24 Essential Facts About Medicare to Know in 2023

Medicare programs were first launched in 1965 and have provided medical relief to millions of seniors and Americans with disabilities and chronic health conditions. If you’ve ever wondered how Medicare works, how it benefits U.S. residents and other facts about Medicare, this guide highlights the details you need to know.

Medicare is an entitlement program designed to cover medical expenses for eligible U.S. residents. The program is provided by the Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services (HHS).

As an entitlement program, most Americans earn the right to enroll in Medicare as taxpayers who contribute to the system. Medicare benefits provide health services to seniors 65 and older, Americans with approved medical conditions and those with qualifying disabilities.

Medicare benefits vary depending on the enrollment plan beneficiaries choose. Medicare is made up of four enrollment plans — Medicare Part A, Part B, Part C and Part D.

Medicare is segmented into four parts that cover different services for beneficiaries. Original Medicare is the most common form of Medicare, which includes Medicare Part A and Medicare Part B.

Medicare Part A is a hospital insurance that covers hospitalization, inpatient stays and hospice care. Part A is typically paired with Medicare Part B, though it has an independent deductible of $1,600 in 2023 to be paid before Medicare covers expenses.

Medicare Part B covers outpatient medical care, excluding dental and vision benefits. Medicare Part B requires a minimum monthly premium of $164.90 and a yearly $226 deductible.

Medicare Parts C and D are not included as part of Original Medicare coverage and seniors will not be automatically enrolled in these benefits.

Medicare Part C is a private insurance opportunity to receive Medicare benefits. This includes all Original Medicare coverage and often offers vision, dental and some prescription drug coverage. Costs vary between Medicare Advantage plans.

Medicare Part D is provided by private insurers and includes prescription drug coverage. The prescription drugs covered by Medicare Part D are determined by the formulary associated with your specific plan.

Medicare Advantage plans include Medicare Part D, though it must be purchased separately when enrolled in Original Medicare. The average monthly premium is $56.49 in 2023.

Medicare is available for seniors ages 65 and older and permanent U.S. residents with qualifying disabilities and chronic medical conditions.

U.S. citizens and permanent residents who have been in the U.S. for over five years and worked at least 10 years paying Medicare taxes may qualify. Beneficiaries must also be eligible for Social Security benefits, even if they’re not currently receiving them.

Residents who don’t meet all requirements may still qualify for Medicare benefits at a higher premium.

About 86% of Medicare beneficiaries qualify by age, but a sizable portion are under the age of 65.

Americans receiving Social Security or Railroad Retirement Board benefits may automatically be enrolled in Medicare. Residents 65 years and older must receive benefits for at least four months before turning 65 to enroll automatically. Those under 65 must have received benefits for at least 24 months to enroll.

Eligible residents who aren’t automatically enrolled can register online, by phone or at their local Social Security office.

Your initial Medicare enrollment period is the best time to sign up. Initial enrollment begins three months before the first day of the month of your 65th birthday and ends four months after your birthday month.

Medicare open enrollment is available between Oct. 15 and Dec. 7 every year.

Medicare is funded in part by the Social Security Administration, which is supported by U.S. tax dollars. Beneficiaries may also be required to pay premiums to support their benefits.

The U.S. Treasury maintains two trust funds that are only applied to Medicare funding.

The Hospital Insurance (HI) trust fund collects funds from payroll taxes, income taxes, interest generated from trust fund investments and Medicare Part A premiums. These funds support Medicare Part A benefits and Medicare program administration costs.

The Supplementary Medical Insurance (SMI) trust fund is funded by Congress, Medicare Parts B and D premiums and interest generated from trust fund investments. This trust fund covers Medicare Part B benefits, Medicare Part D and Medicare program administration costs.

Inpatient hospital stays are the single most costly items covered, on average, by Medicare.

Medicare benefits cover a variety of services including hospital costs, medical care, rehabilitation, hospice care and more. Benefits vary depending on your Medicare enrollment plan.

Medicare doesn’t cover custodial care, like long-term medical assistance. Original Medicare also doesn’t cover dental and vision care. Medicare Part C plans may provide these services.

Medicare recipients aren’t eligible to contribute pre-tax income to a health savings account (HSA) and may be charged a penalty on any new money deposited into an HSA. Beneficiaries can, however, withdraw money from existing HSA accounts to cover Medicare costs.

Individuals qualify for an HSA when they are enrolled in a high-deductible health plan without supplementary health insurance plans. Medicare is a supplementary health plan, so beneficiaries lose this tax advantage.

Medicare offers four programs to cover everything from hospital stays to prescription drug costs, so carefully consider your needs prior to enrolling. Plan ahead to understand your Medicare benefits before your initial enrollment period.

Medicare provides medical benefits to millions of U.S. residents each year. As an entitlement program, most Americans are eligible to receive Medicare benefits once they reach the age of 65 or are diagnosed with a disability or chronic illness.

Know the facts about Medicare so you can enroll with confidence and care for your health in your golden years. If you’re working into retirement, consider how Medicare impacts your employee benefits.