Last updated 3 months ago. Our resources are updated regularly but please keep in mind that links, programs, policies, and contact information do change.
Medicare is the federal health insurance program primarily serving Americans 65 and older, along with certain younger people with qualifying disabilities and those diagnosed with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).
General eligibility typically requires being 65 or older, having received Social Security disability benefits for 24 months, or having ESRD or ALS. You must also meet citizenship and residency requirements as a U.S. citizen or lawfully present permanent resident who has lived continuously in the U.S. for at least five years.
Medicare consists of different parts offering distinct types of coverage. You’ll need to decide between Original Medicare (Parts A and B) or Medicare Advantage (Part C), along with decisions about prescription drug coverage (Part D) and supplemental insurance.
For the most accurate and current information, always refer to the official Medicare website.
Medicare Part A: Hospital Insurance
Medicare Part A is hospital insurance that covers costs associated with inpatient care. Coverage is based on federal and state laws, national coverage decisions, and local determinations regarding medical necessity.
What Part A Covers
Part A extends to several key areas of inpatient and related care:
Inpatient Hospital Stays: When formally admitted to a Medicare-accepting hospital under a doctor’s order, Part A covers:
- Semi-private rooms and meals
- General nursing care
- Medications administered during inpatient treatment
- Other essential hospital services and supplies
This applies to care in acute care hospitals, critical access hospitals, inpatient rehabilitation facilities, and long-term care hospitals. Coverage for inpatient care in psychiatric hospitals is limited to 190 days lifetime; this limit doesn’t apply to psychiatric units within general hospitals.
Medicare doesn’t cover private-duty nursing, private rooms (unless medically necessary), or personal items like television or phone charges. More information on inpatient hospital care is available at the Medicare inpatient coverage page.
Skilled Nursing Facility (SNF) Care: Part A covers care in Medicare-certified SNFs on a short-term basis when certain conditions are met. This differs from custodial or long-term care, which Medicare generally doesn’t cover.
To qualify for SNF coverage, you typically need:
- A prior qualifying inpatient hospital stay of at least three consecutive days
- Admission to the SNF generally within 30 days of hospital discharge
- Daily skilled care (nursing or therapy) that can only be provided in an SNF
- Available days in your benefit period
Covered services include room and meals, skilled nursing care, therapy services, medications, and medical supplies used in the facility. Learn more about SNF coverage on the Medicare SNF care page.
Hospice Care: Part A covers hospice for individuals certified by a doctor as having a terminal illness with a life expectancy of six months or less. Care focuses on comfort rather than cure.
Home Health Care: Part A (sometimes Part B) covers certain home health services if specific criteria are met. These include medically necessary part-time skilled nursing care, physical therapy, occupational therapy, and speech-language pathology services.
Part-time home health aide services may also be covered, but only alongside skilled nursing or therapy services. A doctor must certify the need for home health care, and services must come from a Medicare-certified agency.
Part A doesn’t cover 24-hour home care, meal delivery, or homemaker services unless they’re part of your care plan. Details are available at the Medicare home health services page.
For a complete overview of Part A coverage, visit the Medicare Part A overview page.
Part A Costs in 2025
Most beneficiaries don’t pay a monthly premium for Part A, but other costs like deductibles and coinsurance apply.
Premium: Most people qualify for “premium-free Part A” because they or their spouse paid Medicare taxes for at least 10 years (40 quarters) while working. Those who don’t qualify may purchase Part A if they meet eligibility requirements.
Purchased Part A Premium (2025):
- $285 monthly with 30-39 quarters of Medicare-covered employment
- $518 monthly with fewer than 30 quarters
Late Enrollment Penalty: If you’re required to buy Part A but delay enrollment beyond your initial eligibility period without qualifying for a Special Enrollment Period, your monthly premium may increase by 10%. Unlike other Medicare penalties, this one has a limited duration: twice the number of years you could have had Part A but didn’t sign up.
Deductible (2025): For inpatient hospital stays, there’s a $1,676 deductible for each benefit period, covering your share of costs for the first 60 days of Medicare-covered inpatient hospital care.
Benefit Period: A benefit period begins when you’re admitted as an inpatient and ends once you haven’t received inpatient care for 60 consecutive days. If you’re admitted after one benefit period ends, a new period begins, and you must pay the deductible again. There’s no limit to the number of benefit periods you can have.
Inpatient Hospital Coinsurance (2025):
- Days 1-60: $0 coinsurance (after deductible)
- Days 61-90: $419 coinsurance per day
- Days 91 and beyond: $838 coinsurance per day for each “lifetime reserve day” (60 total)
- Beyond lifetime reserve days: You pay all costs
Skilled Nursing Facility Coinsurance (2025):
- Days 1-20: $0 coinsurance
- Days 21-100: $209.50 coinsurance per day
- Days 101 and beyond: You pay all costs
Hospice Care Costs: Generally $0 for hospice services. Small copayments may apply for outpatient prescription drugs (up to $5) and 5% coinsurance for inpatient respite care.
Home Health Care Costs: $0 for covered services. 20% of the Medicare-approved amount for durable medical equipment.
A summary of these costs:
| Part A Service | 2025 Cost Sharing |
|---|---|
| Premium | $0 for most; $285 or $518 per month if buying Part A (based on work history) |
| Hospital Deductible | $1,676 per benefit period |
| Hospital Coinsurance | Days 1-60: $0 (after deductible) <br> Days 61-90: $419 per day <br> Days 91+: $838 per lifetime reserve day used |
| SNF Coinsurance | Days 1-20: $0 <br> Days 21-100: $209.50 per day <br> Days 101+: All costs |
| Home Health Care | $0 for services; 20% for DME |
| Hospice Care | $0 for services; potential small copay for drugs/respite care |
For a general overview of Medicare costs, visit the Medicare costs page. The official 2025 cost figures are also available in this Medicare costs fact sheet.
Enrolling in Part A
How you enroll in Part A depends on whether you’re already receiving Social Security or Railroad Retirement Board (RRB) benefits.
Automatic Enrollment: If you’re already receiving retirement or disability benefits from Social Security or the RRB for at least four months before turning 65, you’ll typically be enrolled automatically in both Medicare Part A and Part B. You should receive a Medicare welcome package about three months before your 65th birthday or in the 25th month of receiving disability benefits.
Active Enrollment: If you’re not automatically enrolled (e.g., still working at 65 and not yet receiving Social Security benefits), you need to sign up for Medicare Part A (and Part B, if desired). Enrollment is handled through the Social Security Administration (SSA) via the SSA website. Railroad workers should contact the RRB.
Initial Enrollment Period (IEP): The main window for enrollment is the 7-month IEP. This period begins three months before the month you turn 65, includes your birthday month, and ends three months after. Enrolling during the IEP ensures prompt coverage and helps avoid any late enrollment penalty for purchased Part A.
Coverage Start Date: For those eligible for premium-free Part A, coverage generally begins the first day of the month you turn 65. If your birthday falls on the first of the month, coverage starts on the first day of the previous month. If you enroll after your IEP, coverage can start retroactively, up to six months before your application date, but no earlier than when you first became eligible.
Key enrollment resources include:
- When to sign up for Medicare
- How to sign up for Medicare
- When Medicare coverage starts
- Official Medicare enrollment guide
Medicare Part B: Medical Insurance
Medicare Part B provides coverage for outpatient medical services and supplies. It complements Part A’s inpatient focus by covering care received outside of hospital admissions.
What Part B Covers
Part B coverage falls into two main categories:
Medically Necessary Services: Services or supplies needed to diagnose or treat medical conditions that meet accepted standards of medical practice.
Preventive Services: Healthcare aimed at preventing illness or detecting it early. Many preventive services have $0 cost-sharing if received from providers who accept Medicare assignment.
Key Part B covered services include:
Doctor and Healthcare Provider Services: Visits to physicians, specialists, nurse practitioners, physician assistants, clinical nurse specialists, and other providers.
Outpatient Care: Services received in hospital outpatient departments, clinics, ambulatory surgical centers, or other outpatient settings.
Preventive Services: A broad range of screenings (cardiovascular, cancer, diabetes, depression, etc.), vaccinations (flu, pneumococcal, COVID-19, Hepatitis B for those at risk), counseling services (alcohol misuse, obesity, tobacco cessation), the annual “Wellness” visit, and the one-time “Welcome to Medicare” preventive visit. A complete list is available at the Medicare preventive services page.
Durable Medical Equipment (DME): Medically necessary equipment prescribed by a doctor for home use, such as wheelchairs, walkers, oxygen equipment, CPAP devices, and blood sugar monitors. Both the prescribing provider and DME supplier must be enrolled in Medicare. You typically pay 20% coinsurance after meeting the annual Part B deductible. More details at the Medicare DME coverage page.
Home Health Services: Similar to Part A, Part B covers certain medically necessary home health services.
Ambulance Services: Ground ambulance transportation when medically necessary.
Mental Health Services: Outpatient mental health services, therapy, counseling, and partial hospitalization programs. Part B also covers doctor services received during inpatient mental health stays covered by Part A.
Clinical Research Studies: Costs associated with qualifying clinical trials.
Limited Outpatient Prescription Drugs: Part B covers certain drugs typically administered by medical professionals in offices or hospital outpatient settings. Examples include some chemotherapy drugs, certain injectable medications, drugs infused via DME, immunosuppressive drugs post-transplant, and certain vaccines. Insulin used with an external insulin pump is capped at $35 monthly with no deductible.
For a general overview of Part B coverage, visit the Medicare Part B overview page.
Part B Costs in 2025
Part B involves several types of costs:
Standard Monthly Premium (2025): $185 per month. This amount can change annually and must be paid regardless of whether you use Part B services. For Social Security, RRB, or federal civil service benefit recipients, the premium is typically deducted automatically; otherwise, you’ll be billed quarterly. Payment options are detailed at the Medicare premiums payment page.
Income-Related Monthly Adjustment Amount (IRMAA): Higher-income beneficiaries pay an additional amount on top of the standard premium. This is based on Modified Adjusted Gross Income reported on IRS tax returns from two years prior (2025 IRMAA based on 2023 MAGI).
Annual Deductible (2025): $257. You must meet this deductible once per calendar year before Part B begins paying.
Coinsurance: After meeting the deductible, you generally pay 20% of the Medicare-approved amount for most Part B services, including doctor visits, outpatient therapy, and DME. Medicare pays the remaining 80%. Many preventive services are exempt from this coinsurance.
Assignment: When a provider accepts assignment, they agree to accept the Medicare-approved amount as full payment. They can only bill you for the deductible and 20% coinsurance. Providers who accept assignment submit claims directly to Medicare. Using such providers helps limit your out-of-pocket expenses.
Here’s a summary of standard Part B costs and income-related adjustments for 2025:
Table: Part B Costs Summary (Standard – 2025)
| Cost Component | 2025 Amount | Notes |
|---|---|---|
| Standard Premium | $185 per month | Higher for individuals with higher income |
| Annual Deductible | $257 | Paid once per calendar year |
| Standard Coinsurance | Generally 20% of Medicare-approved amount | Applies after deductible; $0 for many preventive services |
For a general overview of Medicare costs, visit the Medicare costs page. The official 2025 cost figures fact sheet is at the Medicare costs publication page.
Enrolling in Part B & The Late Enrollment Penalty
While Part B is optional, failing to enroll when first eligible can lead to significant long-term financial consequences if certain conditions aren’t met.
Enrollment Timing: Most people enroll during their Initial Enrollment Period (IEP), the seven-month window surrounding their 65th birthday. Enrollment can be delayed without penalty only if you (or your spouse) are actively working and have health coverage through that current employer. Retiree coverage or COBRA don’t count as active employer coverage for avoiding the penalty.
Late Enrollment Penalty (LEP): If you don’t sign up during your IEP and don’t qualify for a Special Enrollment Period, you’ll likely face a late enrollment penalty when enrolling later. This penalty is 10% of the standard Part B premium for each full 12-month period you could have had Part B but didn’t enroll.
This penalty isn’t a one-time fee—it’s added to your monthly premium for as long as you have Part B coverage. A delay of just two years means a permanent 20% increase in your monthly premium.
Special Enrollment Period (SEP): If you delay Part B enrollment because you have coverage through current employment (yours or a spouse’s), you have an 8-month SEP to sign up without penalty after the employment or group coverage ends, whichever happens first. Other SEPs exist for less common situations.
General Enrollment Period (GEP): If you miss both your IEP and any applicable SEP, you can only enroll in Part B during the GEP (January 1 to March 31 each year). Coverage begins the month after enrollment, and the late enrollment penalty will almost certainly apply.
Resources for enrollment timing and penalties:
- Avoiding Medicare Penalties
- Working Past 65
- When to Sign Up for Medicare
- When Medicare Coverage Starts
Understanding Original Medicare (Parts A & B)
Original Medicare refers to the traditional program combining Part A (Hospital Insurance) and Part B (Medical Insurance). It operates on a fee-for-service basis—Medicare pays its share for covered services, and you pay your portion as you receive care.
How Original Medicare Works
A defining characteristic of Original Medicare is freedom of provider choice. You can visit any doctor, hospital, or facility in the United States that accepts Medicare. There are no network restrictions, and referrals aren’t typically needed for specialists.
This flexibility comes with potentially significant out-of-pocket costs:
- The Part A deductible ($1,676 per benefit period in 2025)
- The Part B annual deductible ($257 in 2025)
- The typical 20% coinsurance for most Part B services
A critical point: Original Medicare (Parts A and B alone) has no annual limit on what you might pay out-of-pocket for covered services. A serious illness could lead to substantial costs through deductibles and unlimited 20% coinsurance. This potential for high expenses is why many beneficiaries supplement their Original Medicare coverage.
Filling the Gaps: Adding Coverage to Original Medicare
To manage cost-sharing requirements and potential financial exposure of Original Medicare, beneficiaries often obtain additional coverage:
Medicare Supplement Insurance (Medigap):
Purpose: Medigap policies are sold by private insurance companies to fill the “gaps” in Original Medicare by paying some or all of your share of costs.
How it Works: When you receive services, Medicare pays its approved amount first, then your Medigap policy pays its share. This simplifies budgeting by replacing unpredictable cost-sharing with a predictable monthly premium, paid in addition to your Part B premium.
Standardization: Medigap policies are standardized under federal and state laws, identified by letters (Plan A through Plan N). All plans with the same letter must offer identical basic benefits, regardless of which insurance company sells the policy. The only difference should be the premium charged. (Massachusetts, Minnesota, and Wisconsin standardize policies differently.)
Eligibility and Enrollment: To buy a Medigap policy, you must be enrolled in both Medicare Parts A and B. The best time to purchase is during your 6-month Medigap Open Enrollment Period, which begins when you’re both 65 or older and enrolled in Part B. During this window, insurance companies must sell you any Medigap policy they offer, regardless of health status, and cannot charge more due to pre-existing conditions.
Missing this window can have significant consequences. Outside this period (or other limited guaranteed issue situations), insurers may deny coverage or charge much higher premiums based on health underwriting.
Coverage Limitations: Medigap policies primarily cover cost-sharing for services covered by Original Medicare. They generally don’t cover services Medicare doesn’t cover, such as long-term custodial care, routine vision or dental care, hearing aids, eyeglasses, or private-duty nursing. Medigap policies sold after January 1, 2006, can’t include prescription drug coverage. Due to legislative changes, Medigap Plans C and F, which covered the Part B deductible, can’t be sold to individuals newly eligible for Medicare on or after January 1, 2020. Some Medigap plans offer benefits for foreign travel emergency care.
Resources:
- Medigap basics
- Find and compare Medigap policies
- Official Medigap guide
Medicare Part D (Prescription Drug Coverage): Since Medigap policies no longer include drug coverage for new enrollees, individuals with Original Medicare who need prescription drug coverage must enroll in a separate Medicare Part D Prescription Drug Plan offered by a private insurance company. Part D is discussed in detail in a later section.
Medicare Part C: Medicare Advantage Plans
Medicare Part C, commonly known as Medicare Advantage (MA), offers an alternative way to receive Medicare benefits compared to Original Medicare.
What are Medicare Advantage (MA) Plans?
MA plans are offered by private insurance companies that contract with Medicare and follow rules set by the Medicare program. Instead of receiving Parts A and B benefits directly through government-administered Original Medicare, individuals enrolled in MA plans receive benefits through the private plan.
These plans are often described as “bundled” because they combine Parts A and B coverage into a single plan. Most MA plans also include Part D prescription drug coverage (MA-PD plans).
When enrolled in an MA plan, you still have all Medicare rights and protections. However, you must generally use the MA plan’s insurance card to access services, not your Original Medicare card.
Enrollment in an MA plan requires continued enrollment in Medicare Parts A and B, and you must pay the monthly Part B premium (and any Part A premium if applicable), plus any separate premium the MA plan might charge.
Medicare pays the private insurance company a fixed monthly amount for each member enrolled in its MA plan.
For more details, refer to the Understanding Medicare Advantage Plans guide. Explore plan options at the Medicare health plan options page.
Common Plan Types and Provider Networks
MA plans typically use provider networks, with plan types dictating network rules:
Health Maintenance Organizations (HMOs): HMO plans generally require you to use in-network providers for non-emergency care. Out-of-network care is typically not covered except in emergencies or with prior approval. Many HMOs require selecting a Primary Care Physician (PCP) who manages care and provides specialist referrals. Some HMOs offer Point-of-Service (HMO-POS) options allowing limited out-of-network care at higher cost-sharing.
Preferred Provider Organizations (PPOs): PPO plans offer more flexibility than HMOs. You can see providers both inside and outside the network, though in-network providers typically cost less. PPOs generally don’t require a PCP, and referrals aren’t usually needed for specialists.
Private Fee-for-Service (PFFS) Plans: In PFFS plans, the plan determines payment rates for providers and your service costs. You can generally use any Medicare-approved provider that accepts the plan’s payment terms on a service-by-service basis. Not all providers may agree to accept these terms. Some PFFS plans have networks; others don’t.
Special Needs Plans (SNPs): SNPs are designed for specific groups: those with certain chronic conditions (diabetes, ESRD, etc.), those in institutions (nursing homes), or those eligible for both Medicare and Medicaid (dual eligibles). SNPs tailor benefits, provider networks, and drug formularies to meet specific population needs. Network rules and referral requirements depend on whether the SNP operates like an HMO or PPO.
Medicare Medical Savings Account (MSA) Plans: These plans combine a high-deductible health plan with a special medical savings account funded by Medicare. You use account funds to pay healthcare costs before meeting the deductible. Once met, the plan covers Medicare-covered services. MSA plans generally don’t have provider networks. They typically don’t include Part D coverage, requiring separate PDP enrollment if drug coverage is desired.
A comparison of these plan types is available at the Medicare coverage options comparison page.
Beyond the Basics: Potential Extra Benefits
A major attraction of MA plans is their potential to offer extra benefits not covered under Original Medicare. While Original Medicare focuses on medically necessary hospital and medical services, MA plans may include:
- Routine vision care (eye exams, eyeglasses)
- Hearing care (hearing aids, exams)
- Routine dental care (checkups, cleanings, sometimes more extensive work)
- Fitness programs (gym memberships or discounts)
The availability and scope of these extra benefits vary significantly by plan and region.
Original Medicare vs. Medicare Advantage: A Comparison
Choosing between Original Medicare (often with Medigap and Part D) and Medicare Advantage involves weighing several key differences:
| Feature | Original Medicare (Parts A & B) | Medicare Advantage (Part C) |
|---|---|---|
| Provider Choice | Can use any doctor/hospital in the U.S. that accepts Medicare; No referrals usually needed | Usually must use providers in the plan’s network (especially HMOs); May need PCP referrals for specialists |
| Monthly Premiums | Pay Part B premium (and Part A if applicable); Separate premiums for Medigap & Part D if chosen | Pay Part B premium; May pay an additional plan premium (can be $0); Part D often included |
| Cost Sharing | Part A deductible per benefit period; Part B annual deductible; Generally 20% coinsurance for Part B | Plan-specific deductibles, copayments, and coinsurance for services |
| Out-of-Pocket Limit | No annual limit on out-of-pocket costs for covered services (unless Medigap added) | Includes an annual limit on out-of-pocket costs for Parts A & B services; once met, plan pays 100% |
| Prescription Drug Coverage | Need to enroll in a separate Part D plan | Usually included (MA-PD); Cannot typically join a separate Part D plan |
| Supplemental Coverage | Can buy Medigap policies | Cannot buy or use Medigap policies |
| Extra Benefits | Generally covers only Medicare-defined services (Parts A/B) | Often includes routine vision, dental, hearing, fitness benefits |
| Coverage Rules | Generally no prior authorization needed | Often requires prior authorization for certain services/drugs |
| Travel Coverage | Nationwide coverage; Limited foreign travel coverage (unless Medigap adds it) | Typically limited to service area for routine care; Some plans offer limited emergency foreign travel benefit |
The choice between Original Medicare and Medicare Advantage often depends on individual priorities. MA plans can offer potentially lower overall costs (through lower premiums and an out-of-pocket maximum) and bundled benefits including extras like dental and vision. However, this typically means accepting provider network limitations and navigating plan rules like referrals and prior authorizations.
Because beneficiaries cannot have both an MA plan and a Medigap policy, the initial decision between these paths is significant. Switching later, particularly trying to get Medigap after being in an MA plan, can be difficult if your Medigap Open Enrollment Period has passed.
Find the official comparison at the Medicare coverage options comparison page.
Medicare Part D: Prescription Drug Coverage
Medicare Part D provides outpatient prescription drug coverage through private insurance companies with Medicare-approved plans.
Getting Prescription Drug Coverage
There are two primary ways to obtain Medicare Part D coverage:
Standalone Medicare Prescription Drug Plans (PDPs): These plans add drug coverage to Original Medicare. If you have Original Medicare and want drug coverage, you must choose and enroll in a separate PDP. PDPs can sometimes be used with other Medicare health plans like Medicare Cost Plans, some Private Fee-for-Service plans, and Medicare Medical Savings Account plans.
Medicare Advantage Plans with Prescription Drug Coverage (MA-PDs): Most Medicare Advantage plans include prescription drug coverage as part of their bundled benefits. If you enroll in an MA-PD plan, you receive Parts A, B, and D benefits through that single private plan. Generally, MA-PD enrollees cannot also enroll in a standalone PDP.
How Part D Works: Formularies, Tiers, and Coverage Stages (2025 Structure)
Understanding Part D structure and costs:
Formulary: Each Part D plan maintains a list of covered prescription drugs. While plans must cover drugs within various therapeutic categories and protected classes (like cancer or HIV/AIDS drugs), specific included drugs vary between plans. Always check if your medications are included before enrolling.
Tiers: Formulary drugs are assigned to different cost tiers. Plans often use multiple tiers, such as:
- Tier 1: Preferred generics (lowest cost-sharing)
- Tier 2: Non-preferred generics
- Tier 3: Preferred brand-name drugs
- Tier 4: Non-preferred brand-name drugs
- Tier 5: Specialty drugs (highest cost-sharing)
Specific tier placement and cost-sharing amounts vary by plan.
Coverage Stages (2025): Part D cost-sharing is undergoing significant changes in 2025 due to prescription drug law reforms. The previous multi-stage process with a coverage gap (“donut hole”) is being replaced by a simpler structure with an annual out-of-pocket cap:
- Deductible Stage: If your plan has an annual deductible, you pay the full cost of prescriptions until meeting the deductible. For 2025, the maximum allowable Part D deductible is $590, but many plans have lower or no deductibles.
- Initial Coverage Stage: After meeting any deductible, you pay the plan’s specified copayment or coinsurance for each prescription. Under standard benefit design, this is typically 25% of the drug’s cost, but plans vary. This stage continues until your total out-of-pocket spending on covered drugs reaches $2,000 for the calendar year, including deductible and copayments/coinsurance.
- Catastrophic Coverage Stage: Once your out-of-pocket spending reaches $2,000 in 2025, you enter catastrophic coverage and pay $0 for all covered Part D prescriptions for the rest of the calendar year. This annual cap eliminates the previous “donut hole” and provides significant protection against high drug costs.
Insulin Cost Cap: Regardless of coverage stage, Part D plans cannot charge more than $35 for a one-month supply of each covered insulin product. The deductible doesn’t apply to these insulins. For a 3-month supply, the cost is capped at $105 ($35 per month).
Vaccine Coverage: Part D plans cover many Advisory Committee on Immunization Practices (ACIP) recommended vaccines, such as shingles and Tdap, with $0 cost-sharing.
Medicare Prescription Payment Plan (New for 2025): Starting in 2025, you can enroll in a plan-offered program allowing you to pay out-of-pocket drug costs (up to the $2,000 annual maximum) in fixed monthly installments throughout the year, rather than paying potentially large amounts at the pharmacy. This smooths expenses but doesn’t change the total annual cost.
Part D Costs: What You Pay
Part D enrollees typically face several costs:
Monthly Premium: Varies widely by plan. Paid directly to the insurance plan, in addition to your Medicare Part B premium and any MA plan premium. The national base beneficiary premium for 2025 is $36.78, used primarily to calculate the late enrollment penalty and income-related adjustments.
Annual Deductible: Varies by plan, with a maximum of $590 in 2025. Some plans have $0 deductibles.
Copayments/Coinsurance: Amounts paid for each prescription after meeting any deductible, until reaching the $2,000 out-of-pocket maximum. Costs vary based on the drug’s tier and plan structure.
Income-Related Monthly Adjustment Amount (IRMAA): Higher-income individuals must pay an additional monthly amount for Part D coverage, added to their plan premium. Income brackets match Part B IRMAA, but adjustment amounts differ.
Late Enrollment Penalty (LEP): Assessed if you go 63+ continuous days without Medicare Part D or other “creditable” prescription drug coverage after your Initial Enrollment Period ends. The penalty is 1% of the national base beneficiary premium ($36.78 in 2025) for each uncovered month, rounded to the nearest $0.10 and added to your monthly premium. Like the Part B penalty, this typically applies for life, creating a strong incentive to maintain continuous drug coverage.
Extra Help (Low-Income Subsidy – LIS): Medicare provides Extra Help for beneficiaries with limited income and resources, assisting with Part D costs including premiums, deductibles, and copayments/coinsurance. Those with Medicaid, Medicare Savings Programs, or Supplemental Security Income automatically qualify. Others can apply through Social Security. Eligibility criteria expanded in 2024. Importantly, Extra Help recipients aren’t subject to the Part D late enrollment penalty.
Because Part D plans are offered by private insurers, their formularies, tier structures, premiums, and deductibles vary considerably. The most cost-effective plan for one person may not be best for another. Always compare plans based on your medications, preferred pharmacies, and overall costs.
Key Part D resources:
- Part D Costs
- Prescription Drug Law Savings
- Official Part D Guide
When to Enroll: Medicare Enrollment Periods
Specific enrollment periods govern when you can sign up for or change Medicare coverage. Missing these windows, particularly the Initial Enrollment Period, can lead to coverage delays and potentially lifelong financial penalties.
Initial Enrollment Period (IEP):
- Your primary window to first sign up for Medicare Parts A and B, and to enroll in Part C or Part D plans
- 7-month period: starts 3 months before your 65th birthday month, includes your birthday month, and ends 3 months after
- For disability eligibility before age 65, occurs around the 25th month of disability benefits
General Enrollment Period (GEP):
- For those who missed their IEP for Part B (or premium Part A) and don’t qualify for a Special Enrollment Period
- January 1 through March 31 each year
- Coverage begins the first day of the month after enrollment
- Late enrollment penalties likely apply
Special Enrollment Periods (SEPs):
- Allow enrollment outside standard periods due to specific life events
- Common triggers for Part A/B SEPs: losing employer coverage, losing Medicaid, natural disasters, government errors
- Common triggers for Part C/D SEPs: moving from the plan’s service area, losing other drug coverage, plan contract changes, gaining/losing Extra Help or Medicaid
- Duration varies by triggering event (e.g., 8 months after employer coverage ends)
Medicare Open Enrollment Period (Annual Election Period – AEP):
- Annual opportunity for existing beneficiaries to review and change Part C and Part D coverage
- October 15 through December 7 each year
- Changes effective January 1 of the next year
- Actions allowed: switch between Original Medicare and Medicare Advantage; switch MA plans; join, switch, or drop Part D plans
- Cannot be used to initially enroll in Part A or Part B
Medicare Advantage Open Enrollment Period (MA OEP):
- Additional opportunity only for those already in a Medicare Advantage plan
- January 1 through March 31 each year (also applies during first three months of Medicare if enrolled in MA during IEP)
- One change allowed: switch to a different MA plan or return to Original Medicare (with option to join Part D)
- Cannot be used to switch from Original Medicare to MA or between standalone Part D plans
Medigap Enrollment: The best time to buy a Medigap policy is during your 6-month Medigap Open Enrollment Period, starting when you’re 65+ and enrolled in Part B. Outside this period, guaranteed issue rights exist only in specific situations, such as losing employer coverage or if an MA plan leaves your area.
| Enrollment Period | Timing | Purpose / Key Actions Allowed |
|---|---|---|
| Initial Enrollment Period (IEP) | 7 months around 65th birthday (or 25th month of disability) | First chance to enroll in Part A & Part B; Can also join Part C (MA) or Part D plan |
| General Enrollment Period (GEP) | January 1 – March 31 annually | Enroll in Part B (or premium Part A) if IEP missed and no SEP applies; Coverage starts month after enrollment; Late penalties likely |
| Special Enrollment Periods (SEPs) | Varies based on triggering event (e.g., losing job coverage, moving) | Enroll in Part A/B or change Part C/D plans outside standard periods due to specific circumstances, usually without penalty |
| Open Enrollment (AEP) | October 15 – December 7 annually | For existing beneficiaries: Switch between Original Medicare & MA; Switch MA plans; Join, drop, or switch Part D plans. Changes effective Jan 1 |
| MA Open Enrollment Period (MA OEP) | January 1 – March 31 annually (and first 3 months in MA if new) | For those already in an MA plan: Make one switch to another MA plan OR switch back to Original Medicare (can add Part D). Cannot switch from Original to MA |
| Medigap Open Enrollment Period | First 6 months starting when 65+ AND enrolled in Part B | Best time to buy any Medigap policy with guaranteed acceptance |
Finding and Comparing Your Options
Given the complexity and variety of Medicare choices, using official resources to compare options is essential for making informed decisions.
Using Official Tools
Medicare provides several online tools to help navigate choices:
Medicare Plan Finder: The primary tool for comparing Medicare Advantage and Part D plans in your area. Enter your ZIP code, coverage preferences, and specific medications and pharmacies. The tool provides estimates of premiums, deductibles, drug costs, and overall annual costs for side-by-side comparison. Access the Plan Finder directly. Creating a secure Medicare account allows saving drug lists and pharmacies for easier year-to-year comparison.
Medigap Policy Finder: For those considering Original Medicare with Medigap, this tool helps find companies selling policies in your area. Enter your ZIP code to see available plans and companies offering them, with estimated premium ranges. Find this tool at the Medigap plan finder page.
Care Compare: This tool helps locate and compare Medicare-enrolled providers, including doctors, hospitals, nursing homes, home health agencies, and dialysis facilities. It provides quality ratings and services information. Access Care Compare directly.
Coverage Tool: This tool lets you search for specific medical items or services to see if Medicare generally covers them.
Getting Personalized Help
Beyond online tools, personalized assistance is available:
State Health Insurance Assistance Program (SHIP): Every state has a SHIP offering free, confidential, and unbiased counseling to Medicare beneficiaries and families. Trained counselors help understand options, compare plans, navigate enrollment, and resolve problems. SHIPs aren’t affiliated with any insurance company, ensuring objective advice. Find contact information for local SHIP offices on the Medicare website or through state aging agencies.
1-800-MEDICARE: The official Medicare helpline (1-800-633-4227) is available 24/7 for questions about eligibility, benefits, enrollment, and plan options. TTY users can call 1-877-486-2048.
Making an informed Medicare choice requires careful consideration of your health needs, budget, medication requirements, and preferences regarding provider flexibility versus plan structure. Using official comparison tools and seeking unbiased counseling from resources like SHIP are recommended steps before enrolling in or changing Medicare coverage.
Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.
