Medicare and Medicaid · Lesson 15 of 16
How does Medicare work, and when should I sign up?
The short answer
Medicare is federal health insurance for people 65 and older and some younger people with disabilities. Part A covers hospital care, Part B covers doctors, and Part D covers drugs. You choose Original Medicare or a Medicare Advantage plan. Your first sign-up window lasts 7 months around your 65th birthday.
Key takeaways
- Original Medicare lets you see any provider that takes Medicare. Medicare Advantage usually uses a network and may need approvals.
- Missing your sign-up window can mean a monthly Part B penalty for as long as you have Part B.
- Free, unbiased counseling is available through your State Health Insurance Assistance Program (SHIP).
The parts of Medicare
- Part A (hospital insurance) helps cover inpatient hospital stays, skilled nursing facility care, hospice, and some home health care.
- Part B (medical insurance) helps cover doctor visits, outpatient care, medical equipment such as walkers, and many preventive services.
- Part D (drug coverage) is offered by private plans that follow Medicare rules.[1]
Two main ways to get Medicare
Original Medicare is Part A and Part B. You can use any doctor or hospital that takes Medicare. You usually pay a share, such as 20% coinsurance for many Part B services. You can add a separate drug plan, and you can buy a Medigap policy to help pay your share.
Medicare Advantage (Part C) is a private plan approved by Medicare that bundles Part A, Part B, and usually drug coverage. You may need to use the plan's network and get prior authorization for some care. These plans have a yearly limit on out-of-pocket costs, and many add vision, hearing, or dental benefits.[1]
When to sign up
Your first chance is the Initial Enrollment Period. It lasts 7 months: the 3 months before the month you turn 65, that month, and the 3 months after. If you miss it, you may have to wait and pay a monthly late penalty for as long as you have Part B. The penalty grows the longer you wait.[2]
If you missed it, the General Enrollment Period runs January 1 to March 31 each year, and coverage starts the next month. Some situations, such as losing Medicaid or job-based coverage, give you a Special Enrollment Period without a penalty.[2]
What can be different for you
If you get Social Security benefits before 65, you are usually signed up for Parts A and B automatically. If you or your spouse still work and have job-based coverage, you may be able to delay Part B without a penalty; ask your employer and Social Security before you decide. If you have an HSA, you cannot put money into it once Medicare starts. Medigap rules and prices differ by state.
More detail (optional)
Changing plans each year
Each fall, Medicare plans send an Annual Notice of Change. During open enrollment, October 15 to December 7, you can switch between Original Medicare and Medicare Advantage or change drug plans.[3]
Help with costs
If your income and savings are limited, a Medicare Savings Program from your state may help pay Part B premiums, and Extra Help may lower Part D drug costs. Some people qualify for both Medicare and Medicaid.
Notices to keep
Original Medicare sends a Medicare Summary Notice, which works like an EOB. Medicare Advantage and drug plans send an Evidence of Coverage and an Annual Notice of Change. Medicare has its own appeal steps; your notice explains them.
Words in this lesson
- Medicare
- Federal health insurance for people 65 and older and for some younger people with disabilities or certain conditions.
- Medicare Advantage (Part C)
- A private plan approved by Medicare that bundles Part A, Part B, and usually drug coverage. It often uses a network and may require prior authorization.
- Medigap
- Extra insurance from a private company that helps pay your share of costs in Original Medicare. Plans are standardized and named by letters in most states.
- Coinsurance
- Your share of a covered cost as a percentage, such as 20%, usually after you meet your deductible.
- Prior authorization
- Your plan's approval before certain care. Approval is not a guarantee of payment.
Related
Where can I go for help?
Free help is often close by: the member services number on your insurance card, the billing office for your provider, your state insurance department, and nonprofit patient advocates.
This is general education. For decisions about your own plan, taxes, or legal rights, check your plan documents or a qualified professional.