Social Security and Medicare basics

Medicare basics

Who can claim Medicare benefits?

Medicare is the federal health insurance program for people who are 65 or older, as well as for people of all ages with certain disabilities. Medicare will help with hospitalization costs and doctor visits, but keep in mind you'll probably need supplemental coverage to help pay for other healthcare-related expenses. It's important to understand what's covered under the different parts of Medicare, and how it fits into your long-term plan.

Here's more on who qualifies for Medicare:

• If you worked and paid payroll taxes for at least 10 years, you qualify for Medicare at age 65.
• Individuals younger than 65 with disabilities may also qualify.
• You must also be a U.S. citizen or permanent legal resident (or married to one who has paid Social Security taxes for at least 10 years).

Though Medicare goes a long way in helping meet healthcare expenses, there may be deductibles, copays and limits, as with many health plans. Additionally, Medicare Parts B and D (more below) charge monthly premiums based on your annual taxable income. And premiums for Medicare supplement policies vary widely by policy type and state.

When can I claim Medicare benefits?

If you are not already collecting Social Security at 65, you must enroll for Medicare around your 65th birthday if you want Medicare health coverage—and it's a good idea to start the process three months before the big date. If you don’t enroll when you turn 65, it could result in penalties, so make sure you understand your enrollment deadlines and coverage options. There’s no need to re-enroll each year, but you can review and make changes to your plan.

How do I enroll in Medicare?

If you are not enrolled automatically, you may sign up for Medicare Parts A and B during the following time periods:

• Initial Enrollment Period: When you are first eligible for Medicare, you have a seven-month period to sign up. This seven-month period begins three months before your 65th birthday, includes the month you turn 65, and ends three months after you turn 65.
• General Enrollment Period: If you miss your Initial Enrollment Period, you can sign up from January 1 through March 31 of each year. Your coverage would then begin July 1. Late enrollment may result in your having to pay a higher premium.
• Special Enrollment Period: If you or your spouse (or family member if you are disabled) is currently working and covered by a health insurance through an employer or union, you will have a Special Enrollment Period when your coverage ends.

What if I keep working when I turn 65?

If you or your spouse (or family member if you are disabled) is currently working and covered by health insurance through an employer or union, you will be eligible for the Special Enrollment Period described above when that coverage ends.

The ABCs of Medicare

A variety of options let you tailor Medicare to your needs.

Medicare Parts A and B together form what's known as traditional Medicare. Parts C and D can increase the amount of your coverage or reduce costs.

Additionally it's important to note what services are covered by each in terms of your personal health needs. For example, some plans cover only limited dental, vision and long-term care needs.

The following brief descriptions outline basic costs and coverage provided by Medicare Parts A through D:

• Part A is hospital coverage. It pays for inpatient hospital and nursing home care, home healthcare services and hospice care. There is an annual deductible ($1,484 in 2021) that is adjusted each year. Anyone who has worked for at least 10 years and paid payroll taxes qualifies for Part A, and people who do not qualify have the option to purchase Part A benefits.
• Part B is medical insurance. It pays for doctor visits, routine exams and other services and supplies not covered by Part A. There is a monthly premium for Part B ($148.50 in 2021, or higher, depending on your income). It's typically deducted from your Social Security benefits, if you are already receiving Social Security. There is also an annual Part B deductible, which is $203 per year in 2021. If you aren't already receiving Social Security, this will be charged to you as a separate premium.
• Part C plans are also known as Medicare Advantage plans. These are federally approved policies you can purchase from private insurers as an alternative to traditional Medicare Parts A and B Advantage plans offer, at minimum, the same coverage offered by traditional Medicare, as well as some additional benefits such as vision, hearing, dental or drug coverage. Most have low to no deductibles, and monthly premiums depend on the type of plan you choose.
• Part D is prescription drug coverage that’s federally approved and offered through private insurers, with some plans offering enhanced benefits and options. Part D plans are set up to share the cost of drugs until you reach your annual limit. You can add Part D coverage to traditional Medicare or a Part C Medicare Advantage plan, although some Medicare Advantage plans already include prescription coverage. Monthly premiums vary by plan, but it's typically more cost effective to enroll as soon as you are eligible for Medicare. Otherwise, your premiums may be higher, and you may pay a penalty. 

Aside from Medicare, you may want to consider supplemental insurance, also known as Medigap coverage. Offered by private insurers, these plans are designed to help cover medical expenses that traditional Medicare does not. Anyone enrolled in Parts A and B is eligible to enroll in a Medigap plan.

Medicare publishes a guide every yearOpens in a new window with more information. Put it at the top of your must-read list when you turn 64 years old—it's an investment in your future.