Definition
The federal health insurance program for people 65 and older and some younger people with disabilities. Part A covers hospital stays and is usually premium-free after a working career. Part B covers doctors and outpatient care for a monthly premium. Part D covers prescription drugs, and Part C (Medicare Advantage) is a private-plan bundle of the pieces. It is the program itself, not the payroll deduction labeled Medicare, which is the tax that funds it.
Why it matters
Medicare reshapes retirement budgets: premiums, deductibles, and coverage gaps replace employer insurance, and higher incomes pay surcharged premiums. The enrollment windows around 65 carry lifelong late penalties, and enrolling also ends HSA contribution eligibility.
Example
A retiree turns 65: Part A costs nothing thanks to their work history, the Part B premium comes out of their Social Security check, and they add a Part D drug plan. Their 62-year-old spouse must budget for private coverage for three more years.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.