Medicare 101 Guide – What Is Medicare and How Does It Work?

Kat Casna
Licensed Insurance Agent and Medicare Expert Writer
December 13, 2019

Over 61 million Americans receive Medicare benefits,1 but many people don’t know how the program works, whether they’re eligible for Medicare, or how to apply. In a lot of ways, Medicare isn't like the health insurance you may have had in the past, so at times it's a little counterintuitive.

In this Medicare guide, we break down what you need to know about Medicare coverage so you can choose the right options for you. Here’s what we’ll go over:

What is Medicare?

Medicare helps people 65 and older and those with disabilities pay for their health care costs. The US government funds Medicare health insurance, and the Centers for Medicare & Medicaid Services (CMS) administer it.

Am I eligible for Medicare?

You can become eligible for Medicare in two ways:

  • Age: You’re 65 or older.
  • Disability: You’ve received disability benefits for 24 months, or you’ve been diagnosed with either end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).

The Medicare program also has citizenship and other requirements.

Learn more about Medicare eligibility.

What’s included in Medicare benefits?

Medicare has two primary parts: Part A (hospital insurance) and Part B (medical insurance). Together these parts form Original Medicare. Medicare recipients can add prescription drug coverage (Part D) or a Medicare Supplement plan or both. Or, you can choose Medicare Advantage (Part C), which covers everything Original Medicare does and more.

Currently, 38 million people have Original Medicare, and 23 million people have Medicare Advantage.2

Medicare Part A

Medicare Part A covers you if you become an inpatient in a hospital or skilled nursing facility. This insurance also covers hospice and some home health care services.

Medicare Part B

Medicare Part B covers more regular health care costs, such as doctor office visits, lab work, and durable medical equipment (such as medical braces or wheelchairs).

Medicare Part C

Also known as Medicare Advantage, Medicare Part C is something you choose in place of Parts A and B, and it includes everything Parts A and B cover in a single plan. Additionally, many Medicare Advantage plans also offer prescription drug coverage and services such as dental, vision, and hearing care. If you choose a Part C plan, you may also have access to the SilverSneakers fitness program.

Medicare Part D

Medicare Part D plans are stand-alone prescription drug plans designed to pair with Original Medicare (Parts A and B). Part D covers medications you take at home, while Parts A and B typically pay for prescriptions you receive at the hospital or in a doctor's office, respectively.

Medicare Supplement (Medigap)

Medicare Supplement (Medigap) plans help cover the costs left behind by Medicare Parts A and B, such as deductibles and copayments. You must have Original Medicare (not Medicare Advantage) to enroll in a Medigap plan.

What does Medicare cost?

Each part of Medicare has a monthly premium you may have to pay to receive benefits, but many people avoid some of these premiums. If you’ve paid into Medicare taxes at work, for example, you may not have to pay for Part A. And, you could choose a Medicare Advantage or Part D plan that has a $0 premium if one is available in your area.

Most parts of Medicare also come with deductibles and other costs such as copayments and coinsurance.

Learn more about Medicare premiums and deductibles.

When to enroll in Medicare

Age 65 represents a huge milestone for most Americans—it’s the age when a majority of people become eligible for Medicare. But becoming eligible for Medicare and enrolling in Medicare are two separate things. Most people must manually join Medicare during one of their enrollment periods once they’re eligible. Unfortunately, this information doesn’t seem to be widespread knowledge.

According to a recent survey, 41% of Americans 54 and up—the age group nearest to Medicare benefits—think they’ll automatically be enrolled in the government health plan once they’re eligible. Let’s nip this myth in the bud.

You need to enroll in Medicare yourself unless you fall into one of these groups:

  • You’ve been collecting Social Security disability benefits for 24 months.
  • You have ALS (Lou Gehrig’s disease) or ESRD (end-stage renal disease).
  • You’re already receiving Social Security benefits before age 65.

For everyone not on this list, it’s critical to sign up at the right time! Not doing so will result in late enrollment penalties—some of which may last for the rest of your life.

Medicare late enrollment penalties

Did that get your attention?

To avoid late penalties, most should sign up for Medicare during their Initial Enrollment Period (IEP). This period begins three months before your 65th birthday month and lasts until three months after the month you turn 65—seven months total. For example, if you turn 65 on August 5, your IEP lasts from May 1 to November 30.

Medicare Initial Enrollment Period

What about those who work past 65 and are still covered by an employer's health plan?

No worries, you can delay Medicare enrollment without penalty if you’re in a qualified health plan (just talk to your HR representative to be sure it’s qualified). If you're in an employer's health plan, you may enroll in Medicare anytime after age 65. You also get a Special Enrollment Period (SEP) after your employer coverage ends to sign up for Medicare. Your SEP lasts for eight months once employer coverage stops.

There are several other enrollment periods as well, each designed for people in specific situations.

Learn more about Medicare enrollment periods.

How to apply for Medicare

Each part of Medicare has different enrollment rules. If you want Part A and Part B, for example, you'll apply through the Social Security Administration (SSA). Medicare Advantage, Part D, and Medicare Supplement plans are regulated by the government but provided by private companies. That means you’ll need to enroll with the companies that provide these plans.

Learn more about how to apply for Medicare. Or call a licensed sales agent who can help you understand your Medicare options and help you start your application for Medicare Advantage, Part D, or Medicare Supplement.

1.  The Centers for Medicare and Medicaid Services, “Medicare Enrollment Dashboard
2.  The Centers for Medicare and Medicaid Services, “Medicare Enrollment Dashboard

Content on this site has not been reviewed or endorsed by the Centers for Medicare & Medicaid Services, the United States Government, any state Medicare agency, or any private insurance agency (collectively "Medicare System Providers"). is a DBA of Clear Link Technologies, LLC and is not affiliated with any Medicare System Providers.

Kat Casna
Written by
Kat Casna
Kathryn is a Medicare and geriatric specialist who has appeared on Baby Boomers, OppLoans, and Best Company. Her readers don’t need a degree in government-speak to get the right coverage because Kathryn sifts through Medicare’s parts, plans, and premiums to distill only the most useful information. Her favorite place in the world is a hammock that swings peacefully between two crabapple trees somewhere in New Mexico’s Gila National Forest.
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