDI) for 24 months automatically become eligible for Medicare coverage.
End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant) qualifies individuals for Medicare at any age.
People diagnosed with Amyotrophic Lateral Sclerosis (Lou Gehrig's disease) qualify for Medicare immediately upon receiving SSDI benefits — no 24-month wait.
When to Sign Up
Enrollment
Windows
Missing an enrollment window can result in permanent late penalties on your premiums. Know your deadlines.
Your IEP begins 3 months before the month you turn 65 and ends 3 months after. This is the best time to sign up — enrolling during the 3 months before your birthday month means coverage starts on the 1st of your birthday month.
If you missed your IEP, you can enroll during the GEP. Coverage starts July 1. A late enrollment penalty may apply to your Part B premium for as long as you have Medicare.
If you or your spouse are still working and covered by employer insurance, you can delay Medicare without penalty. Once that coverage ends, you have an 8-month SEP to enroll in Part B without a late penalty.
During AEP, you can switch between Original Medicare and Medicare Advantage, change your Part D plan, or add/drop a Medicare Advantage plan. Changes take effect January 1 of the following year.
What You'll Pay
Medicare
Costs at a Glance
Medicare costs include premiums, deductibles, and coinsurance. Here's a general overview — exact amounts are updated each year by CMS.
| Medicare Part | Monthly Premium | Annual Deductible | Coinsurance / Copays |
|---|---|---|---|
| Part A (Hospital) | $0 for most people* | $1,632 per benefit period | $0 for days 1–60; $408/day for days 61–90 |
| Part B (Medical) | $174.70/mo (standard) | $240 per year | 20% of Medicare-approved costs after deductible |
| Part C (Advantage) | Varies by plan ($0–$100+/mo) | Varies by plan | Copays vary; out-of-pocket maximums apply |
| Part D (Drug) | Varies by plan (~$40–$100/mo) | Up to $545/year | Copays/coinsurance vary by drug tier |
* People who paid Medicare taxes for fewer than 40 quarters may pay a premium. Figures shown are approximate 2024 reference amounts — verify current amounts at medicare.gov.
Filling the Gaps
Medigap
Supplement Plans
Original Medicare (Parts A & B) covers a lot — but it doesn't cover everything. You're still responsible for deductibles, coinsurance, and copays, which can add up quickly. That's where Medigap (also called Medicare Supplement Insurance) comes in.
Medigap policies are sold by private insurance companies and are designed to pay many of the "gaps" in Original Medicare coverage. Depending on which plan you choose, Medigap can cover costs like your Part A deductible, Part B coinsurance, and even emergency care during foreign travel.
There are 10 standardized Medigap plans (labeled A through N) available in most states. Each plan with the same letter offers the same basic benefits — the only difference between insurers is price and customer service. Massachusetts, Minnesota, and Wisconsin use different standardized plans.
Important: Medigap policies only work alongside Original Medicare. They cannot be used with Medicare Advantage (Part C) plans.
Best Time to Buy
Your Medigap Open Enrollment Period starts the month you turn 65 and are enrolled in Part B. During this 6-month window, insurers cannot deny you coverage or charge you more due to pre-existing conditions. Once this window closes, you may be subject to medical underwriting — meaning you could be denied or charged higher premiums based on your health status.
Standardized Medigap Plans — Most States
A Different Approach
Medicare Medical
Savings Account Plans
Medicare MSA plans combine a high-deductible Medicare Advantage plan with a tax-free savings account — giving you more control over how you spend your healthcare dollars.
An MSA plan is a type of Medicare Advantage (Part C) plan offered by private insurers approved by Medicare. Like a Health Savings Account (HSA) in the commercial market, Medicare deposits money into your savings account each year — money you can use tax-free to pay for qualified medical expenses before your deductible is met.
Each year, Medicare deposits a set amount of money into your MSA bank account. The deposit amount varies by plan and is typically less than the plan's annual deductible.
You use the deposited funds (and your own money, if needed) to pay for Medicare-covered services until you reach your plan's high deductible. Funds used for qualified expenses are tax-free.
Once you've met your deductible for the year, your MSA plan covers 100% of Medicare-covered services for the rest of the year — no coinsurance or copays.
Any money left in your account at year-end rolls over and grows — you can even invest it. Over time, this can build a meaningful healthcare nest egg.
- Medicare contributes tax-free money to your account annually
- Unused funds roll over year to year and can be invested
- No monthly premium for the medical coverage portion
- 100% coverage once the deductible is met
- Freedom to see any Medicare-accepted provider
- Funds can be used for non-medical expenses (subject to taxes)
- High deductible means significant out-of-pocket costs early in the year
- Part D drug coverage is NOT included — you must enroll separately
- Cannot have other health coverage (e.g., employer plan, Medigap)
- Not available in all areas — plan availability varies by location
- You must report account activity on your federal tax return
- Non-qualified withdrawals are taxable and may carry a penalty
Who is an MSA plan best for? MSA plans tend to work well for people who are generally healthy, don't use many medical services, and want to build tax-free savings for future healthcare costs. They're less ideal if you have ongoing prescriptions or frequent medical needs, since you'll be paying out-of-pocket until the deductible is met.
Got Questions?
Frequently
Asked Questions
Ideally, you should sign up during your Initial Enrollment Period — the 7-month window that starts 3 months before the month you turn 65. If you're still working and have employer coverage, you may be able to delay without penalty. However, once that coverage ends, you have a limited Special Enrollment Period to sign up.
Part A is premium-free for most people who have worked and paid Medicare taxes for at least 10 years (40 quarters). However, Part B has a standard monthly premium, and Parts C and D have costs that vary by plan. There are also deductibles, copays, and coinsurance to consider.
Original Medicare (Parts A & B) is run directly by the federal government and allows you to see any doctor that accepts Medicare anywhere in the U.S. Medicare Advantage (Part C) is offered by private insurers, often bundles Parts A, B, and D, and may include extra benefits — but typically uses a network of doctors and may require referrals.
If you miss your Initial Enrollment Period without a qualifying reason, you may face a late enrollment penalty. For Part B, the penalty is 10% added to your premium for each 12-month period you delayed — and it's permanent. For Part D, the penalty is 1% of the national base beneficiary premium per month delayed.
Original Medicare (Parts A & B) generally does not cover routine dental care, vision exams for glasses, or hearing aids. However, many Medicare Advantage (Part C) plans include these benefits. A standalone dental or vision plan may also be purchased to fill this gap.
Yes. People who qualify for both Medicare and Medicaid are called "dual eligible." Medicaid may help cover costs that Medicare doesn't — including premiums, deductibles, and services like long-term care. Eligibility for Medicaid is based on income and assets and is administered by each state.
Medigap policies are private insurance plans designed to cover the "gaps" in Original Medicare — such as deductibles, coinsurance, and copays. You must have both Part A and Part B to buy a Medigap policy. These plans cannot be used with Medicare Advantage plans.
Several programs can help if you have limited income and resources: the Medicare Savings Program helps pay Part B premiums and other costs; Extra Help (Low Income Subsidy) helps with Part D drug costs; and Medicaid may cover additional expenses. Contact your State Health Insurance Assistance Program (SHIP) for free, unbiased counseling.
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