Medicare is the federal health insurance program for people 65 and older, certain people under 65 with disabilities, and people of any age with End-Stage Renal Disease (ESRD) or ALS. It is made up of four parts, each covering a different kind of care. Knowing what each part does, what it costs, and when to sign up is the key to building coverage that fits your health and your budget.
Understanding Original Medicare: The Foundation of Coverage
Original Medicare is the coverage run directly by the federal government. It has two parts: Part A for hospital care and Part B for medical care. Together they cover most medically necessary services, and you can see any doctor or hospital in the country that accepts Medicare, with no network and no referrals.
Original Medicare does not cover everything. There is no annual cap on what you pay out of pocket, and it does not include most prescription drugs, routine dental, vision, or hearing care. That is why most people pair it with a Medicare Supplement (Medigap) plan and a Part D drug plan, or choose a Medicare Advantage plan instead.
Medicare Part A: Hospital Insurance Explained
Part A helps pay for inpatient hospital stays, care in a skilled nursing facility after a qualifying hospital stay, hospice care, and some home health care. It does not cover custodial or long-term care.
What Part A Costs
Most people pay no premium for Part A because they or their spouse paid Medicare taxes for at least 10 years (40 quarters). If you do not qualify, you can buy Part A. In 2026, the monthly premium is $311 if you have 30 to 39 quarters of work and $565 if you have fewer than 30. If you buy Part A, you must also enroll in Part B.
Part A has a deductible for each benefit period rather than each year. A benefit period starts when you are admitted and ends after you have been out of the hospital or skilled nursing facility for 60 days in a row, so you can pay the deductible more than once in a year. In 2026, the deductible is $1,736 per benefit period.
Hospital and Skilled Nursing Costs
After the deductible, you pay nothing for days 1 through 60 of a hospital stay. In 2026, you pay $434 per day for days 61 through 90 and $868 per day for each lifetime reserve day after that, and you have 60 lifetime reserve days in total. For skilled nursing facility care, days 1 through 20 cost nothing and days 21 through 100 cost $217 per day in 2026. After day 100, you pay all costs.
Hospice care is covered with little or no cost to you, though small copayments can apply for drugs and for inpatient respite care. Home health care is covered at no cost, with 20% coinsurance for durable medical equipment.
Medicare Part B: Medical Insurance in Detail
Part B covers doctor visits, outpatient care, lab tests, durable medical equipment, ambulance services, mental health care, and preventive services. Most preventive services, such as screenings and an annual wellness visit, cost nothing when your provider accepts Medicare assignment.
What Part B Costs
Most people pay the standard monthly premium, which is $202.90 in 2026. The annual deductible is $283 in 2026. After the deductible, you generally pay 20% of the Medicare-approved amount for covered services, with no annual limit.
If your income is above a certain level, you pay a higher premium called the Income-Related Monthly Adjustment Amount (IRMAA). Medicare bases it on the tax return you filed two years earlier. If you use an insulin pump covered by Part B, your cost for a month’s supply of insulin is capped at $35, and the Part B deductible does not apply.
The Part B Late Enrollment Penalty
If you do not sign up for Part B when you are first eligible and you do not have other qualifying coverage, such as an employer plan through current work, your premium goes up 10% for each full 12-month period you could have had Part B. In most cases you pay this penalty for as long as you have Part B.
Exploring Medicare Advantage (Part C): An Alternative Approach
Medicare Advantage, also called Part C, is a way to get your Medicare benefits through a private insurance company approved by Medicare. These plans cover everything Part A and Part B cover, and most include Part D drug coverage. Many also add extra benefits like dental, vision, hearing, and fitness programs.
Unlike Original Medicare, every Medicare Advantage plan has an annual out-of-pocket maximum for covered services. In exchange, most plans use provider networks and may require referrals or prior authorization. You still pay your Part B premium, and some plans charge an additional premium.
Types of Medicare Advantage Plans
The most common types are Health Maintenance Organizations (HMOs), which usually require you to use network providers, and Preferred Provider Organizations (PPOs), which let you go out of network for a higher cost. Special Needs Plans (SNPs) serve people with certain chronic conditions, those living in an institution, or those who have both Medicare and Medicaid. Private Fee-for-Service (PFFS) plans and Medicare Medical Savings Account (MSA) plans are less common.
Navigating Medicare Part D: Prescription Drug Coverage
Part D helps pay for prescription drugs and many recommended vaccines. It is offered by private insurance companies, either as a stand-alone plan that works with Original Medicare or built into a Medicare Advantage plan. Each plan has its own list of covered drugs, called a formulary, and its own pharmacy network, so the right plan depends on the medications you take.
How Part D Costs Work
Part D has three phases. In the deductible phase, you pay the full cost of your drugs until you meet your plan’s deductible, which cannot be more than $615 in 2026, and some plans have none. In the initial coverage phase, you pay a copay or coinsurance while your plan pays the rest. Once your out-of-pocket drug costs reach $2,100 in 2026, you enter catastrophic coverage and pay nothing for covered drugs for the rest of the year. The old coverage gap, or “donut hole,” no longer exists.
You can also choose the Medicare Prescription Payment Plan, which spreads your out-of-pocket drug costs into monthly payments across the year instead of paying at the pharmacy.
The Part D Late Enrollment Penalty
If you go 63 days or more in a row without Part D or other creditable drug coverage after your initial enrollment period ends, you may owe a late enrollment penalty. It is added to your monthly premium for as long as you have Part D, so it pays to enroll on time even if you take few medications today.
Supplementing Original Medicare: Medigap Policies
Medicare Supplement Insurance, also called Medigap, is sold by private insurance companies to help pay the costs Original Medicare leaves behind, such as deductibles, copayments, and the 20% Part B coinsurance. You must have Part A and Part B to buy a Medigap plan, and you keep paying your Part B premium.
Standardized Plans
Medigap plans are standardized and named by letter. A Plan G from one company has the same benefits as a Plan G from any other company, so the main differences are price and the company’s rate history. Massachusetts, Minnesota, and Wisconsin standardize their plans differently. Plans C and F are not available to people who became eligible for Medicare on or after January 1, 2020. You can compare every plan side by side on our Medigap plan comparison page.
When to Buy a Medigap Plan
The best time to buy is during your Medigap Open Enrollment Period, the six months starting the first month you are 65 or older and enrolled in Part B. During this window, a company cannot turn you down or charge you more because of your health. After it ends, most states allow companies to use medical underwriting.
Medigap plans cover one person, so spouses each need their own policy. Plans sold since 2006 do not include drug coverage, so you will want a separate Part D plan. You cannot use a Medigap plan with a Medicare Advantage plan. Medigap plans are guaranteed renewable as long as you pay your premium.
Eligibility and Enrollment Periods: When and How to Join
You are generally eligible for Medicare at 65. You may qualify sooner if you have received Social Security disability benefits for 24 months, or if you have ESRD or ALS. If you already receive Social Security benefits when you turn 65, you are enrolled in Part A and Part B automatically.
Initial Enrollment Period
Your Initial Enrollment Period lasts seven months. It starts three months before the month you turn 65, includes your birthday month, and ends three months after. If you sign up before your birthday month, coverage starts the first day of your birthday month. If you sign up during your birthday month or later, coverage starts the first day of the following month.
General and Special Enrollment Periods
If you miss your Initial Enrollment Period, you can sign up during the General Enrollment Period from January 1 to March 31 each year, with coverage starting the month after you enroll. Late enrollment penalties may apply.
A Special Enrollment Period lets you sign up without a penalty after certain life events. The most common is losing employer coverage based on current work, which gives you eight months to enroll in Part B after the job or the coverage ends, whichever comes first. Moving or losing Medicaid can also qualify.
Yearly Enrollment Periods
During the Medicare Annual Enrollment Period, from October 15 to December 7, you can join, switch, or drop a Medicare Advantage or Part D plan, with changes starting January 1. During the Medicare Advantage Open Enrollment Period, from January 1 to March 31, people already in a Medicare Advantage plan can switch to a different Medicare Advantage plan or return to Original Medicare and add a Part D plan, one time.
