The basics of Medicare

How Medicare works

Think of Medicare as your foundation for healthcare in retirement. It helps cover hospital stays, preventive care, prescriptions, and more, depending on the Parts you sign up for. According to the Centers for Medicaid & Medicare, 69.3 million people¹ had Medicare coverage as of August 2025.

Medicare has four Parts:

• Medicare Part A
• Medicare Part B
• Medicare Part C, also called Medicare Advantage
• Medicare Part D

We’ll look closer at the different types of Medicare later in this article.

Medicare eligibility

Generally, Medicare is available to people 65 or older. But there are exceptions to who else can use it.

You may also qualify for Medicare if:

• You’re younger than 65 but have received Social Security Disability Insurance (SSDI) for at least 24 months.
• You have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS), also called Lou Gehrig’s disease. In this case, you qualify regardless of age.

If you’re already receiving Social Security Administration benefits before turning 65, you’re enrolled in Medicare automatically. If not, you’ll need to sign up during your enrollment window.

Understanding the different Parts of Medicare

Each Part covers different types of care. The Part you choose impacts your premiums, out-of-pocket costs, and access to providers.

Medicare Part A

Medicare Part A is hospital insurance. Most people enrolled in Medicare Part A don’t have to pay a monthly premium. If you’ve contributed to Medicare payroll taxes for at least ten years (or 40 quarters), you automatically qualify for premium-free hospital coverage.

Medicare A covers:

• Inpatient hospital stays
• Skilled nursing facility care
• Hospice care
• Some home health services

Medicare Part B

Medicare Part B is medical insurance. Your income level determines your Medicare Part B monthly premium amount.

Medicare B covers services like:

• Doctor’s visits
• Preventive services
• Ambulance services
• Mental health services
• Lab tests
• Durable medical equipment

Medicare Part C

Medicare Part C, or Medicare Advantage, is an alternative to Original Medicare (Parts A and B). Parts A and B typically cover about 80% of your healthcare costs. Medicare Part C bundles the same hospital and medical coverage into a single plan. These plans also offer extra benefits in exchange for low copays and coinsurance.

Medicare C plans usually include:

• All Part A and B benefits
• Prescription drug coverage
• Vision, dental, and hearing
• Wellness perks, like fitness programs

Private insurance companies approved by Medicare offer Medicare Advantage plans. However, costs and provider networks vary by plan and region, so it’s important to compare carefully.

Some of the most common Medicare Advantage plans are:

• Health maintenance organizations (HMOs)
• Preferred provider organizations (PPOs)
• Private fee-for-service (PFFS)

Medicare Part D

Medicare Part D is prescription drug coverage. Premiums vary depending on the plan you choose. Most enrollees only pay the standard monthly premium. However, individuals with higher incomes may pay extra on top of that amount.

All Medicare Part D prescription drug plans must cover the following:

• HIV/AIDS treatments
• Antidepressants
• Antipsychotic medications
• Anticonvulsive treatments for seizure disorders
• Immunosuppressant drugs
• Anticancer drugs (unless covered by Part B)
• Vaccines (unless covered by Part B)

Medigap

Original Medicare (Parts A and B) doesn’t cover everything. Many beneficiaries choose a Medigap policy, also known as Medicare Supplement Insurance. Medicare supplement plans help cover medical expenses, such as deductibles, copays, and coinsurance.

You can’t combine Medigap with a Medicare Advantage plan, so you’ll need to choose the path that fits your budget and healthcare needs.

When to sign up for Medicare

Timing matters when it comes to Medicare. Missing your Medicare enrollment window can lead to permanent penalties².

There are three enrollment periods for Medicare:

1. Initial enrollment period (IEP): When you’re turning 65.
2. Special enrollment period (SEP): After 65, and you’ve had coverage through an employer group health plan.
3. General enrollment period: When you miss the other enrollment periods.

Can your employer cover your Medicare costs?

If your employer offers an individual coverage health reimbursement arrangement (ICHRA), you’re in luck! They can help cover your Medicare costs. With an ICHRA, employers offer tax-free allowances to employees to help cover the cost of their individual health insurance coverage. That includes premiums for certain types of Medicare coverage.

To participate in an ICHRA as a Medicare-eligible individual, you must have coverage under both Medicare Part A and Medicare Part B, or opt for Medicare Part C. Medicare Part B alone doesn’t meet the criteria for minimum essential coverage (MEC).

You don’t have to navigate enrolling in Medicare on your own as part of your ICHRA onboarding. If your employer administers their ICHRA with Remodel Health, our in-house Medicare experts can guide you through the process.

Conclusion

Navigating Medicare doesn’t have to feel overwhelming. When you understand your coverage options, you can prevent gaps in coverage, choose benefits that match your lifestyle, and manage your healthcare costs more effectively. Whether you’re preparing for your own enrollment or helping a loved one understand their options, taking the time to learn now will pay off for years to come.

References

1. https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment
2. https://www.ssa.gov/medicare/plan/when-to-sign-up