Medicare Overview
Medicare is the federal health insurance program for people 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or transplant). Administered by the Centers for Medicare & Medicaid Services (CMS), Medicare provides essential health coverage to over 65 million Americans.
Medicare Eligibility
Age-Based Eligibility (Age 65+)
| Requirement | Details |
|---|
| Age | 65 or older |
| Citizenship | U.S. citizen or permanent resident (5+ years) |
| Work credits | 40 quarters (10 years) of Medicare-covered employment |
| Automatic enrollment | If receiving Social Security benefits |
Disability-Based Eligibility (Under 65)
| Condition | Waiting Period |
|---|
| Social Security Disability Insurance (SSDI) | 24 months of SSDI benefits |
| Amyotrophic Lateral Sclerosis (ALS/Lou Gehrig's disease) | No waiting period |
| End-Stage Renal Disease (ESRD) | Generally 3 months after dialysis begins |
Key Point: Those with ALS receive Medicare immediately upon receiving their first SSDI payment—no 24-month waiting period required.
The Four Parts of Medicare
Original Medicare vs. Medicare Advantage
| Component | Description | Coverage |
|---|
| Part A | Hospital Insurance | Inpatient hospital, skilled nursing, hospice, home health |
| Part B | Medical Insurance | Doctor visits, outpatient care, preventive services |
| Part C | Medicare Advantage | Private plans combining Parts A & B (often includes D) |
| Part D | Prescription Drug Coverage | Outpatient prescription medications |
Original Medicare (Parts A & B)
| Feature | Details |
|---|
| Administration | Federal government (CMS) |
| Provider choice | Any provider accepting Medicare |
| Referrals | Not required to see specialists |
| Coverage gaps | Significant cost-sharing, no out-of-pocket maximum |
| Drug coverage | Must add separate Part D plan |
Medicare Advantage (Part C)
| Feature | Details |
|---|
| Administration | Private insurance companies |
| Provider networks | Usually HMO or PPO network restrictions |
| Additional benefits | Often includes vision, dental, hearing |
| Out-of-pocket maximum | Required annual cap on spending |
| Drug coverage | Usually included (MA-PD plans) |
Medicare Enrollment Periods
Initial Enrollment Period (IEP)
| Timeframe | 7-month window |
|---|
| Begins | 3 months before 65th birthday month |
| Includes | Month of 65th birthday |
| Ends | 3 months after 65th birthday month |
| Coverage start | Depends on when you enroll |
Coverage Start Date by Enrollment Timing
| When You Enroll | Coverage Begins |
|---|
| 3 months before birthday month | 1st day of birthday month |
| During birthday month | 1st of the following month |
| 1-3 months after birthday month | 1st of month after enrollment |
Annual Enrollment Period (AEP)
| Feature | Details |
|---|
| Dates | October 15 - December 7 each year |
| Purpose | Switch between Original Medicare and Medicare Advantage |
| Changes | Add, drop, or change Part D plans |
| Effective date | January 1 of following year |
General Enrollment Period (GEP)
| Feature | Details |
|---|
| Dates | January 1 - March 31 each year |
| Purpose | Enroll if missed IEP and no SEP |
| Coverage begins | July 1 (4-month delay) |
| Penalty | Late enrollment penalty applies |
Special Enrollment Period (SEP)
| Qualifying Event | SEP Length |
|---|
| Loss of employer coverage | 8 months |
| Moving out of plan area | 2 months |
| Losing Medicaid | 2 months |
| Other qualifying events | Varies |
Exam Tip: COBRA and retiree coverage do NOT qualify as creditable employer coverage. If relying on COBRA after leaving employer, you may face late enrollment penalties.
Late Enrollment Penalties
Part A Penalty (If Premium Required)
| Situation | Penalty |
|---|
| Less than 30 quarters worked | May owe Part A premium |
| Penalty amount | 10% higher premium |
| Duration | Twice the number of years delayed |
Part B Penalty
| Factor | Details |
|---|
| Amount | 10% for each full 12-month period without coverage |
| Duration | Lifetime—added to premium as long as enrolled |
| 2025 standard premium | $185.00/month |
| Example | 2 years late = 20% penalty ($37/month added) |
Part D Penalty
| Factor | Details |
|---|
| Trigger | 63+ consecutive days without creditable drug coverage |
| Calculation | 1% of national base premium per month without coverage |
| 2025 national base | $36.78/month |
| Duration | Lifetime—paid as long as enrolled in Part D |
Key Point: Late enrollment penalties are LIFETIME penalties—they never go away and are added to your premium for as long as you have Medicare coverage.