How Medicare works

Older couple on couch looking at a tablet

Moving your health coverage to Medicare can feel overwhelming and confusing — but we can help make it easier. The first step in choosing the right coverage is understanding the 4 parts of Medicare. Below, learn the basics of how each part works and what it covers, so you’ll know what you need to do at every step of the Medicare process.

What is Medicare?

Medicare is a federal health insurance program that provides health care coverage to millions of Americans who are 65 and older. (People with certain disabilities or health conditions may be eligible before they turn 65.) It’s designed to protect the health and well-being of those who use it.

The 4 parts of Medicare

With Medicare, it’s important to understand Parts A, B, C, and D — each part covers specific services, from medical care to prescription drugs.

  • Together, Part A and Part B are called Original Medicare and are provided by the federal government. Original Medicare covers only about 80% of hospital and medical expenses and doesn’t include prescription drug coverage. You need to have Part A, Part B, or both before you can get Part C.
  • Part C — known as Medicare Advantage — is another way to get Part A and Part B coverage. You can get Medicare Advantage plans from private health care providers like Kaiser Permanente.
  • Part D is prescription drug coverage that can be added to Original Medicare and is available from private health care providers like Kaiser Permanente.

Let’s take a closer look at each part:


Part A

Covers:
hospital insurance

Monthly cost:
typically, no cost

Provided by:
federal government

Part B

Covers:
medical insurance

Monthly cost:
yes

Provided by:
federal government

Part C

Covers:
hospital and medical insurance, plus benefits like prescription drugs

Monthly cost:
varies by plan

Provided by:
private health care providers

Part D

Covers:
prescription drugs

Monthly cost:
varies by plan

Provided by:
private health care providers


Part A — Hospital insurance

Medicare Part A is offered by the federal government to help you pay for hospital services, including inpatient hospital stays, skilled nursing care, and hospice care.

You can usually start getting Part A on the first day of the month of your 65th birthday. If you’re already getting Social Security benefits, you’ll automatically be enrolled in Part A as soon as you’re eligible. Learn about when to enroll in Medicare.

You can get Part A at no cost if you or your spouse paid into Medicare for at least 10 years (or 40 quarters).

Part B — Medical insurance

Medicare Part B is also provided by the federal government. It helps you pay for outpatient services like doctor’s office visits, preventive care, a yearly wellness visit, physical therapy, mental health care, lab services, and X-rays.

As with Part A, if you’re already getting Social Security benefits, you’ll automatically be enrolled in Part B. Social Security will usually send your Medicare card 4 months before the month you turn 65.

Enrolling in Part B is optional, and you can opt out after you get your Medicare card. If you keep working after age 65, you can delay enrolling in Part B if your employer has 20 or more employees and their health plan covers the same services as Part B. However, if you don’t have equivalent coverage, you could be charged an ongoing penalty if you enroll late. The penalty increases the Part B monthly premium by 10% for each 12-month period you decline coverage. Learn how Medicare late enrollment penalties work.

The monthly premium for Part B is based on your income taxes from 2 years before you enroll and is automatically deducted from your Social Security check each month. If you’re not collecting Social Security, you’ll get a bill from the federal government every 3 months.

Part C — Medicare Advantage

Medicare Part C, or Medicare Advantage, is offered by private health care providers. Medicare Advantage is an all-in-one plan that bundles Original Medicare (Part A and Part B) with additional benefits. Kaiser Permanente Medicare health plans are examples of Medicare Advantage plans. Keep in mind that you need to be enrolled in Part B and eligible for Part A before you can sign up for a Medicare Advantage plan.

With Medicare Advantage, your costs are predictable and you often pay less out of pocket:


Medicare Advantage

  • Includes Part A and Part B, usually prescription drug coverage (Part D) , and optional benefits like vision, dental, and hearing services for an extra cost.
  • See doctors who are covered by your health plan.
  • There’s usually no yearly deductible to reach.
  • You’ll know what to expect to pay before you get care with set copays.
  • An out-of-pocket maximum limits how much you’ll spend each year.

Original Medicare

  • Includes Part A and Part B. You can also buy a stand-alone prescription drug plan (Part D).
  • See any doctor in the United States who accepts Medicare.
  • You’ll need to reach a deductible each year before your plan begins to pay.
  • You’ll usually pay 20% of the total cost of each service, including primary care doctor visits.
  • There’s no limit to how much you’ll pay out of pocket each year.

A Medicare Advantage plan can provide the coverage and value you want, in one convenient package. Learn about Kaiser Permanente Medicare Advantage plans.

Part D — Prescription drugs

Medicare Part D provides outpatient prescription drug coverage and is offered by private health care providers. You can enroll in a stand-alone prescription drug plan if you have Original Medicare.

If you choose a Medicare Advantage plan (Part C), your coverage may include prescription drug costs (Part D).

Your Part D costs will depend on which plan you choose. If you’re on a limited income, you may qualify for Extra Help, a Medicare program that helps you pay for some or most prescription drug costs, including monthly premiums, yearly deductibles, and copays. Learn more about Extra Help and find out if you qualify.

Like Part B, you could be charged an ongoing penalty if you enroll in Part D late. If you’re eligible for the Extra Help program, the penalty doesn’t apply. Learn how Medicare late enrollment penalties work.

Get more information

Learn more about Medicare Parts A, B, C, and D by watching our video "Guide to Medicare Basics" — or read our guide to Medicare.


Learn more about Medicare
 
Man writes as he works at laptop

When to enroll
Find out options for when and how to sign up for each part of Medicare.

Women look at a doctor on a tablet

Why choose Medicare Advantage
An all-in-one plan can offer more than Original Medicare.

Ready to start shopping?

Explore plans