Medicare Overview
Medicare is the federal health insurance program administered by CMS for people aged 65 and older, certain younger individuals with disabilities, and people with End-Stage Renal Disease (ESRD) or ALS. It covers approximately 65 million beneficiaries.
The Four Parts of Medicare
Part A — Hospital Insurance
- Covers: Inpatient hospital stays, skilled nursing facility (SNF) care, hospice care, some home health services
- Premium: Most people pay $0 (premium-free) if they or a spouse paid Medicare taxes for 40+ quarters
- Deductible: ~$1,632 per benefit period (2024)
- Coinsurance: Days 1–60: $0 after deductible; Days 61–90: ~$408/day; Days 91+: ~$816/day (lifetime reserve days)
- Funding: Payroll taxes (1.45% employee + 1.45% employer)
Part B — Medical Insurance
- Covers: Physician visits, outpatient care, preventive services, ambulance, DME, lab tests, mental health
- Premium: ~$174.70/month (2024 standard); higher for high-income beneficiaries (IRMAA)
- Deductible: ~$240/year
- Coinsurance: Typically 20% of Medicare-approved amount
- Funding: Premiums + general tax revenues
Part C — Medicare Advantage (MA)
- What it is: Private health plan (HMO, PPO, PFFS) that contracts with CMS to provide all Part A and Part B benefits
- Additional benefits: Often includes dental, vision, hearing, fitness, and sometimes Part D coverage
- Premium: Varies by plan; sometimes $0 beyond standard Part B premium
- Network restrictions: HMOs require in-network care; PPOs offer out-of-network at higher cost
- Enrollment: ~50% of Medicare beneficiaries now choose Medicare Advantage
- Administered by: Private insurers (UnitedHealthcare, Humana, Elevance, CVS/Aetna, Kaiser)
Part D — Prescription Drug Coverage
- Covers: Outpatient prescription medications
- Offered through: Stand-alone Prescription Drug Plans (PDPs) or included in Medicare Advantage plans (MA-PDs)
- Structure: Monthly premium + annual deductible + tiered copays/coinsurance + coverage gap + catastrophic coverage
- Formulary: Each plan maintains a drug formulary with tier-based cost-sharing
Comparison Table
| Feature | Part A | Part B | Part C | Part D |
|---|---|---|---|---|
| Coverage | Hospital, SNF, hospice | Doctor visits, outpatient, preventive | All A + B (bundled) | Prescription drugs |
| Premium | Usually $0 | ~$175/mo | Varies ($0+) | Varies (~$33/mo avg) |
| Deductible | ~$1,632/benefit period | ~$240/year | Plan-specific | Plan-specific |
| Administered by | CMS (Original Medicare) | CMS (Original Medicare) | Private insurers | Private insurers |
| Network | Any Medicare provider | Any accepting assignment | Plan-specific network | Plan-specific formulary |
Medigap (Medicare Supplement)
Medigap policies are standardized supplemental insurance plans (Plans A through N) sold by private insurers to cover cost-sharing gaps in Original Medicare (Parts A and B), such as deductibles, coinsurance, and copayments. Medigap is not available with Medicare Advantage.
Enrollment Periods
- Initial Enrollment Period (IEP) — 7-month window around 65th birthday
- General Enrollment Period (GEP) — January 1 – March 31 annually
- Annual Election Period (AEP) — October 15 – December 7 (for Part C and D changes)
- Special Enrollment Periods (SEPs) — Triggered by qualifying life events
