Medicare is the federal health insurance program for Americans age 65 and older, as well as for younger people with certain disabilities or end-stage renal disease. If you are approaching 65 or helping a parent navigate coverage, understanding Medicare’s parts, costs, and enrollment windows can save you thousands of dollars and prevent costly gaps in coverage.
The Four Parts of Medicare
Part A: Hospital Insurance
Medicare Part A covers inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice care, and some home health services. Most people pay no premium for Part A if they or their spouse paid Medicare taxes for at least 10 years (40 quarters). If you do not meet the work requirement, the 2026 premium can be up to $518 per month.
Part A does have cost-sharing: a deductible of $1,676 per benefit period (2026) for hospital stays, plus daily coinsurance after 60 days.
Part B: Medical Insurance
Medicare Part B covers outpatient services — doctor visits, preventive care, lab tests, durable medical equipment, and outpatient procedures. Unlike Part A, Part B always has a premium. The standard 2026 monthly premium is $185.00, though higher earners pay more through Income-Related Monthly Adjustment Amounts (IRMAA). Part B also has an annual deductible ($257 in 2026) and you pay 20% of most covered services after the deductible.
Part C: Medicare Advantage
Medicare Advantage (Part C) is an alternative to Original Medicare (Parts A and B) offered by private insurance companies approved by Medicare. Plans must cover everything Original Medicare covers, and most include prescription drug coverage and extras like dental, vision, and fitness benefits. Premiums vary by plan and location — some plans have $0 premiums beyond the standard Part B premium. Trade-offs include network restrictions and prior authorization requirements.
Part D: Prescription Drug Coverage
Medicare Part D covers prescription medications through private insurance plans. If you have Original Medicare, you add a standalone Part D plan. If you have Medicare Advantage, drug coverage is usually bundled in. Part D premiums averaged around $40–$50 per month in recent years. In 2026, the Inflation Reduction Act cap limits out-of-pocket drug costs to $2,000 per year, a significant change from prior years.
Medigap (Medicare Supplement Insurance)
Original Medicare has significant gaps — the 20% coinsurance for Part B with no out-of-pocket maximum can add up quickly. Medigap is private supplemental insurance that fills those gaps. Plans are standardized and labeled A through N. Plan G is the most popular comprehensive option for new enrollees. Premiums vary by age, location, and plan, typically $100–$300 per month. You need Original Medicare to buy a Medigap plan — it does not work with Medicare Advantage.
Medicare Enrollment Windows
Missing enrollment deadlines can result in permanent late-enrollment penalties and months without coverage.
- Initial Enrollment Period (IEP): A 7-month window starting 3 months before your 65th birthday month, including your birthday month, and ending 3 months after. Enroll in Part B during this window to avoid penalties.
- Special Enrollment Period (SEP): If you or your spouse are still working and covered by employer insurance at 65, you can delay Part B without penalty and enroll during the SEP (up to 8 months after employer coverage ends).
- General Enrollment Period: January 1 – March 31 each year if you missed your IEP. Coverage starts July 1. Late enrollment penalty applies.
- Annual Enrollment Period: October 15 – December 7 each year to switch Medicare Advantage or Part D plans for the following year.
Late Enrollment Penalties
- Part B: 10% added to your premium for each full 12-month period you could have enrolled but did not. This penalty is permanent and applies for life.
- Part D: 1% of the national base premium multiplied by the number of months without creditable drug coverage. Also permanent.
What Medicare Does Not Cover
Medicare does not cover routine dental, routine vision (eye exams and glasses), hearing aids, long-term custodial care (nursing home care for daily activities), or most care outside the U.S. These gaps are why Medigap, Medicare Advantage extras, and separate long-term care insurance exist.
Bottom Line
Medicare is more complex than most people expect. The key actions: enroll on time (or know your SEP window), decide between Original Medicare plus Medigap vs. Medicare Advantage, and add Part D drug coverage. Most people do best by comparing plans during their Initial Enrollment Period rather than waiting and paying late penalties. Use Medicare’s Plan Finder tool at medicare.gov to compare plans in your area.
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