Medicare Facts You Need to Know

Most people count on Medicare to help cover their medical expenses in retirement. But Medicare doesn’t cover all health care expenses, it’s not free, and the price can vary based on when you sign up for coverage. Workers should learn about Medicare enrollment and benefits before they reach age 65 so they can factor health care costs into their retirement savings goals and avoid late enrollment penalties. 

These frequently asked questions and answers provide basic information about Medicare coverage and costs (as of June 2021). 

When am I eligible for Medicare?

Individuals who are age 65 or older and who are citizens or permanent residents of the U.S. are eligible for free hospital insurance (Part A) if they or their spouse are eligible to receive Social Security benefits. (It does not matter if you are still working.) Social Security eligibility (and thus Medicare eligibility) is conditioned on earning a certain number of “credits” during one’s working years and paying Social Security (and Medicare) taxes. 

What kind of medical expenses does Medicare cover?

After you satisfy the annual deductible, Part A covers most Medicare-approved inpatient costs for the first 60 days you are hospitalized or for care in a skilled nursing facility after a hospital stay. Some home and hospice care are also covered. 

If you have Medicare Part B coverage, it pays a portion of your doctor bills, lab tests, x-rays, preventive screenings for conditions such as heart disease and diabetes, outpatient care such as rehabilitation therapy, home health services, durable medical equipment, and certain other medical services not covered by Part A. Anyone who is eligible for Part A can enroll in Part B but must pay a monthly premium.

Do I need to apply for Medicare?

If you are receiving Social Security retirement benefits at age 65, you will receive a Medicare card in the mail 3 months before your 65th birthday, and you will be automatically enrolled in Medicare Parts A and B, starting the first day of the month you turn 65. 

If you will not be receiving Social Security retirement benefits at age 65, you should contact the Social Security Administration 3 months before you turn 65 to enroll in Medicare. You can find more information at https://www.ssa.gov/benefits/medicare/.

How long do I have to enroll in Medicare?

When you first become eligible for Part A insurance (at age 65), you have a seven-month initial enrollment period in which to sign up or opt-out of Part B. Your initial enrollment period begins three months before the month you turn 65 and ends three months after that birthday month. If you accept automatic enrollment in Medicare Part B or enroll during the first three months of your initial enrollment period, you will have coverage beginning with the month you are first eligible.

What documents do I need to enroll?

If you are not enrolled automatically by the Social Security Administration, when you enroll you will need to provide your 

1. Date and place of birth and 
2. Start and end dates for employment with the current employer who provides your health insurance coverage 
3. Start and end dates for the Group Health Insurance provided by you (or your spouse’s) current employer 

After you are enrolled, the Centers for Medicare & Medicaid Services (CMS) will mail you a welcome packet and handbook with important information about your Medicare coverage choices with your Medicare card.

If I still have employer-provided insurance after age 65, do I have to pay for Medicare Part B?

Part B coverage is optional. You may choose not to enroll in Part B if you have health insurance through another source, such as your employer, union, or spouse. But if you opt-out of Part B coverage when you are initially eligible and decide you want it later, you may have to wait to enroll and pay higher premiums (generally 10% for each 12-month period you were eligible but didn’t sign up). You may be able to avoid the higher premium if you enroll in Part B within the Special Enrollment Period (8 months after your employment ends or your health coverage ends, whichever happens first).

What about medical expenses not covered by Medicare Part A and Part B?

To fill the gaps in coverage under Parts A and B, some people purchase Medigap Policies or Medicare Supplemental Insurance from private insurance companies. These policies are designed to supplement Part A and B coverage and can help pay out-of-pocket costs such as co-insurance and deductibles.

Are prescription drugs automatically covered?

No. Medicare prescription drug coverage (Part D) is optional coverage you may purchase from a private insurance company to help pay for medications doctors prescribe for treatment. Anyone who has Medicare Part A and Part B is eligible for Part D. Joining a Medicare prescription drug plan is voluntary, and there is an additional monthly premium for the coverage. 

You can wait to enroll in a Medicare Part D plan if you have other creditable prescription drug coverage, but you may have to pay a penalty if you join later. The penalty applies for as long as you have Medicare prescription drug coverage.

How much does Medicare cost?

Here are the general costs for Medicare Part A, Part B and/or Part D coverage in 2021. If you purchase a Medigap or supplemental insurance plan you may have additional expenses. 

If you receive Social Security retirement benefits, your Part B premium will be deducted from your benefit payment.

Is a Medicare Advantage Plan the same as Medicare?

A z (formerly known as Part C) is an alternative path to original Medicare Parts A and B. It is an all-in-one plan, purchased from a private insurance company. These plans cover hospital and medical benefits, and most also include prescription drug coverage and offer extra benefits, such as vision, hearing and dental benefits. A Medicare Advantage Plan typically requires you to use doctors and hospitals within a network designated by the insurance company, but they may have lower out-of-pocket costs than original Medicare. The monthly premium, deductible and co-payment costs vary by plan.

What is Medicaid?

Medicaid is a state-run program that provides hospital and medical coverage for people with low income and little or no resources, including children and the elderly. Each state has its own eligibility and coverage rules within limits prescribed by the federal government. An individual may be covered by both the federal Medicare program and a state-run Medicaid program. If they cannot afford to pay their Medicare premiums and other medical costs, Medicaid may pay some or all of their Medicare premiums, deductibles, or co-insurance.

Where can I find more information?

You can find more information in this comprehensive handbook, Medicare & You 2021, on the Medicare website, www.medicare.gov, or you can call 1-800-MEDICARE.