What is Medicare?
Medicare is a health insurance program provided by the government for people 65 and older, as well as younger people with eligible disabilities, end-stage renal disease or ALS. Within the Department of Health and Human Services is an organization called the Centers for Medicare & Medicaid Services (CMS), which administers the program.
Medicare gets its funding from two U.S. Treasury accounts:
| Medicare funding account | Primary funding sources | What it pays for |
|---|---|---|
| Hospital Insurance Trust Fund | Payroll taxes; taxes on some Social Security benefits; interest; premiums from people who don’t qualify for premium-free Part A | Medicare Part A |
| Supplementary Medical Insurance Trust Fund | Funds authorized by Congress; premiums from Part B and Part D; enrollees and interest | Medicare parts B and D |
You might be wondering about the fourth part of Medicare not shown in the table above. Medicare Advantage, also called Part C, doesn’t have a separate trust fund. Instead, Medicare uses money from Part A and Part B accounts to pay private insurers that provide these plans.
Eligibility
If you meet federal citizenship or residency requirements, you become eligible for Medicare at 65. If under 65, you may also qualify if you meet certain circumstances:
- You’ve received Social Security Disability Insurance benefits for 24 months
- You have ALS and receive disability benefits, with no 24-month waiting period
- You have end-stage renal disease, need dialysis or a kidney transplant and meet applicable work-history requirements
Disability-based Medicare might not last indefinitely. The Social Security Administration (SSA) conducts continuing disability reviews every six months to seven years, depending on whether it expects your condition to improve. If the agency determines you no longer meet its disability rules, your disability benefits and related Medicare eligibility may end.
Different protections apply when your disability payments stop if you return to work. If you’re eligible, you can usually retain Medicare for at least 93 months after completing a nine-month trial work period, provided you continue to meet Social Security’s medical disability rules.
Coverage
Original Medicare covers medically necessary and preventive services through Part A and Part B. Part A covers your inpatient hospital care, short-term skilled nursing facility care, hospice and some home health care.
Part B covers services like doctor visits, outpatient care, preventive care, mental health care, ambulance transportation and durable medical equipment.
To get coverage for prescription drugs, you need a separate Part D plan or a Medicare Advantage plan that includes it (called Medicare Advantage prescription drug plan, or MAPD).
Common coverage gaps
Depending on the service, be mindful of certain coverage gaps.
| Service | What Original Medicare doesn’t cover |
|---|---|
| Long-term custodial care | Personal care, such as help bathing, dressing or eating |
| Dental care | Most routine dental care, including cleanings, fillings, extractions and dentures |
| Vision care | Routine eye exams for glasses or contacts and most eyewear, but Medicare covers some tests and treatments for eye diseases and one pair of corrective lenses after certain cataract surgeries |
| Hearing care | Hearing aids and exams for fittings, but Medicare might cover diagnostic hearing and balance exams when medically necessary |
Medicare Advantage plans must cover nearly all medically necessary services covered by Original Medicare, and many include additional dental, vision or hearing benefits. Coverage limits, provider networks and out-of-pocket costs can vary significantly across plans, and even when Medicare covers a service, you might still owe a deductible, copayment or coinsurance.
Medicare parts A, B, C and D
Medicare parts compared
Medicare has four parts, each covering different types of care. Parts A and B make up Original Medicare, which the federal government provides. Medicare-approved private insurers offer parts C and D.
| Medicare part | What it covers | Who sells it | Typical costs |
|---|---|---|---|
| Part A: Hospital insurance | Inpatient hospital care, short-term skilled nursing facility care, hospice and some home health care | Federal government | Most pay no monthly premium. Those who must buy pay $311 or $565 per month. The inpatient hospital deductible is $1,736 per benefit period. |
| Part B: Medical insurance | Doctor visits, outpatient care, preventive services and durable medical equipment | Federal government | The standard premium is $202.90 per month, although higher-income beneficiaries may pay more. The annual deductible is $283, followed by 20% coinsurance for most covered services. |
| Part C: Medicare Advantage | Bundles parts A and B and usually Part D. Plans often include extra dental, vision, hearing or fitness benefits. | Medicare-approved private insurers | Premiums, deductibles, copayments and annual out-of-pocket limits vary by plan. Enrollees must continue paying the Part B premium even if their Medicare Advantage plan has a $0 premium. |
| Part D: Prescription drug coverage | Covers prescription drugs listed on the plan’s formulary | Medicare-approved private insurers | The projected average premium for a stand-alone plan is $34.50 per month. Actual premiums and cost-sharing vary, and the 2026 deductible can’t exceed $615. |
Medigap, while similar-sounding in name, isn’t a fifth part of Medicare. Private insurers sell these supplemental policies to help you “fill in the gap” by paying for certain deductibles, copayments and coinsurance under Original Medicare parts A and B. Medigap doesn’t work with Medicare Advantage, and you usually need a separate Part B plan for prescription drug coverage.
Medicare enrollment periods
Medicare has several enrollment windows based on how you become eligible and whether you already have coverage:
- Initial Enrollment Period: If you’re enrolling when you first become eligible for Medicare
- General Enrollment Period: If you miss your Initial Enrollment Period and don’t qualify for a Special Enrollment Period
- Special Enrollment Period: If you have delayed enrollment because of qualifying job-based coverage or experience another qualified event
- Medicare Open Enrollment: When you want to join, drop or switch Medicare Advantage or Part D plans
- Medicare Advantage Open Enrollment: If you have a Medicare Advantage plan and want to make a switch or return to Original Medicare
Initial Enrollment Period
You get a seven-month window to sign up for Medicare. It opens three months before your 65th birthday and closes three months after your birthday month. For example, if you turn 65 on June 15, you can enroll from March through September.
If you collect Social Security or Railroad Retirement Board benefits, you usually receive Medicare automatically. Others must sign up. Enrolling before your birthday can help prevent coverage gaps.
General Enrollment Period
Medicare’s General Enrollment Period runs from Jan. 1 through March 31 every year. It is for people who missed the Initial Enrollment Period to sign up for Original Medicare.
Late enrollment penalties
If you delay Part B or Part D without qualifying coverage, you may pay a higher monthly premium for as long as you have that coverage.
| Medicare part | Late-enrollment penalty |
|---|---|
| Part B | An extra 10% of the standard premium for each full 12-month period you could’ve enrolled but didn’t |
| Part D | An extra 1% of the national base beneficiary premium for each full month you went without Part D or other creditable drug coverage |
A Special Enrollment Period can help you avoid these penalties.
Special Enrollment Period
If you delay Part B because you or your spouse have group health coverage through employment, you can enroll while that coverage continues or within eight months after the employment or coverage ends, whichever occurs first. You usually won’t owe a late enrollment penalty.
COBRA and retiree insurance don’t count as current employment-based coverage. If you elect COBRA, it also doesn’t extend your eight-month deadline. If you want Part B to begin when job-based insurance ends, you should apply the month before losing that coverage.
Medicare options: Original vs. Advantage
Original Medicare gives you a much broader choice of providers compared to Medicare Advantage. On the flip side, Medicare Advantage plans often combine more benefits in one private plan.
| Feature | Original Medicare | Medicare Advantage |
|---|---|---|
| Provider access | Any U.S. doctor or hospital accepting Medicare | Usually requires in-network care for nonemergencies |
| Referrals | Not usually required | May be required, depending on the plan |
| Drug coverage | Add a separate Part D plan | Usually included |
| Extra benefits | Generally not included | Often includes dental, vision and hearing benefits |
| Out-of-pocket maximum | No annual cap; Medigap can reduce cost-sharing | Annual cap for covered Part A and B services |
| Travel coverage | Nationwide | Limited to the plan’s network or service area for nonemergency care |
FAQ
Do you have to pay for Medicare?
Yes, you usually must pay for Medicare. Most people don’t pay a premium for Part A, but Part B has a monthly premium, and many people also pay for Part D, Medicare Advantage or Medigap coverage.
Does Medicare cover 100% of hospital bills?
No, Medicare doesn’t cover 100% of hospital bills. Under Original Medicare, you may owe a Part A deductible and coinsurance for longer stays at a hospital or skilled nursing facility.
Does Medicare cover dental care?
No, Original Medicare doesn’t cover dental care. Some Medicare Advantage plans offer dental benefits, and Medicare may cover limited dental services tied to another covered medical procedure.
What is the difference between Medicare and Medicaid?
Medicare is federal health insurance for those over 65 or certain younger people with disabilities. Medicaid is a joint federal-state program providing health coverage largely based on income and other eligibility rules. Read more about Medicare vs. Medicaid.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Centers for Medicare & Medicaid Services, "Medicare Monthly Enrollment." Accessed Sept. 9, 2026.
- U.S. Centers for Medicare and Medicaid Services, "How is Medicare funded?" Accessed Sept. 9, 2026.
- U.S. Centers for Medicare & Medicaid Services, "Get started with Medicare." Accessed Sept. 9, 2026.
- Centers for Medicare & Medicaid Services, "What Original Medicare covers." Accessed Sept. 9, 2026.
- U.S. Centers for Medicare and Medicaid Services, "What's not covered?" Accessed Sept. 9, 2026.
- U.S. Centers for Medicare and Medicaid Services, "Parts of Medicare." Accessed Sept. 9, 2026.
- U.S. Centers for Medicare and Medicaid Services, "Costs." Accessed Sept. 9, 2026.
- Centers for Medicare & Medicaid Services, "2026 Medicare Parts A & B Premiums and Deductibles." Accessed Sept. 9, 2026.
- U.S. Centers for Medicare & Medicaid Services, "Medicare Advantage and Medicare Prescription Drug Programs Expected to Remain Stable in 2026." Accessed Sept. 9, 2026.
- Centers for Medicare & Medicaid Services, "Final CY 2026 Part D Redesign Program Instructions." Accessed Sept. 9, 2026.
- U.S. Centers for Medicare & Medicaid Services, "When does Medicare coverage start?" Accessed Sept. 9, 2026.
- U.S. Centers for Medicare and Medicaid Services, "When can I sign up for Medicare?" Accessed Sept. 9, 2026.
- U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services, "Working past 65." Accessed Sept. 9, 2026.
