Since Congress created Medicare in 1965, the benefits covered under the program have expanded along with the number of recipients. The program now covers more than 57 million Americans age 65 and older, plus about 8 million younger people with a disability. These days, Medicare has four parts.
 

• Part A helps pay for the cost of inpatient stays in hospitals and skilled nursing facilities, some home health services and end-of-life hospice care. Most people don’t pay a premium for Part A.

• Part B helps pay for doctors’ services, including those in the hospital; outpatient care in or out of a hospital; diagnostic tests; preventive care; and some medical equipment and supplies. Most people pay $174.70 a month for Part B in 2024. Together, parts A and B are known as original or traditional Medicare.

• Part C, better known as Medicare Advantage, is an alternative to original Medicare parts A and B that allows you to choose to receive all of your Medicare health care benefits through a plan from a private insurer. These plans, which have been offered for more than 20 years, must cover all Part A and Part B services, and most include Part D prescription drug coverage. Some plans also provide extra benefits that original Medicare doesn’t offer. You still are responsible for the Part B premium, and the Medicare Advantage plan may charge an additional monthly premium although some plans don’t charge extra. 

• Part D, the newest part of Medicare, helps cover the cost of outpatient prescription drugs through plans from private insurers. If you decide to buy Part D coverage, you’ll pay an extra premium that averages about $55.50 a month in 2024. 

Note: Private companies also have stepped in to provide Medicare supplement plans, better known as Medigap plans — insurance that helps pay for expenses Medicare doesn’t cover.

As a federal government insurance system, Medicare helps tens of millions of older adults and younger people with disabilities pay for their health care. Wherever you live nationwide, original Medicare is available regardless of your income or the state of your health.

As you approach 65, you’ll usually want to enroll in Medicare during your initial enrollment period. This seven-month period spans the three months before the month in which you turn 65 through the three months after turning 65.

If you’re already receiving Social Security or Railroad Retirement Board benefits at least four months before your 65th birthday, you’ll be enrolled automatically in parts A and B on the first day of the month you turn 65. Or if your birthday is on the first day of a month, your automatic enrollment will happen during the previous month. (Puerto Rico’s rules differ.)

If you or your spouse are working and have health insurance through an employer with 20 or more employees, then you can delay signing up for Medicare. However, you must enroll in parts A and B within eight months of losing your employer-based coverage or you will have to pay a penalty. For Part D prescription drug coverage, you have only two months to enroll after you lose coverage that's considered at least as good as Medicare to avoid a penalty.

If you enroll late, Medicare parts A, B and D and Medigap plans may charge penalties.

• Part A. If you're among the 1 percent or so who have to pay for Part A, the monthly penalty would be an additional 10 percent of the premium. And you would have to pay it for twice the number of years that you delayed your enrollment.

• Part B. This penalty is an additional 10 percent of your premium for each full 12-month period enrollment is delayed. It’s charged every month for as long as you have Part B.

• Part D. The penalty for late enrollment is an additional 1 percent of the national base beneficiary Part D plan premium for each full month you don’t have it or an employer or retiree plan that meets Medicare standards. You’ll pay the penalty for as long as you’re enrolled in a Part D plan.

• Medigap plans. In most states, private insurers’ Medicare supplement plans may deny coverage or charge more because of preexisting conditions if you apply for or switch policies more than six months after signing up for Part B.

You can’t be covered by both original Medicare and Medicare Advantage at the same time. But you won’t be stuck with your initial decision forever. From Oct. 15 to Dec. 7 each year, you can make a switch and also change your Part D insurance.

Original Medicare, also known as traditional Medicare, works on a fee-for-service basis. This means you can go to any doctor or hospital that accepts Medicare anywhere in the United States, and Medicare will pay its share of the bill for any Medicare service it covers.

You pay the rest unless you have additional insurance that covers those costs, such as a Medigap plan or your state’s Medicaid program. Original Medicare covers many health care services and supplies, but it doesn’t pay all of your expenses.

The Medicare Advantage program, Part C, gives people an alternative way of receiving their Medicare benefits. The program consists of many different health plans — typically health maintenance organizations (HMO) and preferred provider organizations (PPO) — that Medicare regulates but private insurance companies run.

The number of plans varies by where you live. Plans may charge monthly premiums in addition to the Part B premium, although some plans in some areas are available without additional cost.

Confusion about Medicare is almost inevitable for two main reasons. First, Medicare’s regulations affect different people in different ways, so the decisions you need to make may be unlike the next person’s.

Medicare also offers a range of choices that can be bewildering if you aren’t sure how to sift through them to find the one that’s right for you. That’s where we can help.