Your 65th birthday approaches. Friends mention Medicare. Your mailbox fills with insurance brochures. The letters don’t make sense. Parts A, B, C, D. Original Medicare. Medicare Advantage. Medigap. What does any of this mean?
Medicare doesn’t have to confuse you. The system uses alphabet letters because it grew piece by piece over decades. But once you understand the basics, everything clicks into place.
This guide explains Medicare in plain English. No jargon. No confusing terms. Just clear answers about what Medicare is, how it works, and what you need to do.
What Is Medicare?
Medicare is federal health insurance for people 65 and older. Some younger people with disabilities also qualify. The government runs it, funded by Medicare taxes you paid while working.
Think of it as your earned benefit. You paid into the system your entire career. Now the system pays for your healthcare.
Medicare isn’t free. You’ll pay some costs. But it covers most major medical expenses that would otherwise bankrupt you.
The Four Parts of Medicare Explained
Medicare splits into four parts. Each covers different healthcare services.
Part A: Hospital Insurance
Part A covers hospital stays when you’re admitted as an inpatient. It also includes hospice care and some skilled nursing facility care after hospitalization.
Most people pay nothing for Part A. If you worked and paid Medicare taxes for at least 10 years, it’s free. Your spouse’s work history can also qualify you.
Free doesn’t mean zero costs though. You pay a deductible each time you’re admitted to the hospital. For 2025, that deductible is $1,676 per benefit period.
Part A covers your first 60 days in the hospital fully after the deductible. Days 61 through 90 cost $419 daily. After that, you pay $838 per day for up to 60 lifetime reserve days.
Part B: Medical Insurance
Part B covers doctor visits, outpatient care, preventive services, ambulance rides, medical equipment, and lab tests. This is the coverage you use most often.
Unlike Part A, everyone pays for Part B. The standard monthly premium is $185 in 2025. If you collect Social Security, they automatically deduct this from your check.
You also pay an annual deductible of $257. After meeting the deductible, you typically pay 20 percent of costs for most services.
Higher earners pay more. If you made over $106,000 as an individual in 2023, you’ll pay extra in 2025. This surcharge is called IRMAA. Your premium could range from $259 to $628.90 monthly depending on income.
Part C: Medicare Advantage
Part C offers an alternative way to get Medicare coverage. Private insurance companies run these plans, combining Parts A and B into one package.
Most Medicare Advantage plans include Part D prescription coverage. Many add extra benefits like dental, vision, hearing, and gym memberships.
These plans often have lower premiums than Original Medicare. Some cost zero dollars monthly beyond your Part B premium. But they come with networks. You usually must use doctors and hospitals in the plan’s network.
Medicare Advantage plans also cap your annual out-of-pocket spending. Once you hit that cap, the plan pays everything else. Original Medicare has no spending cap.
Part D: Prescription Drug Coverage
Part D helps pay for prescription medications. You buy this coverage from private insurance companies approved by Medicare.
If you have Original Medicare, you’ll likely want to add a Part D plan. These plans cost extra but save you money on medications.
Medicare Advantage plans usually include Part D coverage already. Check before adding a separate drug plan.
Big news for 2025. Your out-of-pocket drug costs now cap at $2,000 annually. Once you spend that much, you pay nothing more for covered drugs the rest of the year.
Original Medicare vs Medicare Advantage
You have two main paths for getting Medicare coverage. Understanding the difference helps you choose what works best.
Original Medicare
Original Medicare means you have Parts A and B directly through the federal government. You go to any doctor or hospital that accepts Medicare. No networks. No referrals needed.
Original Medicare covers about 80 percent of costs. You pay the remaining 20 percent plus deductibles. This can add up fast during expensive treatments.
Most people with Original Medicare add two things. First, a Part D prescription drug plan. Second, a Medigap supplemental policy to cover the 20 percent coinsurance and other gaps.
Medicare Advantage
Medicare Advantage replaces Original Medicare. One private insurance plan handles everything. You still have Medicare, just delivered differently.
These plans must cover everything Original Medicare covers, plus they often add extras. Lower premiums and additional benefits attract many people.
The tradeoff is less freedom. You pick doctors from the plan’s network. Need a specialist? You might need a referral. Travel outside your coverage area? Care costs more or isn’t covered.
Which Should You Choose?
No single answer fits everyone. Original Medicare gives you flexibility but costs more without supplemental coverage. Medicare Advantage saves money upfront but limits your choices.
Consider your health, travel plans, and preferred doctors. If your doctors don’t accept a Medicare Advantage plan’s network, stick with Original Medicare. If you want predictable costs and extra benefits, Medicare Advantage might work better.
What Medicare Covers
Medicare covers medically necessary care. Here’s what that includes.
Hospital Care
Inpatient stays, surgery, hospital meals, nursing care, and medications given during your stay all fall under Part A. Semi-private rooms are standard. Private rooms cost extra unless medically necessary.
Doctor Visits
Part B covers appointments with doctors, specialists, and physician assistants. Annual wellness visits cost nothing. Preventive screenings like mammograms and colonoscopies are free too.
Emergency Care
Both Original Medicare and Medicare Advantage cover emergency room visits. If admitted to the hospital from the ER, Part A takes over.
Skilled Nursing Care
After at least three days hospitalized, Medicare covers up to 100 days in a skilled nursing facility. The first 20 days are free. Days 21 through 100 cost $209.50 daily in 2025.
Home Health Care
Part-time skilled nursing care, physical therapy, and speech therapy at home are covered if you’re homebound and under a doctor’s care.
Mental Health
Outpatient mental health care is covered. You pay 20 percent after the deductible. Inpatient psychiatric care falls under Part A with the same costs as regular hospital stays.
What Medicare Doesn’t Cover
Medicare leaves some gaps. Knowing what’s not covered helps you plan.
Routine dental care isn’t included. Neither are dentures. Most vision care beyond cataract surgery doesn’t qualify. Hearing aids cost you entirely.
Long-term care in nursing homes isn’t covered. Medicare only pays for skilled nursing after hospitalization, and only temporarily. If you need custodial care for daily living, you pay out of pocket or through long-term care insurance.
Cosmetic surgery, acupuncture (usually), and most care outside the United States aren’t covered either.
Medicare Costs for 2025
Let’s break down exactly what you’ll pay.
If You Have Original Medicare
Part A premium: $0 for most people.
Part B premium: $185 monthly standard rate. Higher if your income exceeds $106,000.
Part A deductible: $1,676 per benefit period.
Part B deductible: $257 annually.
Coinsurance: 20 percent of most services after deductible.
If You Add a Medigap Plan
Medigap policies help cover the 20 percent coinsurance and deductibles. Premiums vary by plan type, your age, location, and insurance company. Expect to pay $150 to $400 monthly.
If You Choose Medicare Advantage
Premiums vary widely. Some plans cost $0 beyond your Part B premium. Others charge $50 to $200 monthly. You still pay your Part B premium to Medicare.
Each plan sets its own copays and coinsurance. Doctor visits might cost $10 to $50. Specialist visits often run higher.
Most plans cap your annual spending between $3,000 and $8,000. Once you reach the cap, your plan pays everything.
When to Enroll in Medicare
Timing matters. Enroll late and you pay penalties forever.
Initial Enrollment Period
Your first chance to enroll starts three months before your 65th birthday and lasts until three months after. That’s a seven-month window.
Don’t wait until the last minute. Sign up during the three months before your birthday so coverage starts on time.
If You’re Still Working
Special rules apply if you have health insurance through a current employer. Company size matters.
For employers with 20 or more employees, you can delay Part B without penalty while you have job-based coverage. You have eight months after leaving the job or losing coverage to sign up.
Smaller employers work differently. Medicare becomes primary, so you should enroll even if you have employer coverage.
Late Enrollment Penalties
Miss your enrollment window and you pay forever. The Part B penalty adds 10 percent to your premium for each 12-month period you could have enrolled but didn’t.
Part D has its own penalty. Wait too long to get drug coverage and you pay 1 percent of the national base premium for each month you went without coverage. This penalty also lasts as long as you have Part D.
How to Sign Up
Enrollment happens through Social Security. If you already collect Social Security benefits, you’re automatically enrolled in Parts A and B. Your Medicare card arrives in the mail about three months before your 65th birthday.
Not collecting Social Security yet? Sign up online at ssa.gov, call 1-800-772-1213, or visit your local Social Security office.
For Medicare Advantage or Part D plans, you enroll directly with insurance companies. Compare plans at medicare.gov or call 1-800-MEDICARE for help.
Understanding Common Terms
Medicare uses specific vocabulary. Here’s what these words mean.
Premium: What you pay monthly for coverage.
Deductible: What you pay before insurance starts covering costs.
Coinsurance: A percentage of costs you pay after meeting your deductible.
Copayment: A fixed dollar amount you pay for a service.
Formulary: The list of prescription drugs covered by your Part D plan.
Network: Doctors and hospitals that contract with a Medicare Advantage plan.
Benefit Period: Starts when you enter a hospital and ends when you’ve been out for 60 consecutive days.
Can You Change Your Medicare Coverage?
Yes, but only during specific times each year.
Annual Enrollment Period
October 15 through December 7 lets you switch between Original Medicare and Medicare Advantage. You can also change or add Part D plans.
Whatever changes you make take effect January 1.
Medicare Advantage Open Enrollment
January 1 through March 31 gives Medicare Advantage members another chance to switch plans or drop Medicare Advantage for Original Medicare. Changes take effect the first of the next month.
Special Enrollment Periods
Certain life events trigger special enrollment windows. Moving to a new area, losing other coverage, or qualifying for Extra Help with drug costs all let you change plans outside normal periods.
Getting Help with Medicare Costs
Limited income? Programs exist to help pay for Medicare.
Medicare Savings Programs
State programs help pay Part A and B premiums, deductibles, and coinsurance if you qualify based on income and assets. Each state runs these programs differently.
Extra Help
This program specifically helps with Part D prescription drug costs. If you qualify, you pay little or nothing for medications.
Apply through Social Security online, by phone at 1-800-772-1213, or at your local office.
State Health Insurance Assistance Programs
Every state runs a free SHIP program. Trained counselors help you understand Medicare, compare plans, and find assistance programs.
Find your local SHIP by calling 1-800-MEDICARE or searching online for your state’s program.
Common Mistakes to Avoid
New Medicare enrollees often make these errors. Skip them.
Don’t ignore the enrollment deadline. Missing it costs you money forever through late penalties.
Don’t assume employer coverage after 65 is enough. Check how your employer plan coordinates with Medicare. Small company plans might require Medicare enrollment.
Don’t skip prescription drug coverage thinking you’ll add it later. Even if you take no medications now, get Part D anyway. Waiting triggers the late enrollment penalty.
Don’t pick a plan based solely on premium cost. A plan with zero premium might have high copays and deductibles that cost more overall.
Don’t forget to review your coverage annually. Plans change benefits and costs each year. Last year’s best plan might not be best now.
What to Do Right Now
If you’re turning 65 soon, start three months before your birthday. Create an account at ssa.gov. Review the Medicare & You handbook online. Make a list of your doctors and medications.
Call your current doctors’ offices. Ask if they accept Medicare. Find out if they participate in any Medicare Advantage networks.
Compare your options at medicare.gov. Enter your medications and preferred pharmacies. The site shows which Part D plans cost least for your specific drugs.
If you feel overwhelmed, call your local SHIP program. Free counselors will walk you through everything at your own pace.
Already on Medicare? Review your coverage during the October enrollment period. Your health needs and available plans change yearly. What worked last year might not be your best option now.
Frequently Asked Questions
Is Medicare free?
Part A is free for most people. Part B costs $185 monthly minimum. Part D and Medicare Advantage plans have separate premiums. You also pay deductibles and coinsurance.
What’s the difference between Medicare and Medicaid?
Medicare is federal health insurance for people 65 and older or with certain disabilities. Medicaid is a state program for people with low income. Some people qualify for both.
Can I have Medicare and private insurance?
Yes. How they work together depends on the type of private coverage and which is primary. Medicare coordinates benefits with employer plans, VA benefits, and other coverage.
Does Medicare cover me when I travel?
Original Medicare covers emergency care anywhere in the United States. Limited coverage exists for care in Canada and Mexico during emergencies. No coverage exists for routine care abroad. Medicare Advantage plans vary in travel coverage.
How do I find a doctor who accepts Medicare?
Use the Physician Compare tool at medicare.gov or call 1-800-MEDICARE. You can also call doctors’ offices directly and ask.
The Bottom Line
Medicare provides essential health coverage when you need it most. The alphabet soup of parts and plans makes sense once you break it down.
Parts A and B form your foundation. Part D adds drug coverage. Medicare Advantage combines everything into one plan through private insurers.
You’ll pay some costs no matter which path you choose. But Medicare prevents the catastrophic medical bills that destroy retirement savings.
Don’t stress about making the perfect choice immediately. You can change plans during enrollment periods. Most people adjust their coverage as their needs evolve.
The key is understanding your options and enrolling on time. Take it step by step. Read the handbook. Ask questions. Use the free resources available.
Medicare has covered Americans for nearly 60 years. It works. You just need to learn how to work with it. Now you know the basics. The rest comes with experience.
