FAQ

Understanding the Four Parts of Medicare

Medicare is divided into four key parts:

• Medicare Part A: Hospital Insurance
• Medicare Part B: Medical Insurance
• Medicare Part C: Medicare Advantage (formerly Medicare + Choice)
• Medicare Part D: Prescription drug coverage

Generally, individuals over the age of 65 who are receiving Social Security benefits are automatically enrolled in Medicare Parts A and B. This also applies to people receiving disability benefits for two years, those with amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease) who receive disability benefits, and individuals with permanent kidney failure undergoing dialysis or a kidney transplant.

Medicare Part A is funded through a portion of Social Security taxes and helps cover expenses like inpatient hospital care, skilled nursing facility care, hospice services, and other related care.

Medicare Part B is funded by monthly premiums paid by those enrolled, as well as contributions from the U.S. Treasury. It helps cover costs like doctors’ fees, outpatient hospital services, and other medical services or supplies not included under Part A.

Medicare Part C (Medicare Advantage) allows you to receive all your healthcare services through a provider organization, like an HMO. These plans may reduce your overall healthcare costs or offer additional benefits for an extra monthly fee. To enroll in Part C, you must already have both Parts A and B.

Medicare Part D offers prescription drug coverage and is voluntary. Costs are covered through enrollees’ monthly premiums and contributions from Medicare. Unlike Part B, which automatically enrolls you unless you opt out, you must actively enroll in Part D by choosing an approved plan and submitting an application.

Medicare

Medicare is a federal insurance program, funded by trust funds that individuals have paid into. It primarily covers people aged 65 and older, regardless of their income, as well as younger individuals with disabilities or those undergoing dialysis. Beneficiaries contribute to costs through deductibles for hospital stays and other services, and small monthly premiums are required for non-hospital coverage. Managed by the Centers for Medicare & Medicaid Services (CMS), Medicare operates consistently across the United States.

Medicaid

Medicaid, on the other hand, is an assistance program that provides medical coverage to low-income individuals of all ages. Funded by federal, state, and local taxes, Medicaid generally covers medical costs entirely, though a small co-payment may be required for some services. Unlike Medicare, Medicaid is a joint federal-state program, meaning it varies from state to state and is managed by state and local governments under federal guidelines.