Medicare is the federal health insurance program in the United States that primarily covers people 65 and older. It also covers some younger people with disabilities and anyone with permanent kidney failure requiring dialysis or a transplant. The program is run by the Centers for Medicare & Medicaid Services, a federal agency, which means your coverage works the same no matter what state you live in.
Who Qualifies for Medicare
Most people become eligible at age 65. If you or your spouse paid Medicare payroll taxes for at least 10 years (40 quarters), you qualify for Part A without paying a monthly premium. Part B, which covers doctor visits and outpatient care, requires a monthly premium regardless of your work history.
You can qualify before 65 in two situations. If you receive Social Security disability benefits, you get Medicare automatically after 24 months of receiving those benefits. The one exception is ALS (Lou Gehrig’s disease), where Medicare kicks in as soon as your disability benefits start, with no waiting period. People of any age with end-stage renal disease also qualify.
The Four Parts of Medicare
Medicare is split into distinct parts, each covering different types of care.
Part A (Hospital Insurance) helps cover inpatient hospital stays, skilled nursing facility care, hospice care, and home health care. Most people pay no monthly premium for Part A because it was funded through payroll taxes during their working years.
Part B (Medical Insurance) covers doctors’ visits, outpatient care, preventive services like screenings and vaccines, durable medical equipment (wheelchairs, walkers, hospital beds), and home health care. The standard Part B premium for 2025 is $185 per month, with an annual deductible of $257.
Together, Parts A and B make up what’s called “Original Medicare.” With Original Medicare, you can see any doctor or go to any hospital in the country that accepts Medicare.
Part C (Medicare Advantage) is an alternative way to get your Medicare benefits. Instead of using Original Medicare directly, you enroll in a private health plan approved by Medicare. These plans bundle Part A, Part B, and usually Part D (prescription drugs) into one package. They often include extras like dental or vision coverage that Original Medicare lacks. The tradeoff: you typically need to use doctors within the plan’s network and may need prior approval for certain services.
Part D is prescription drug coverage. You can add a standalone Part D plan to Original Medicare, or get drug coverage built into a Medicare Advantage plan.
What Medicare Does Not Cover
Original Medicare has notable gaps. It does not cover most dental care, including cleanings, fillings, extractions, or dentures. Eye exams for prescription glasses, hearing aids, and hearing exams for fitting them are excluded. Long-term care, such as a nursing home stay for custodial purposes, is not covered. Cosmetic surgery, massage therapy, and routine physical exams (separate from the annual “Wellness” visit that is covered) are also excluded.
These gaps are a major reason many people buy additional coverage, either through Medicare Advantage or a Medigap policy.
Medigap: Filling the Gaps in Original Medicare
If you stick with Original Medicare (Parts A and B), you’re still responsible for copayments, coinsurance, and deductibles. Medicare Supplement Insurance, commonly called Medigap, is extra insurance you buy from a private company to help cover those out-of-pocket costs. You must have both Part A and Part B to purchase a Medigap policy. These plans don’t add new types of coverage. They reduce how much you pay for the services Original Medicare already covers.
When to Sign Up
Your Initial Enrollment Period lasts seven months: it starts three months before the month you turn 65, includes your birthday month, and extends three months after. If you miss this window, you may have to wait for a later enrollment period, and you could face a late enrollment penalty that increases your Part B premium permanently. The penalty grows the longer you delay, and you pay it for as long as you have Part B coverage.
If you’re already receiving Social Security benefits before 65, you’ll be enrolled in Medicare automatically when you become eligible.
How Medicare Is Funded
Medicare is paid for through two trust funds held by the U.S. Treasury. Part A is funded largely by payroll taxes: employees and employers each pay 1.45% of wages (2.9% total). Part B and Part D are funded through a combination of enrollee premiums and general federal revenue authorized by Congress.
The Part A trust fund faces a long-term funding challenge. According to the Medicare Board of Trustees’ 2024 report, it is projected to be depleted by 2036. That doesn’t mean Medicare would disappear. Payroll tax revenue alone would still cover about 89% of Part A costs in that year. The trustees estimate that a relatively small adjustment, either increasing the payroll tax by 0.35 percentage points or reducing Part A spending by 8%, would bring the fund into long-term balance.
Medicare vs. Medicaid
People often confuse these two programs. Medicare is federal health insurance based primarily on age or disability. It works the same everywhere in the country. Medicaid is a joint federal and state program that helps cover medical costs for people with limited income and resources. Each state runs its own Medicaid program, so eligibility and benefits vary depending on where you live. Some people qualify for both programs at the same time, known as “dual eligibility.”