Personal Finance & Estate › Medicare, Medi-Cal & long-term care
Medicare (federal health insurance at 65+)
Since 1965· Government program
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
Federal health insurance for people 65 and older and some younger people with disabilities, run by CMS.
See it on the Personal Finance & Estate map →How it works
Signed by Lyndon Johnson in July 1965, Medicare began in 1966 and now covers nearly 70 million people. Part A covers hospitals and is premium-free with 40 work credits; Part B covers doctors, at a standard $202.90 a month in 2026, more at high incomes; Part D covers drugs. You can take Original Medicare, often with a Medigap supplement, or a private Medicare Advantage plan. It does not cover long-term custodial care, most dental care or hearing aids.
Why it matters for you
It is the health coverage nearly every retiree relies on, and choices made at 65 shape costs and doctor access for years.
Rules, limits and sources (2026)
Title XVIII of the Social Security Act (1965), CMS enrollment data and the annual Medicare Trustees Report, which in 2025 projected the hospital trust fund lasting to 2033.
Watch out for
How to keep the hospital trust fund solvent past 2033, and whether Medicare Advantage plans are overpaid, are active debates.
Inside this (7)
Connections (11)
▸Medicare Part A (hospital) is the hospital part of Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
Part A was one of Medicare's two original parts: hospital insurance, financed mainly by payroll taxes paid into the Hospital Insurance trust fund. With Part B it forms 'Original Medicare'. People already collecting Social Security get it automatically at 65, and it remains the base even inside a Medicare Advantage plan.
When it applies
Signed by President Johnson on July 30, 1965, in Independence, Missouri, with Harry Truman present; benefits began July 1, 1966.
The rule
Title XVIII of the Social Security Act, Part A (Sec. 1811 onward); CMS and the Trustees Reports track it separately.
Watch out for
Whether hospital 'observation' days should count toward Part A's skilled-nursing benefit is a long fight; courts ordered appeal rights for some patients in the 2020s.
▸Medicare Part B (doctors & outpatient) is the doctor part of Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
Part B is Medicare's voluntary medical insurance for doctors and outpatient care. Unlike Part A, it is funded about three-quarters by general federal revenue and one-quarter by enrollee premiums. With Part A it makes up Original Medicare, and you keep paying for it even inside a Medicare Advantage plan.
When it applies
Created alongside Part A in the 1965 Medicare law; coverage began in July 1966 with a $3 monthly premium.
The rule
Social Security Act Title XVIII, Part B (Sec. 1831 onward); the 25% premium share is set in Sec. 1839.
Watch out for
Part B spending is growing fast, driven by physician-given drugs and outpatient care; how to slow it without shifting costs to seniors is debated.
▸Medicare Advantage (Part C) is a private-plan route within Medicare (federal health insurance at 65+)Standard practice
How they connect
Medicare pays private insurers a monthly, risk-adjusted amount per enrollee to deliver all Part A and B benefits, usually with Part D. Enrollees stay in Medicare and still pay the Part B premium, but the plan's network, rules and copays replace Original Medicare's. Insurers use part of the payment to fund extras and lower premiums.
When it applies
Private Medicare contracts began in the 1980s; the 1997 Balanced Budget Act created Medicare+Choice, renamed Medicare Advantage by the 2003 Medicare Modernization Act.
How sure?
Social Security Act Part C (Sec. 1851 onward); CMS rate notices; KFF data show plans covering more than half of eligible enrollees since 2023.
Watch out for
Whether insurers' diagnosis coding inflates payments, and by how much, is disputed among insurers, MedPAC and federal auditors.
▸Medicare Part D (prescription drugs) adds drug coverage to Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
Part D lets private insurers sell drug plans under Medicare rules: standalone plans for people in Original Medicare, or drug coverage built into most Advantage plans. Medicare subsidizes roughly three-quarters of the cost, and low-income enrollees get 'Extra Help' with premiums and copays.
When it applies
Signed by President George W. Bush in December 2003 as part of the Medicare Modernization Act; coverage began January 1, 2006.
The rule
Social Security Act Part D (Sec. 1860D-1 onward); CMS publishes plan and enrollment data and the yearly base premium.
Watch out for
How the 2025 redesign, which shifted more catastrophic drug costs onto insurers, will affect standalone plan prices and choices is still playing out.
▸Medigap (Medicare Supplement) & CA birthday rule fills cost gaps in Medicare (federal health insurance at 65+)Standard practice
How they connect
Original Medicare leaves deductibles and an uncapped 20% coinsurance. Medigap is a private policy that pays those leftovers after Medicare pays its share; Medicare approves the claim first, then Medigap follows automatically. It works only with Original Medicare: insurers can't sell it to someone in a Medicare Advantage plan unless they are switching back.
When it applies
Supplemental policies date to Medicare's start in 1966; a 1990 federal budget law standardized them into lettered plans from 1992.
How sure?
Social Security Act Sec. 1882 governs Medigap; CMS's 'Choosing a Medigap Policy' guide lists the standardized plans.
Watch out for
Federal law guarantees Medigap access mainly at 65; whether more states should require year-round access, as New York does, is debated.
▸Medicare enrollment windows & late penalties control entry into Medicare (federal health insurance at 65+)Watch out
How they connect
You join Medicare by signing up for Parts A and B during set windows. Miss your initial or special window without qualifying job coverage, and you wait for the January–March general window and can owe a lifetime Part B surcharge.
When it applies
The windows and the 10% Part B penalty date to Medicare's early years; a 2023 change ended long waits after general enrollment.
How sure?
Sections 1837–1839 of the Social Security Act and CMS's 'Medicare & You' handbook; penalties appear on premium notices.
Watch out for
How often people miss enrollment unknowingly is poorly tracked; advocates push for clearer notices before 65.
▸HICAP (free California Medicare counseling) gives free, unbiased advice on Medicare (federal health insurance at 65+)Standard practice
How they connect
HICAP counselors explain Medicare's parts, compare Advantage and drug plans each fall, and help fix billing errors or appeal denials, all free and without sales pressure, a counterweight to commission-paid agents.
When it applies
Statewide through California's 33 Area Agencies on Aging, funded partly by federal SHIP grants since the early 1990s.
How sure?
The California Department of Aging and the national SHIP network report counseling contacts yearly; Medicare.gov refers people to their state SHIP.
Watch out for
Counselor capacity varies by county, and volunteers can't settle every complex case; for legal or tax questions, see an attorney or CPA.
▸Social Security Disability Insurance (SSDI) leads after 24 months to Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
After 24 months of SSDI payments, about 29 months after disability begins, a disabled worker gets Medicare regardless of age. People with ALS get it as soon as SSDI starts; kidney failure has separate rules.
When it applies
Congress extended Medicare to SSDI recipients in the 1972 amendments, effective 1973; the ALS exception was added in 2000.
The rule
CMS enrollment data show millions of under-65 enrollees qualifying through disability; SSA enrolls them automatically.
Watch out for
Bills to shorten or end the 24-month wait come up regularly; cost has kept them from passing.
▸Medicare (federal health insurance at 65+) is run by Centers for Medicare & Medicaid Services (CMS)Law or rule (2026)
How they connect
CMS runs Medicare: it sets premiums and coverage rules, contracts with private firms that process claims, approves Medicare Advantage and Part D plans, and pays providers. SSA handles enrollment and premium deductions, while CMS answers benefit questions through 1-800-MEDICARE and Medicare.gov.
When it applies
Medicare began in 1966 under the Social Security Administration; the Health Care Financing Administration took it over in 1977 and was renamed CMS in 2001.
The rule
Title XVIII of the Social Security Act sets Medicare's rules; the Medicare Trustees Report and CMS data show enrollment, spending and plan payments.
Watch out for
Medicare Advantage now enrolls over half of beneficiaries; whether CMS overpays these private plans, as Congress's advisory commission MedPAC estimates, is hotly debated.
▸PACE (Program of All-Inclusive Care for the Elderly) is paid by Medi-Cal and Medicare (federal health insurance at 65+)Law or rule (2026)
How they connect
PACE pools both programs' money into one monthly payment per member: Medicare pays a rate similar to an Advantage plan's, and Medi-Cal pays for long-term care. In return PACE covers everything both programs would, including drugs. Members without Medi-Cal pay the Medi-Cal share themselves as a monthly premium.
When it applies
Made a permanent Medicare and Medicaid benefit by the Balanced Budget Act of 1997; California's On Lok was the national model.
The rule
Social Security Act Sec. 1894 (Medicare) and Sec. 1934 (Medicaid); CMS and DHCS contracts with each PACE organization.
Watch out for
Private-pay premiums can run thousands of dollars a month, so whether PACE is realistic for middle-income families without Medi-Cal is debated.
▸Medicare fraud & medical identity theft (report to SMP) drains Medicare (federal health insurance at 65+)Watch out
How they connect
Every false claim is paid from Medicare's trust funds, and the hospital fund is already projected to run short. Fraud also hits beneficiaries directly: a stolen number can use up covered benefits, trigger denials for real care, and leave false diagnoses in medical records.
When it applies
Throughout Medicare's claims system; medical equipment, lab testing, hospice and home health are long-standing high-risk areas flagged by HHS's inspector general.
How sure?
The 2025 Medicare Trustees Report projects the hospital trust fund will run short in 2033; CMS reported about $31.7 billion in improper fee-for-service payments for 2024, fraud and errors combined.
Watch out for
The share of Medicare spending lost to outright fraud is unknown; estimates range widely, and Medicare Advantage billing raises separate overpayment disputes.