THE BASICS OF MEDICARE
WHAT IS MEDICARE?
Medicare is the federal government program that provides health care coverage (health insurance) if you are 65+, under 65 and receiving Social Security Disability Insurance (SSDI) for a certain amount of time, or under 65 and with End-Stage Renal Disease (ESRD). The Centers for Medicare & Medicaid Services (CMS) is the federal agency that runs Medicare. The program is funded in part by Social Security and Medicare taxes you pay on your income, in part through premiums that people with Medicare pay, and in part by the federal budget.
PARTS OF MEDICARE
Part A covers inpatient hospital stays, skilled nursing facility (SNF) stays, some home health visits, and hospice care. Part A benefits are subject to a deductible ($1736 per benefit period in 2026). Part A also requires coinsurance for extended inpatient hospital and skilled nursing facility stays.
Part B covers physician visits, outpatient services, preventive services, and some home health visits. Many Part B benefits are subject to a deductible ($283 in 2026) and monthly premium ($202.90 in 2026), and, typically, coinsurance of 20 percent. No coinsurance or deductible is charged for an annual wellness visit or for preventive services that are rated ‘A’ or ‘B’ by the U.S. Preventive Services Task Force, such as mammography or prostate cancer screenings.
Part C refers to the Medicare Advantage program, through which beneficiaries can enroll in a private health plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO), and receive all Medicare-covered Part A and Part B benefits and typically also Part D benefits. Enrollment in Medicare Advantage plans has grown over time, with more than 35 million beneficiaries enrolled in Medicare Advantage Plans.
Part D covers outpatient prescription drugs through private plans that contract with Medicare, including stand-alone prescription drug plans (PDPs) and Medicare Advantage plans with prescription drug coverage (MA-PDs). The Part D benefit helps pay for enrollees’ drug costs and provides coverage for very high drug costs. Additional financial assistance is available for beneficiaries with low incomes and modest assets. Enrollees pay monthly premiums and cost sharing for prescriptions, with costs varying by plan. Enrollment in Part D is voluntary.
MEDICARE VS. MEDICAID
Medicare and Medicaid are both government health programs, but they serve different populations and have different eligibility rules. Medicare is primarily health insurance for people age 65 and older, as well as certain younger people with qualifying disabilities or specific medical conditions. Eligibility is generally based on age or disability, not income. Medicaid is a joint federal and state program that provides health coverage to people who meet income and other eligibility requirements. Rules and benefits can vary by state. Some people qualify for both Medicare and Medicaid. These individuals are often called “dual eligible.” Medicaid may help with certain Medicare costs, such as premiums, deductibles, and copayments, depending on the person's eligibility level and state program.
