A Guide to Medicare Benefits 2024

If you’re approaching age 65, you’re likely waiting to retire and join Medicare, the U.S. federal health insurance program that can help with the cost of health care as your income shifts into a fixed state. Once you enroll, you’ll be joining 67 million other Americans who use Medicare health insurance programs as of 2022 — counting those with Part A and/or Parts B and D. 

Medicare enrollment has been on an upward trend for over a decade. Total benefit payments increased by $288 billion from 2011 and 2021 and in the latter year, accounted for 10% of federal spending. That expenditure is expected to rise to 18% by 2032.

Because of its complexity, Medicare is often misunderstood. This means seniors are not taking advantage of Medicare to its full extent. Adding to the confusion are the many different categories of Medicare — parts A, B, and D as well as Medicare Advantage (also known as Part C), and Medigap.

This guide will provide you with a better understanding of who Medicare is for, what it does and doesn’t cover, as well as the eligibility requirements and steps to enrolling in the various Medicare programs.

What is Medicare?

Medicare is a US federal health insurance program for people age 65 or older, and those with qualifying medical conditions and/or disabilities. There are four parts to Medicare. Those who sign up for Medicare Part A (hospital insurance) and Part B (medical insurance) through Social Security get coverage that’s referred to as Original Medicare. 

To add prescription drug coverage, those with Original Medicare join a separate Medicare drug plan (Part D) available through Medicare-approved private companies. As an alternative to Original Medicare, people can also choose to get all of their benefits through a Medicare Advantage (Part C) plan that bundles Parts A and B and usually D coverage together.

Who’s Eligible for Medicare?

The vast majority of American seniors gain eligibility for Medicare at age 65. Those who receive Social Security benefits at least four months before their 65th birthday should be automatically enrolled in Original Medicare Part A and Part B once they turn  65. However, these seniors must be a U.S. citizen or a legal permanent resident for at least five continuous years prior to the month they apply.

Americans under age 65 may qualify for Medicare if they meet the Social Security definition of “disabled” or have a diagnosis of Lou Gehrig’s disease or end-stage renal disease.Those who aren’t automatically enrolled in Original Medicare can do so at a Social Security office, starting as early as three months before they turn 65. Once they have Medicare Part A and Part B, any senior may choose to enroll in a Medicare Advantage plan to receive bundled Part A and Part B (and usually Part D) coverage through a private company.

Medicare Basics: Parts and Coverage

Medicare is split into three basic parts: Parts A, B, and D. Part A is hospital insurance while Part B is medical insurance, and Part D is prescription drug coverage. There are two other options as well: Medicare Advantage, originally called Part C and designed as an alternative to Parts A and B, and Medigap, a supplement to Parts A and B that fills in gaps in insurance and is sold by private insurance companies. 

Medicare doesn’t cover elective procedures such as cosmetic surgery, and there’s a deductible for each hospital stay or other covered service. As such, most members will have out-of-pocket costs even in cases where all services are medically necessary and covered by Medicare.

Medicare Parts A and B

Medicare Part A is also referred to as hospital insurance. It covers inpatient care in hospitals and skilled nursing facilities but it doesn’t provide coverage for custodial or long-term care in most cases. Some in-home health care and hospice services are also covered, depending on specific eligibility criteria.

The majority of Americans enrolled in Medicare Part A have paid for this coverage via payroll tax collected during their working years, or they receive coverage based on the payroll tax paid by a spouse. In some cases, the enrollee pays a monthly premium for Part A coverage.

Medicare Part B is also referred to as medical insurance. It covers some of the enrollee’s outpatient costs and doctor bills, but in most cases, it doesn’t fully cover any of the applicable goods and services.

In the case of preventive care, however, Part B covers the full cost of services rendered by providers that accept assignment (i.e., the provider is paid an approved amount directly by Medicare.)

What Services Do Medicare Part A and B Cover?

Most people get Medicare Part A and pay no monthly premiums because they already paid sufficient Medicare taxes during their time of employment. This is known as premium-free Part A. Others will have to pay a premium which will either be $278 or $505 each month depending on the work history of the individual and their spouse. Eligibility for Part A varies depending on whether or not there will be a required premium. 

Eligibility for premium-free Part A:

Based on Employment: To be eligible for premium-free Part A based on employment, an individual or their spouse, parent, or child must have worked to make a qualifying length of time as well as completed an application for Social security or Railroad Retirement benefits (RRB). 

Based on Age: To be eligible for premium-free Part A based on age, an individual must be at least 65 years old and eligible for Social Security or Railroad Retirement cash benefits. 

Eligibility for Part A with a Paid Premium:

Based on Age: To be eligible for Part A with a paid premium based on age, an individual must enroll through the Social Security Administration during the correct enrollment period and also enroll in or already be enrolled in Part B. 

Based on Disability: To be eligible for Part A with a paid premium based on disability, an individual must have received Social Security or Railroad Retirement Board benefits for 24 months. If a disabled government employee is not eligible for these benefits but has been disabled for 29 months, they automatically qualify for Medicare Part A. 

Based on a Qualifying Health Condition: Those with Lou Gehrig’s disease who qualify for Social Security or Railroad Retirement benefits also qualify for Part A coverage that same month. Individuals with End-Stage Renal Disease qualify if they received a kidney transplant or  need routine dialysis, applied for Medicare, and satisfied all employment requirements. 

Eligibility for Part B:

Individuals who are paid Social Security or RRB benefits for a minimum of 4 months prior to qualifying for Medicare are automatically enrolled in Part B (and premium-free Part A) once eligible. 

Individuals who enroll in Part A and have a required premium must meet these additional criteria to be eligible for part B:

• Be at least 65 years old and a US resident
• Be a US citizen or a legally admitted alien who has been living in the US for 5 continuous years before applying

Medicare Part D

What Services Do Medicare Part D Cover?

Medicare Part D is also referred to as prescription drug coverage. The majority of those enrolled in Part D pay a premium.

Although the federal government maintains authority and oversight over Part D, the plans are offered by private insurance companies that are largely responsible for setting the rules of coverage. For example, plans differ on which drugs are covered and whether coverage is for a brand name or generic drug.

Additionally, the list of covered prescription drugs in each plan is not set in stone. Members of a Part D plan are allowed to view any upcoming changes to covered drugs each year, and they may wish to change plans and providers if they’re negatively affected by these changes.

Medicare Part D Covers:

• Selected prescription drugs (list differs by plan)
• Drugs may be brand name or generic
• Plans must cover a minimum of 2 drugs in the most frequently prescribed categories and classes
• Plans must cover drugs in specific protected classes, which include those used to treat depression, cancer, or HIV/AIDS.
• Buprenorphine and other drugs used to treat opioid use disorders
• Methadone for pain

Eligibility for Part D

Part D is available to anyone enrolled in Original Medicare Part A or Part B, or who has joined a Medicare-approved plan with prescription drug coverage listed as a benefit.

Medicare Advantage and Medigap

Medicare Advantage

Medicare Advantage (MA) was originally named Medicare+Choice (M+C) and although it was renamed in 2003, it’s still often referred to as Medicare Part C. Coverage by Part C is a replacement for both Parts A and B (Original Medicare). Many Medicare Advantage plans also include Part D coverage. Part C plans are provided through private companies and may be less expensive for the member because they have yearly out-of-pocket limits. Once these limits are reached, health care services are free of cost for the remainder of the year.  In addition, these plans may offer additional benefits not covered by Original Medicare, such as dental or vision coverage. However, the potentially lower costs and extra coverage are somewhat balanced by the added complexities of Part C coverage.

Members of a Medicare Advantage Plan must be provided with the same coverage as Parts A and B, at a minimum, but there may be additional rules in place. For example, services may be limited to particular settings, and the rules for coverage may be different based on the member’s health conditions. As these plans are offered by private insurance companies, they can differ greatly based on location and may not be accepting new members at any given time.

Medigap

Medigap is also referred to as Medicare Supplement coverage. As the name suggests, this type of coverage is intended to fill the gaps in, or be a supplement to, Original Medicare (Parts A and B). Federal and state regulations set the framework for Medigap plans, but they’re sold by private insurance companies.

One of the requirements is that plans are standardized across all insurance providers in a particular state, making it much easier to compare costs. Medigap plans don’t provide prescription drug coverage (similar to Medicare Part D) as they did before 2006, and they can’t be used if you’re enrolled in Medicare Advantage, or on Medicaid.

How to Enroll in Medicare

Medicare Coverage of Senior Care

Enrollees in Medicare Part A and/or Part B may be covered for various in-home care services as long as they need some form of skilled care and a doctor has certified that they’re homebound. They may also be covered for nursing home care, but assisted living communities are generally not covered. Below, we explain the extent to which Medicare does or does not offer coverage for the main types of senior care.

Medicare Coverage of Residential Senior Care

For seniors, residential care such as assisted living communities is often the next best thing to living independently in their own home. Unfortunately, assisted living isn’t directly covered by Medicare in any of its Parts or Plans.
Programs of All-Inclusive Care for the Elderly (PACE) are available to members in some areas of the country who are dually eligible for Medicare and Medicaid. PACE doesn’t directly cover assisted living, but residents of these communities and are eligible for PACE can receive some covered services.. However, PACE programs and Medicare don’t cover assisted living room and board costs.

Medicare Coverage of Nursing Homes

Medicare Part A covers skilled nursing care provided in approved facilities when it’s medically necessary. As such, nursing home care is covered if it’s required to diagnose or treat an illness, injury, disease or other medical condition. However, custodial (non-medical) care is never covered by Medicare, and thus a nursing home stay will not be covered if it’s the only type of care a person requires.

Medicare Coverage of In-Home Care

In-home health care may be covered if it’s medically necessary. It must also be part-time or intermittent, which rules out full-time and long-term care in the home. Home health services such as skilled nursing care, home health aide services, physical and occupational therapies and medical social services are covered by Part A and/or Part B.

Medicare doesn’t cover 24-hour care, or pay for meal deliveries. In-home care and personal care, such as help with chores and assistance with the activities of daily living, may be covered only when provided alongside other medically necessary care.

Medicare Resources by State

Click on your state on the map below to see what Medicare resources are available in your state.

Medicare Frequently Asked Questions

What’s the difference between Medicare and Medicaid?

Medicare is a federal health insurance program for those age 65 or older or with certain qualifying disabilities or medical conditions. Medicaid is a needs-based program jointly run by the federal government and each state.

How do I know what Medicare plan is best for me?

Medicare Advantage plans are required to offer the same benefits as Original Medicare (Part A and B) and also frequently include Part D (drug coverage) benefits under the same plan. Further, they have an annual limit on what subscribers are expected to pay and may include additional benefits like dental or vision. If you want a set limit on your out-of-pocket expenses or have additional medical needs not covered by Original Medicare, you may want to consider an Medicare Advantage plan as a possible alternative.

Do I automatically get Medicare when I turn 65?

People are automatically enrolled in Medicare when they turn 65 if they have been getting retirement or disability benefits from Social Security or the Railroad Retirement Board for at least four months prior. Others will have to sign up to begin receiving Medicare benefits.

Can I drop my Medicare Advantage plan and go back to original Medicare?

You can drop your Medicare Advantage plan and go back to an Original Medicare plan during an approved enrollment period. These are the Open Enrollment Period from October 15 to December 7 and the Medicare Advantage Open Enrollment Period between January 1 and March 31.

More Information about Medicare and Medicare Advantage

For more information about Original Medicare, Medicare Advantage, and Medicare Supplement Plans, read the following guides:

• Medicare Advantage vs Medicare Supplement Plans
• Advantages and Disadvantages of Medicare Advantage for Baby Boomers
• Can You Have Medicare Advantage If You Live in an Assisted Living Community?
• Preventive Services under Medicare Advantage Plans
• How to Switch Medicare Advantage Plans
• Tips on Traveling with Medicare Advantage
• Tips for Finding a Primary Doctor who Accepts Medicare Advantage
• Medicare Coverage of Blood Pressure Monitors
• Does Medicare Pay For Feeding Tube Food?

Sources

• Costs. (n.d.). Medicare.gov 
• Cubanski, Juliet, et al. (2023). What to know about Medicare spending and financing. KFF
• Medicare eligibility for those under 65. (n.d.). Medicare Interactive.
• Learn how Medigap works. (n.d.). Medicare.gov 
• Ochieng, Nancy, et al. (2024). A snapshot of sources of coverage among Medicare beneficiaries. KFF
• Original Medicare (Part A and B) eligibility and enrollment. (n.d.). CMS.gov

• Understanding Medicare Advantage plans. (n.d.). Medicare.gov
• What Medicare Part D drugs plans cover. (n.d.). Medicare.gov 
• Your health plan options. (n.d.). Medicare.gov