What is Medicare and how does it work?

Medicare is federal health insurance that starts at 65 for most people. It has four parts, and at 65 you choose one of two ways to put them together.

Updated September 3, 2026 · 5 min read · by Gerino Alejos

A nurse in blue scrubs goes over a clipboard with an older couple at a kitchen table. — Medicare is federal health coverage that starts at 65 for most people. You need A and B to be in the system, then you pick one path.

Key points

Medicare is federal health insurance that most people can start the month they turn 65.
Original Medicare pays 80 percent of most bills and you pay 20 percent, with no yearly limit on your share.
At 65 you choose one of two paths to cover that 20 percent: Original Medicare with a supplement, or a Medicare Advantage plan.

Medicare is health insurance run by the federal government. Most people can start it the month they turn 65. It comes in four parts, and at 65 you choose one of two ways to put them together.

Some people qualify before 65 through a disability. A few qualify through end stage renal disease, which is permanent kidney failure, or through ALS. Medicare has its own overview of the parts on medicare.gov.

The four parts were added one at a time over the years. That is why Medicare feels harder than it needs to be.

The four parts, in plain terms

Part A pays for hospital stays. It also pays for skilled nursing, which is nursing care after a hospital stay, for hospice, which is care at the end of life, and for some home health care.
Part B pays for the everyday side: doctor visits, lab work, imaging such as X-rays, and outpatient surgery (surgery where you go home the same day). It also pays for durable medical equipment, which is medical gear you use at home, like a walker.
Part C is Medicare Advantage. A private insurance company delivers your Part A and Part B benefits through its own plan. It replaces how you get those benefits rather than adding to them.
Part D pays for the prescriptions you pick up at the pharmacy.

Part A and Part B together are called Original Medicare. With Original Medicare, the government pays your doctors and hospitals directly.

What it costs

Most people pay nothing each month for Part A, because they already paid for it through the Medicare taxes taken out of their paychecks. If you or your spouse worked and paid those taxes for about 10 years, Part A has no premium, which is the monthly bill for coverage.

Part B has a monthly premium that nearly everyone pays. It usually comes straight out of your Social Security check. People with higher incomes pay an extra charge on top, called the Income Related Monthly Adjustment Amount (IRMAA). The exact figures change every January, so we keep the current numbers in what Medicare costs per month.

The decision at 65: one path or the other

Original Medicare does not put a cap on what you pay out of pocket. After Part B pays its share, you pay 20 percent of most services, and there is no limit on how high that can go in a year. If your bills reach $50,000 in a year, your share is $10,000.

Almost every Medicare decision you make is about covering that gap. You pick one of two paths.

Path one: Original Medicare plus a supplement

You keep Original Medicare and buy a Medicare Supplement policy, also called Medigap, which is private insurance that pays the 20 percent for you. For prescriptions, you add a standalone Part D plan, which is a drug plan you buy on its own.

You can see any doctor or hospital in the country that accepts Medicare. There is no network, meaning no list of doctors you must stay inside, and no referrals, meaning no permission slip before you see a specialist. You pay a monthly premium for the supplement, and in return your bills are very predictable.

Path two: Medicare Advantage

You stay enrolled in Part A and Part B, but a private insurance company runs your coverage. These plans usually include prescriptions, and they often add dental, vision and hearing. Many charge no monthly premium beyond what you already pay for Part B.

In exchange, you use the plan's network of doctors, you may need referrals, and you pay copays as you go. A copay is a set amount you pay at each visit. The copays stop once you reach the plan's out of pocket maximum, which is the most it can make you pay in a year.

In Hidalgo County, the large majority of people on Medicare are on an Advantage plan, well above the Texas average. The networks here are deep and the plans are competitive, and that is a real part of why.

When you sign up

Your first chance is a seven month window around your 65th birthday. It covers the three months before your birthday month, the birthday month itself, and the three months after. Sign up in the three months before, and your card is in hand on day one.

After that, you make changes during Annual Enrollment, October 15 through December 7 each year.

If you are still working at 65 and have real coverage through your employer, the rules are different, and you may be able to wait. Read whether you have to sign up at 65 if you are still working before you do anything, because getting this wrong is expensive.

What Medicare does not cover

Routine dental, vision and hearing care under Original Medicare
Long term custodial care, which is the day to day help with things like bathing and dressing that most people picture when they hear nursing home
Most care outside the United States

Some Medicare Advantage plans cover some of these as extra benefits. It depends entirely on the plan.

If you are close to 65, start by marking the three months before your birthday month on a calendar. Then decide which path fits your doctors, your prescriptions and your budget. If you would like to talk it through, call our office in McAllen and we will go over it with you.

Common follow-up questions

Is Medicare the same as Medicaid?

No. The names sound alike, and some people have both, but they are two different programs with different rules. See Medicare vs Medicaid in Texas.

Do I get Medicare automatically?

Only if you are already getting Social Security checks before you turn 65. In that case, Part A and Part B start on their own. If you are not drawing Social Security yet, nothing happens until you sign up.

Can I have Medicare and employer insurance at the same time?

Yes. Which one pays first depends on how many employees your company has. Twenty is the number that changes the answer.

Want this looked at properly?

We are an independent agency in McAllen serving Hidalgo, Cameron and Starr counties. There is no obligation to talk it through.

Call (956) 687 3334

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