How Does Medicare Work?

The basics

Established in 1965, Medicare is a federal health insurance program that provides benefits to seniors and those with disabilities and certain illnesses. Medicare has several parts. Part A covers hospitals, nursing facilities, and home health services. Part B covers preventative services like doctor visits, diagnostic tests, and medical equipment. Part D covers prescription drugs, and Part C, also known as Medicare Advantage, offers its own additional benefits. While Part A is typically free, Parts B, C, and D come with premiums.

Medicare eligibility

If you're a U.S. citizen or have been a permanent legal resident for at least five years, your Medicare eligibility starts at age 65 provided you meet these requirements:

• You or your spouse worked enough years to be eligible for Social Security or Railroad Retirement benefits.
• You or your spouse is a government employee or retiree who has not paid into Social Security but has paid Medicare taxes.

Certain individuals under 65 are eligible for Medicare as well -- namely:

• Anyone who's permanently disabled and has received disability benefits for at least two years.
• Those with end-stage renal disease (ESRD).
• Those with ALS (Lou Gehrig's disease).

If you meet the necessary criteria, you can sign up for Medicare at the start of your initial enrollment period, which is a seven-month period that begins three months before your 65th birthday.