Medicare Basics

What is Medicare?

Medicare is the federal health insurance program for people 65 or older, people under 65 with certain disabilities, and people of any age with End-Stage Renal Disease (ESRD).

When and how do I sign up for Medicare?

If you're already getting Social Security benefits, you'll be automatically enrolled into Medicare and will receive your Medicare card three months before your 65th birthday (or 25th month of disability).

If you're not receiving Social Security payments yet, you may need to manually sign up for Medicare Part A & Part B during your Initial Enrollment Period through SSA.

What is Medicare Part A and Part B?

Part A helps pay for hospital, skilled nursing facility, home care, and hospice. In most cases, if you paid into Medicare while working you will not have to pay for Part A.

Part B helps pay for physician services, outpatient care, durable medical equipment, and other medical services. Most people will pay a monthly premium for Part B.

Part A & Part B is known as Original Medicare and covers about 80% of allowable medical charges.

What is Medicare Advantage (Part C)?

Medicare Advantage is an “all in one” alternative to Original Medicare. These “bundled” plans include Part A, Part B, and usually Part D. Most plans offer extra benefits that Original Medicare doesn’t cover — like vision, hearing, dental, and more. Medicare Advantage Plans have yearly contracts with Medicare and must follow Medicare’s coverage rules. The plan must notify you about any changes before the start of the next enrollment year.

What is Medicare Part D?

Part D refers to prescription drug coverage. To get Medicare drug coverage, you must join a Medicare-approved plan that offers drug coverage (this includes Medicare drug plans and Medicare Advantage Plans with drug coverage).

Each plan can vary in cost and specific drugs covered, but must give at least a standard level of coverage set by Medicare. Medicare drug coverage includes generic and brand-name drugs. Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different "tiers" on their formularies.

Plans have different monthly premiums. You’ll also have other costs throughout the year in a Medicare drug plan. How much you pay for each drug depends on which plan you choose.

What is Medicare Supplement (Medigap)?

Medicare Supplement plans (also known as Medigap) fills in the gaps of Original Medicare, such as the 20% of Part B services not covered by Medicare.

What if I am still working?

If you’ve worked at least 10 years (40 quarters) under Medicare-covered employment and paid Medicare taxes during that time, you qualify for premium-free Medicare Part A.

Medicare Part B usually comes with a monthly premium, so you may choose to delay your Part B enrollment if you or your spouse are still working and have employer-based group coverage.

If you don’t sign up for Medicare when you’re first eligible and don’t have other coverage based on current employment, you could have to pay a late-enrollment penalty later when you do enroll. Late-enrollment penalties can apply to Medicare Part B and Part D.

Even if you have health coverage through your employer or union, Medicare may help pay for some of the costs not covered by your group health plan. If your company has less than 20 employees, Medicare is likely the primary payer before your group health insurance. You may want to consult with your employer or union benefits administrator for specifics on how your health coverage and costs may compare with Medicare.

If you do decide to wait until your group coverage ends to enroll in Medicare Part A and/or Part B, you’ll have an 8-month Special Enrollment Period to sign up for Medicare that starts once you stop working or your group coverage ends (whichever happens first). You can also enroll in Medicare at any time while you are still working and have employer-based coverage.

If you choose COBRA after you stop working, do not wait until your COBRA coverage ends to sign up for Medicare. If you delay enrolling in Medicare Part A and/or Part B after your Special Enrollment Period ends, you’ll have to wait until the next General Enrollment Period (January 1 to March 31 every year) to enroll, and you may have to pay a late-enrollment penalty.