Medicare Basics

Medicare basics come down to four parts, A, B, C, and D, each covering a different slice of your health care costs. Medicare is the federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS) for people age 65 and older, along with some younger people who have qualifying disabilities. If you are turning 65, retiring, or helping a parent sort out coverage, learning the basics of Medicare before you enroll can help you avoid gaps in coverage and the late enrollment penalty. This guide covers what each part actually pays for, what none of the parts cover, and how a Medicare Supplement or Medicare Advantage plan can fill the gaps that remain.

The Four Parts of Medicare

Each part of Medicare covers a distinct type of care. Knowing the difference is the first real medicare basics lesson most people need before they enroll.

• Part A (hospital insurance) covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people qualify for premium-free Part A because they or a spouse paid Medicare payroll taxes for at least 10 years.
• Part B (medical insurance) covers outpatient care, doctor visits, preventive services, and durable medical equipment. It carries a monthly premium that increases at higher income levels.
• Part C (Medicare Advantage) is sold by private insurers approved by Medicare. These plans replace Parts A and B, must cover everything Original Medicare covers, and typically add extras like dental, vision, or a prescription drug benefit. See how Medicare compares to Medicare Advantage before deciding between them.
• Part D (prescription drug coverage) is sold separately by private insurers and helps pay for prescription medications. Enrolling late without other creditable drug coverage can trigger the Medicare late enrollment penalty, which is added to your premium for as long as you have Part D.

You can review official coverage details for every part at medicare.gov. For a full breakdown of premiums, deductibles, and coinsurance, see our Medicare cost guide.

When Can You Enroll in Medicare

Most people become eligible for Medicare at age 65. Your Initial Enrollment Period runs for seven months: the three months before your birthday month, your birthday month, and the three months after. Missing this window without other creditable coverage can trigger the Medicare late enrollment penalty for Part B and Part D, which stays attached to your premium for as long as you're enrolled. If you're still working and covered by a group health plan when you turn 65, you may qualify for a Special Enrollment Period instead.

What Medicare Does Not Cover

Original Medicare (Parts A and B) leaves out several categories of care that many people assume are included. According to Medicare.gov, common gaps are:

• Most routine dental, vision, and hearing care
• Long-term custodial care, such as help with daily living in a nursing home
• Cosmetic procedures
• Most care received outside the United States

Full details on these exclusions are available at medicare.gov. Closing these gaps is the job of either a Medicare Supplement (Medigap) policy, which pays some of the out-of-pocket costs Original Medicare leaves behind, or a Medicare Advantage plan with built-in extra benefits.

Filling the Gaps: Medigap vs. Medicare Advantage

Once you understand medicare basics, the next decision is how to cover what Original Medicare leaves out. Most people choose one of two paths: a Medigap policy such as Plan G or Plan N, or a Medicare Advantage plan with built-in extras.

Where to Start With Medicare Basics

Your starting point depends on where you are in the process:

• If you are turning 65 or new to Medicare, review your enrollment timing and qualifying events so you don't miss your window.
• If you are leaving a job or losing employer coverage, see how to handle enrolling in Medicare after losing employer coverage.
• If cost is your main concern, check whether you qualify for a Medicare Savings Program that helps pay premiums and out-of-pocket costs.
• For definitions of terms used throughout this guide, see the Medicare glossary.