What Is Medicare? Understanding the Basics
What is Medicare? Medicare is the federal government program that provides health care coverage for:
- Individuals age 65 and older
- Individuals under 65 who are receiving Social Security Disability Insurance (SSDI) for a certain amount of time
- Individuals under 65 with End-Stage Renal Disease (ESRD)
The Centers for Medicare & Medicaid Services (CMS) is the federal agency responsible for running Medicare. Understanding Medicare basics — how the program is funded, who qualifies, and how coverage works — is the first step toward making informed decisions about your health care.
How Is Medicare Funded?
Medicare is funded through three primary sources:
- Social Security and Medicare taxes paid on your income during your working years
- Premiums paid by people currently enrolled in Medicare
- The federal budget
This combined funding structure allows Medicare to provide coverage regardless of income, which is a key distinction from other government health programs.
Medicare Eligibility
Medicare eligibility is based on age or specific health circumstances rather than income. You may qualify for Medicare if you are:
- 65 years of age or older
- Under 65 and have received SSDI for a certain qualifying period
- Under 65 and diagnosed with End-Stage Renal Disease (ESRD)
Once you become Medicare-eligible and enroll, you’ll need to decide how you want to receive your Medicare benefits.
How Medicare Works: Your Coverage Choices
Understanding how Medicare works starts with knowing that there are two main paths for receiving your benefits:
- Original Medicare — the traditional fee-for-service program offered directly through the federal government.
- Medicare Advantage Plans — a type of private insurance offered by companies that contract with Medicare.
Original Medicare
Original Medicare consists of two parts:
- Part A — Inpatient/hospital coverage
- Part B — Outpatient/medical coverage
If you want prescription drug coverage (Part D) along with Original Medicare, in most cases you’ll need to actively choose and join a stand-alone Medicare private drug plan (PDP).
With Original Medicare, you are generally covered to visit nearly all doctors and hospitals across the country.
Medicare Advantage Plans
If you enroll in a Medicare Advantage Plan, you still have Medicare — this means you will still owe a monthly Part B premium (and your Part A premium, if applicable).
Key facts about Medicare Advantage Plans:
- Each plan must provide all Part A and Part B services covered by Original Medicare.
- Plans can apply different rules, costs, and restrictions that affect how and when you receive care.
- Plans usually have network restrictions, meaning your choice of doctors and hospitals may be more limited than with Original Medicare.
- Plans can also include Part D prescription drug coverage.
- Plans can offer additional benefits that Original Medicare does not cover, such as routine vision or dental care.
A note on employer or union coverage: If you have health coverage from a union or a current or former employer when you become eligible for Medicare, you may be automatically enrolled in a Medicare Advantage Plan they sponsor. You have the choice to stay with this plan, switch to Original Medicare, or enroll in a different Medicare Advantage Plan — but you should speak with your employer or union before making any changes.
Comparing Your Medicare Coverage Options
Choosing carefully among your Medicare coverage options matters because your choice affects both your out-of-pocket costs and where you can receive care.
| Original Medicare | Medicare Advantage Plans | |
|---|---|---|
| Doctor/hospital access | Nearly all doctors and hospitals nationwide | Typically limited to a plan network |
| Extra benefits | Not included | May include vision, dental, and other extras |
| Part D drug coverage | Requires a separate stand-alone plan | Can be included in the plan |
| Cost structure | Standard Medicare premiums and cost-sharing | Varies by plan rules and restrictions |
For Medicare beneficiaries in Fort Myers and across Southwest Florida, comparing available Medicare Advantage Plans against Original Medicare is an important step, since plan networks and extra benefits can vary by region.
Medicare vs. Medicaid: What’s the Difference?
Medicare is different from Medicaid, which is a separate government program that also provides health insurance.
- Medicaid is funded and run by the federal government in partnership with individual states, and it covers people with limited incomes. Depending on the state, Medicaid may be available to people below a certain income level who also meet other criteria (such as age, disability status, or pregnancy), or it may be available to all people below a certain income threshold.
- Medicare eligibility does not depend on income — this is a key difference from Medicaid.
- Some individuals qualify for both programs at the same time. These individuals are known as dual-eligibles.
Your Medicare Card
Everyone with Medicare receives a red, white, and blue Original Medicare card.
- If you receive coverage through Original Medicare, you’ll show this card when you get services.
- If you receive coverage through a Medicare Advantage Plan, you’ll still be issued an Original Medicare card, but you’ll show your Medicare Advantage Plan card when you get services.
Important: No matter how you receive your Medicare health benefits, only share your Medicare number with your doctors and health care providers.
Frequently Asked Questions
What is Medicare?
Medicare is a federal government program that provides health care coverage for people age 65 and older, individuals under 65 receiving SSDI for a certain period, and individuals under 65 with End-Stage Renal Disease.
Who is eligible for Medicare?
Medicare eligibility is based on age or specific health circumstances — generally being 65 or older, receiving SSDI for a qualifying period, or having End-Stage Renal Disease — rather than income level.
How does Medicare work?
Once eligible, you enroll in Medicare and choose to receive benefits through either Original Medicare, which includes Part A and Part B, or a Medicare Advantage Plan offered by a private insurer under contract with Medicare.
What is the difference between Original Medicare and Medicare Advantage Plans?
Original Medicare allows access to nearly all doctors and hospitals nationwide, while Medicare Advantage Plans typically have network restrictions but may offer additional benefits like vision or dental coverage.
Does Medicare cover prescription drugs?
Original Medicare does not include prescription drug coverage by default; you generally need to join a stand-alone Part D drug plan. Medicare Advantage Plans can include Part D coverage as part of the plan.
Is Medicare based on income?
No. Unlike Medicaid, Medicare eligibility does not depend on income.
What is the difference between Medicare and Medicaid?
Medicare is a federal program based on age or health status, while Medicaid is a joint federal-state program that provides coverage based on income and, in some states, additional criteria. Some individuals qualify for both and are known as dual-eligibles.
What card do I use for Medicare services?
Everyone with Medicare receives a red, white, and blue Original Medicare card. If you’re enrolled in a Medicare Advantage Plan, you’ll use your plan’s card when receiving services instead.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult a legal or tax professional for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
