Medicare is health insurance for Americans age 65 and older, and for some younger people with a qualifying disability.
Most of its 61 million enrollees qualify due to age, but more than eight million receive benefits because of a qualifying disability. By 2050, an estimated 92 million Americans will receive Medicare benefits.
In 2019, the U.S. government paid more than $785 billion in medical and prescription drug costs for people with Medicare. That number, which is increasing faster than inflation, already represents an incredible 21% of all health care spending in America.
There are four parts of Medicare:
Medicare Part A is hospital insurance. While it pays for care when you are admitted to the hospital, this is the part of Medicare that also pays for skilled nursing care, home health care and more.
Medicare Part B is medical insurance. This is the part of Medicare you’ll use for doctor visits, lab tests, ambulance transportation and more.
Someone who has Part A and Part B has what is sometimes called "Original Medicare". Original Medicare does not pay for most dental care, vision care or prescription medicines.
Medicare Part C is also called Medicare Advantage. This is not Original Medicare. It’s members get their hospital and medical benefits from a private company with a government contract. They typically get extra benefits, too.
Medicare Part D is prescription drug insurance. This is the newest part of Medicare and is used when filling a prescription at the pharmacy. Most Medicare beneficiaries get Part D coverage through either a Medicare Advantage plan or a standalone Part D drug plan, both of which are offered by private insurance companies.
Medicare prescription drug plans have a pharmacy network that their members must use. They also have an approved drug list, called a formulary, broken into tiers. Each tier has its own out of pocket amounts either in the form of a co-pay or co-insurance.