Medicare is a federal health insurance program for people aged 65 or older, and those with certain health conditions. It’s meant to help Americans cover their healthcare costs as they age, but it doesn’t cover all medical expenses or long-term care. There are several plans to choose from, and the costs, eligibility requirements and enrollment processes vary between each.
Disclaimer: We’re here to help you navigate the nuances of Medicare plans and decide which one is right for you and your family. For the most official information about the program, go to Medicare.gov. And if you still need advice, you can also get free health insurance counseling through your local State Health Insurance Assistance Program (SHIP).
All US citizens are eligible for Medicare when they turn 65, as well as legal permanent residents who are 65 or older and have lived in the country for five years in a row.
If you’re under 65, you might be eligible for Medicare if you have:
A long-term disability and have received Social Security benefits for more than two years.
End-stage renal disease — i.e. permanent kidney failure requiring dialysis or a transplant.
Amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.
The amount you pay for Medicare comes down to your work history and income.
Can I get Medicare coverage if I don’t sign up for Social Security at 65?
Yes. If you’re still in the workforce and don’t want to start collecting Social Security benefits as soon as you turn 65, you can still enroll in Medicare.
If Medicare offers better coverage than the health insurance plan you have through work, you might want to consider signing up. If you wait, you may end up paying higher premiums when you do enroll.
Types of Medicare plans
There are two main Medicare plans to choose from:
Original Medicare (Part A and Part B)
Medicare Advantage (Part C)
Depending on the plan you pick, you may be eligible for additional coverage:
Medicare prescription drug coverage (Part D)
Supplemental Medicare (Medigap)
Features of Medicare plans
This table breaks down each coverage option to help you decide which plan is best for you.
What it covers
What’s not covered?
Which providers can I see?
Does it work with other Medicare plans?
Medicare Part A (Hospital Insurance)
Inpatient care in a hospital or skilled nursing facility following a hospital stay.
Part A also pays for some home health care, as well as hospice care.
Most prescriptions, as well as long-term care, dental care, eye exams, hearing aids, dentures, cosmetic surgery, acupuncture and routine foot care.
Medicare doesn’t apply when you’re traveling outside the US and need care — even if it’s an emergency.
Visit any doctor, clinic or hospital in the US that accepts Medicare.
You don’t need a referral to see a specialist, as long as they take Medicare.
Yes — you can enroll in a separate drug plan (Medicare Part D).
You can also opt into Medigap, Medicaid, employee or union coverage to help you cover out-of-pocket costs.
Medicare Part B (Medical Insurance)
Emergency, urgent and outpatient care, as well as services from doctors and other health providers.
Part B also pays for some medical supplies, home health care and preventative services.
Same as above.
Same as above.
Same as above.
Medicare Advantage (Part C)
A bundled alternative to Original Medicare, these comprehensive plans include Part A, Part B and usually Part D.
Most plans offer additional benefits, such as vision, hearing, dental and wellness coverage.
Medically unnecessary services.
Usually limited to doctors, clinics and hospitals in your plan’s network and service area.
You’ll most likely need a referral to see a specialist.
If your plan doesn’t offer drug coverage, you can enroll in a separate Part D plan.
Medicare prescription drug coverage (Part D)
Most generic and brand-name prescription drugs, including shots and vaccines.
Hospital and medical care.
N/A — though you will need a prescription to get any drug.
Yes — you can have Part D at the same time as Part A, Part B or Medicare Advantage.
Medigap (Parts F-N)
Also known as Part F, G, K, L, M and N, Medigap is designed to supplement Original Medicare.
These plans can help pay for “leftover” out-of-pocket costs, like copays, coinsurance and deductibles. Some policies also cover medical care outside the US.
Most prescriptions, as well as long-term care, dental care, eye exams, glasses, hearing aids and private duty nursing.
Yes — this plan works alongside Original Medicare (Part A or B).
How to choose a Medicare plan
When you’re narrowing down plans, compare these factors:
Cost. Consider premiums, deductibles and coinsurance, as well as the maximum amount you’ll pay out of pocket for medical services.
Coverage. Does the plan cover the services you need? This could include hospital stays, doctor’s visits, medical supplies and additional benefits like vision and dental.
Other coverage. Learn how the plan works with any health insurance you currently have, such as the policy you have through work.
Prescription drugs. Does the plan pay for prescription drugs, or will you need to buy a separate policy? If you take medication regularly, check to see if it’s covered under the plan.
Choice of doctors and healthcare providers. Find out whether your doctors accept the plan or if you’ll need to stay in-network. Also, look at how the plan treats specialist referrals.
Healthcare outside the US. Original Medicare and Medicare Advantage plans won’t step in if you need care overseas, but some Medigap plans will.
How to apply for Medicare
The process differs depending on the plan you choose. For context, Original Medicare is run by the federal government, while Part D, Medicare Advantage and Medigap are offered by health insurance companies.
If you already get Social Security or Railroad Retirement Board benefits, you’ll be automatically enrolled in Original Medicare three months before you turn 65 You’ll also be automatically enrolled if you have ALS, or you’re younger than 65 and have a qualifying disease or disability.
If not, you’ll need to apply through the Social Security Administration (SSA). There are three ways to do this:
Phone. Call 800-772-1213 on weekdays from 7 a.m. to 7 p.m. local time.
In person. Visit your nearest SSA office — you can find it by entering your ZIP code on the site.
You’ll be automatically enrolled if:
You’re part of the government’s Low-Income Subsidy program — also known as Extra Help
You get Supplemental Security Income (SSI)
Otherwise, you can buy a Part D plan through a health insurance company or pharmacy around the time you turn 65. You need to enroll in Medicare Part A or Part B first. The federal government regulates prescription drug plans, so they all need to follow the same rules.
Log in or create a Medicare account to see your options.
Compare Part D plans.
When you’ve settled on one, fill out the enrollment form. You’ll need your Medicare number and the date your Part A and/or B coverage started.
Call the plan you want to enrol in, or call Medicare at 800-633-4227 to have a counselor help you with the process.
To apply for Medicare Advantage, you need to have Original Medicare first. Then, follow the same steps as Part D above.
It’s important to compare the rules and costs of each plan before deciding on one. While Medicare Advantage plans are regulated by the federal government, the finer details vary — and plans can change their extra benefits and costs once a year.
Medigap policies are sold by insurance companies. You can shop on insurers’ sites directly, or start your research via Medicare’s site:
Compare the benefits of each Medigap plan and decide which one you want. In most states, the plans are lettered Part F, G, K, L, M and N.
Enter your ZIP code to find the cheapest policies in your area. The price is the only difference between plans with the same letter sold by different insurers.
Contact a handful of insurance companies to get a quote.
When you find the best policy for the lowest price, apply with the insurer.
How do I enroll in Medicare?
The enrollment period comes down to the plan you want.
If you’re not automatically enrolled, you have a seven-month period to enroll: the three months before you turn 65, the month of your birthday, and three months after that. This is known as the “initial enrollment period.”
For example, if you were born on August 30, it would start on May 1 and end on November 30.
If you don’t sign up for Original Medicare when you’re first eligible, you can enroll during “general enrollment”. It runs from January 1 to March 31 each year, but you may end up paying a higher premium.
But the best time to buy a policy is within six months after enrolling in Medicare Part B. That way, you’ll be able to buy any Medigap policy sold in your state — even if you have a health condition.
After the six-month window is up, insurers are allowed to use medical underwriting to decide whether to issue a policy — and how much to charge.
What is a Special Enrollment Period?
If you have a “qualifying life event,” you’re allowed to sign up for Original Medicare and Medicare Advantage during a Special Enrollment Period (SEP). This means you don’t need to worry if you miss the open or general enrollment periods.
The list of qualifying events includes major life changes, according to Healthcare.gov:
Loss of health insurance. For example, losing coverage under a spouse’s employer-sponsored plan, or no longer qualifying for Medicaid.
Changes in household size. Getting married or divorced, having a baby, adopting a child or losing coverage due to a family member’s death.
Changes in residence. Moving to a different ZIP code or county or changing work locations.
Other events. Becoming a US citizen, being released from prison or becoming eligible for Medicaid.
These events are especially important for people who choose not to enroll in Medicare Part B when they’re eligible and decide to do so later. Unless you qualify for a SEP, your premium will go up 10% for every 12-month period you could have enrolled in Part B, but didn’t.
How much does Medicare cost?
The cost structure varies between plans. These are the basic costs you can expect to pay in 2020 and 2021 for each type of plan, according to Medicare.gov.
To find the out-of-pocket costs for a specific item or service or whether you’ve reached your deductible, log into your Medicare account.
Most people don’t pay a monthly premium for Part A.
But if you were in the workforce for less than 30 quarters (7.5 years), the standard premium is $458 /month in 2020 — and $471/month in 2021.
If you paid payroll taxes for 30 to 39 quarters (7.5 to 10 years), the standard premium is $252 in 2020 — and $259/month in 2021.
$1,408 in 2020, or $1,484 in 2021 for each benefit period.
This depends on how long you’re in the hospital.
Days 1-60: $0
Days 61-90: $352 per day, and $371 per day in 2021
Days 91 and beyond: $704 per day for up to 60 days, or $742 per day in 2021
Beyond “lifetime reserve days:” you’ll pay all costs
No out-of-pocket maximum for your share of the costs.
Premiums are based on your income level.
They start at $144.60/month — and $148.50/month in 2021.
$198 per year in 2020, and $203 in 2021.
After you meet your deductible, you’ll typically pay 20% of your medical costs.
No out-of-pocket maximum for your share of the costs.
The monthly premium varies by plan — but you’ll always need to pay the Part B premium.
Varies by plan.
Varies by plan.
The maximum out-of-pocket limit is $6,700 in 2020, and $7,550 in 2021.
Plans can set their limit below this, but they can’t ask you to pay more than that figure out-of-pocket.
Once you reach your limit, you’ll pay nothing for services that Part A and B cover.
Depends on your plan and income.
Varies by plan, but no plan can have a deductible higher than $435 in 2020, and $445 in 2021.
Varies by plan. But once you spend $4,130, you’ll pay no more than 25% of the cost of prescription drugs until you reach your out-of-pocket limit.
The maximum out-of-pocket limit is $6,350 in 2020, and $6,550 in 2021.
Varies between plans.
$2,340 in 2020, and $2,370 in 2021.
You’ll pay for all Medicare-covered costs — including coinsurance and copays — until you reach your Medigap deductible.
Only two plans have out-of-pocket limits.
Part K: $5,880 in 2020, and $6,220 in 2021
Part L: $2,940 in 2020, and $3,110 in 2021
Can I get help paying my Medicare costs?
Potentially. If you’re a low-income worker or have a disability, you might qualify for a Medicare Savings Program (MSP) through Medicaid. This subsidy helps with Medicare Part A and/or Part B premiums, as well as other costs like deductibles and coinsurance.
There are four programs on offer, and you can find the eligible criteria for each on the Medicare site.
If you qualify for MSPs, you’re automatically eligible for Medicare’s Extra Help program — which can step in to pay for some Part D costs.
Alternatives to Medicare
The primary purpose of Medicare is to give retirees access to low-cost healthcare. If you don’t meet the eligibility criteria, explore these options:
Check if you qualify for Medicaid. This program is open to low-income Americans. The requirements vary by state, but you’ll typically qualify for coverage if your income is at or below 138% of the federal poverty level. That level is $17,609 for a single person, $23,791 for two people, and $36,156 for a family of four. This limit may increase if you’re pregnant or have children, a disability or a serious illness.
Ask if you have coverage through your employer. Many companies offer health insurance as part of their workplace benefits and subsidize the premiums. If yours does, you’ll be able to enroll during your company’s annual enrollment period.
Shop for a policy on the Health Insurance Marketplace. Thanks to the Affordable Care Act, US citizens can apply for a subsidized policy through Healthcare.gov. The site guides you to a state or federal “exchange,” where you can look for a policy that suits your needs and budget.
Purchase an individual policy. You can apply for a policy directly with a health insurance company — though this is the most expensive option.
Compare alternatives to Medicare
Medicare is designed to cover most medical expenses for those over 65 years old and young people with specific health conditions. While you pay for coverage through taxes when you’re in the workforce, you’ll still have to pay for a portion of your care — such as hospital stays, doctor’s visits or medications.
There are two main ways to get Medicare: through Social Security and health insurance companies. To get the care you need at an affordable price, take the time to compare plans, coverage and costs.
Depending on your plan and where you live, you’ll most likely pay Medicare rates — which come to 20% of the cost.
No. You can’t enroll in Medicare via Healthcare.gov — only through the Medicare site or private insurance companies, depending on your plan.
No. Under the ACA, you’ll need to enroll in a Medicare Part A plan or pay a tax penalty.
If your company has 20 or more employees, your group plan will pay first, and Medicare will pay second. And if your employer has less than 20 employees, Medicare pays first and the group plan pays second.
Also known as a late enrollment penalty, this applies to those who don’t sign up for Medicare Part A, B or D when they’re first eligible.
For Part A and B, the premium goes up by 10% each year you could have had the coverage. For Part D, Medicare multiplies 1% of the national base monthly premium — $32.74 in 2020 and $33.06 in 2020 — by the number of months you didn’t have coverage. They round the number to $0.10, and tack it on to your ongoing premium when you do sign up.
Katia Iervasi is a staff writer who hails from Australia and now calls New York home. Her writing and analysis has been featured on sites like Forbes, Best Company and Financial Advisor around the world. Armed with a BA in Communication and a journalistic eye for detail, she navigates insurance and finance topics for Finder, so you can splash your cash smartly (and be a pro when the subject pops up at dinner parties).
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