What Medicare Is and How It Pays for Care
Medicare is federal health insurance for people 65 and older, regardless of income. It also covers some younger people with disabilities and people with end-stage renal disease. Medicare has four parts: Part A covers hospital stays and skilled nursing; Part B covers doctor visits and outpatient care; Part D covers prescription drugs; and Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers.
Medicare is not means-tested, meaning your income does not determine whether you can enroll. However, your income does determine how much you pay in premiums, deductibles, and out-of-pocket costs. Lower-income people may pay nothing or very little for Part B premiums and may receive help with deductibles and copayments through programs like the Medicare Savings Program and Extra Help.
You do not automatically receive Medicare when you turn 65. You must enroll during your enrollment window, which typically opens three months before the month you turn 65 and closes three months after. If you miss this window, you may pay a permanent penalty on your premiums.
Key Takeaways
- Medicare enrollment opens three months before you turn 65 and closes three months after; missing this window results in a permanent premium penalty.
- Part A (hospital insurance) is free for most people at 65 if they or their spouse paid Medicare taxes for at least 10 years.
- Part B (doctor visits) costs a monthly premium that increases if you delay enrollment, and lower-income people may pay nothing through the Medicare Savings Program.
- Extra Help and the Medicare Savings Program are separate programs that reduce what you pay for prescriptions, premiums, and doctor visits based on your income and resources.
- You enroll through Social Security, Medicare.gov, or your local Social Security office; you cannot enroll through a private insurance company or a third-party website.
Part A: Hospital Insurance and What It Covers
Part A covers inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice care, and some home health services. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes for at least 10 years while working. If you did not meet this requirement, you can still enroll in Part A but will pay a monthly premium, which varies based on how many quarters of Medicare tax you paid.
Part A does have a deductible and copayments. For a hospital stay in 2024, you pay a deductible of $1,632 for the first 60 days; after 60 days, you pay a daily copayment. These amounts change each year. If your income is below 135% of the federal poverty line, you may be able to have the Medicare Savings Program pay your Part A deductible and copayments.
Part A is automatic for most people. If you are already receiving Social Security benefits when you turn 65, Medicare Part A enrollment happens without you taking action. If you are not yet receiving Social Security, you must enroll in Medicare separately through Social Security or Medicare.gov.
Part B: Doctor Visits, Outpatient Care, and Premium Costs
Part B covers doctor office visits, outpatient surgery, diagnostic tests, physical therapy, and durable medical equipment like wheelchairs and oxygen. Part B requires a monthly premium. In 2024, the standard premium is $164.90 per month, but the amount you pay depends on your income from two years prior. Higher-income beneficiaries pay more through an Income-Related Monthly Adjustment Amount (IRMAA).
Part B also has an annual deductible (currently $240) and a 20% copayment for most services after you meet the deductible. If your income is below 150% of the federal poverty line, the Medicare Savings Program may pay your Part B premium, deductible, and copayments. You must apply for this program separately; it does not happen automatically.
Delaying Part B enrollment after you turn 65 results in a permanent 10% premium increase for each year you delay, unless you have employer coverage or meet other exceptions. This penalty stays with you for life, so enrolling on time matters even if you do not plan to use Medicare immediately.
Part D: Prescription Drug Coverage and Extra Help
Part D is prescription drug insurance offered by private insurers approved by Medicare. You choose a plan during the annual enrollment period (October 15 to December 7 each year). Part D plans vary in which drugs they cover and how much you pay, so comparing plans each year can lower your costs.
Part D has a deductible (up to $545 in 2024), a copayment or coinsurance for each prescription, and a coverage gap called the "donut hole" where you pay more out-of-pocket before catastrophic coverage begins. If your income is below 150% of the federal poverty line and your resources are below $15,000 (or $30,000 if married), you may be able to receive Extra Help, which pays your Part D premium, deductible, and copayments.
Extra Help is a separate program from Medicare itself. You apply through Social Security or at your local Social Security office. If you receive Supplemental Security Income (SSI) or Medicaid, you may be automatically enrolled in Extra Help without applying. You can apply for Extra Help at any time during the year; it is not limited to the annual enrollment period.
The Medicare Savings Program: Paying Your Premiums and Deductibles
The Medicare Savings Program (also called Medicaid Buy-In in some states) pays your Part A and Part B premiums, deductibles, and copayments if your income is below a certain threshold. Income limits vary by state but are typically 135% to 200% of the federal poverty line. For 2024, 135% of the federal poverty line is roughly $1,550 per month for a single person and $2,080 for a married couple.
The Medicare Savings Program is run by your state Medicaid agency, not by Medicare or Social Security. You apply through your state's Medicaid office, which you can find by calling 1-800-MEDICARE or visiting your state health department website. Processing times vary by state but typically take 30 to 60 days.
If you are approved for the Medicare Savings Program, the program pays your premiums directly to Medicare and your deductibles and copayments are reduced or eliminated. You do not receive money; the program pays providers and Medicare on your behalf. You remain enrolled in regular Medicare Parts A and B; the Medicare Savings Program simply reduces what you pay.
How to Enroll in Medicare at 65
You can enroll in Medicare through three routes: online at Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office. The Social Security office route is often fastest if you are already receiving Social Security benefits, because your enrollment can happen in one visit.
When you enroll, you will need your Social Security number, proof of citizenship or legal residency, and information about any current health coverage (such as employer insurance or COBRA). If you are enrolling in Part D, you will choose a prescription drug plan at the time of enrollment or during the annual enrollment period.
After you submit your enrollment, Medicare sends you a Medicare card by mail within two to four weeks. Your coverage typically begins on the first day of the month in which you turn 65, even if your card arrives later. You can use your Social Security number as your Medicare number until your card arrives.
Income Limits and Resource Limits for Help Programs
| Program | Income Limit (2024) | Resource Limit | What It Pays |
|---|---|---|---|
| Medicare Savings Program (135% tier) | ~$1,550/month single; ~$2,080/month married | $8,000 single; $12,000 married | Part A and B premiums |
| Medicare Savings Program (150% tier) | ~$1,720/month single; ~$2,310/month married | $12,000 single; $18,000 married | Part A and B premiums, deductibles, copayments |
| Extra Help (Part D) | ~$1,720/month single; ~$2,310/month married | $15,000 single; $30,000 married | Part D premium, deductible, copayments |
Income and resource limits change each year. The figures above are approximate for 2024. Your state may have higher limits for the Medicare Savings Program. To find your state's exact limits, call 1-800-MEDICARE or visit your state Medicaid office website.
Income includes Social Security, pensions, wages, and interest. It does not include Supplemental Security Income (SSI). Resources include bank accounts, stocks, and real estate other than your home. Your home and one car do not count toward resource limits.
Frequently Asked Questions
What happens if I do not enroll in Medicare when I turn 65?
If you miss your initial enrollment window and do not have employer coverage or other may have access to coverage, you will pay a permanent 10% premium increase on Part B for each year you delay. Part A may also have a penalty. You can enroll during the General Enrollment Period (January 1 to March 31 each year), but the penalty applies unless you have a may have access to life event.
Do I have to choose between Original Medicare and Medicare Advantage?
Yes. Original Medicare is Parts A and B run by the federal government. Medicare Advantage (Part C) is an alternative offered by private insurers that combines Parts A, B, and usually D into one plan. You choose one or the other during enrollment; you cannot have both at the same time. Medicare Advantage plans often have lower premiums but narrower networks of doctors.
Can I get help paying for Medicare if I am still working at 65?
Yes. If you are still working and have employer health insurance, you can delay Part B enrollment without penalty as long as your employer has 20 or more employees. You must enroll in Part A. Once you leave your job or lose employer coverage, you have eight months to enroll in Part B without penalty. The Medicare Savings Program and Extra Help are based on income and resources, not employment status.
How do I know if I may have access to for Extra Help or the Medicare Savings Program?
Call 1-800-MEDICARE and ask to be screened for both programs. You can also apply directly through your state Medicaid office or Social Security. Social Security can screen you over the phone and mail you an application. Processing takes 30 to 60 days. If you are approved, benefits usually begin the month after approval.
What if my income changes after I enroll in a help program?
Report income changes to your state Medicaid office or Social Security within 30 days. If your income rises above the limit, your benefits end, but you can reapply if your income drops again. If your income falls, you may become may be able to access for a higher tier of help. Your state will tell you how to report changes when you are approved.