Medicare is the federal health insurance program that covers most Americans starting at age 65. It also covers some people under 65 with disabilities or permanent kidney failure. The program is split into distinct parts, each covering different types of care, and understanding which parts you need is the key to making Medicare work for you.
Who Qualifies for Medicare
Most people become eligible at 65. Your enrollment window is a 7-month period that starts 3 months before your 65th birthday month and ends 3 months after it. If you’ve worked and paid Medicare taxes for at least 10 years (or your spouse has), you qualify for Part A at no monthly premium.
People under 65 can also qualify if they’ve received Social Security Disability Insurance benefits for 24 months, or if they have end-stage renal disease requiring dialysis or a kidney transplant.
The Four Parts of Medicare
Medicare is organized into four lettered parts, each handling a different slice of your healthcare.
Part A is hospital insurance. It covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Most people pay no monthly premium for Part A, but there is a deductible each time you’re admitted to the hospital: $1,736 in 2026.
Part B is medical insurance, covering the outpatient side of things: doctor visits, lab tests, medical equipment like wheelchairs and walkers, outpatient procedures, and preventive services such as screenings, vaccines, and annual wellness visits. Part B has a standard monthly premium of $202.90 in 2026, plus an annual deductible of $283. After you meet that deductible, you typically pay 20% of the cost for most services.
Part C is Medicare Advantage, an alternative way to receive your Part A and Part B benefits through a private insurance company instead of directly through the government. More on this below.
Part D is prescription drug coverage. It helps pay for medications and many recommended vaccines. Part D plans are sold by private insurers, and premiums vary by plan. Starting in 2025, there’s a hard cap of $2,000 per year on what you pay out of pocket for prescription drugs, a protection created by the Inflation Reduction Act.
Original Medicare vs. Medicare Advantage
This is the biggest choice you’ll make when enrolling. You pick one path or the other.
Original Medicare (Parts A and B together) lets you see any doctor or hospital in the country that accepts Medicare, with no referrals needed. The trade-off is that there’s no annual cap on your out-of-pocket spending. If you have a year with heavy medical needs, your 20% share of costs under Part B can add up without a ceiling. You’d also need to buy a separate Part D plan for prescription drugs, since Original Medicare doesn’t include drug coverage.
Medicare Advantage (Part C) bundles hospital, medical, and usually drug coverage into a single plan run by a private insurer. Many Advantage plans also include extras that Original Medicare doesn’t cover, like routine dental, vision, and hearing care. These plans do set a yearly out-of-pocket maximum, so once you hit that limit, covered services cost you nothing for the rest of the year. The trade-off is that you’ll generally need to use doctors and hospitals within the plan’s network, and you may need referrals to see specialists.
Filling the Gaps With Medigap
If you choose Original Medicare, you can purchase a Medigap policy (also called Medicare Supplement Insurance) from a private insurer to help cover the costs that Medicare doesn’t fully pay. These are the “gaps” in coverage: your deductibles, the 20% coinsurance you owe under Part B, and copayments for various services. A copayment is a flat fee (like $30 per visit), while coinsurance is a percentage of the total cost.
Medigap policies only work alongside Original Medicare. You can’t use one if you’re enrolled in a Medicare Advantage plan, because Advantage plans have their own built-in cost protections.
What Medicare Doesn’t Cover
Original Medicare has some notable gaps. It doesn’t cover routine dental care, most eye exams for glasses, hearing aids, or long-term custodial care (like an assisted living facility where you need help with daily activities but not skilled medical care). This is one reason many people choose Medicare Advantage plans, which often include at least some dental and vision benefits. Others buy separate standalone policies for dental and vision.
Enrollment Timing Matters
Missing your initial 7-month enrollment window can cost you permanently. Medicare charges late enrollment penalties that last for as long as you have coverage, not just for a year or two.
For Part B, the penalty is an extra 10% added to your monthly premium for every full 12-month period you were eligible but didn’t sign up. So if you waited two years past your initial window, you’d pay 20% more every month for the rest of your time on Medicare. For Part A (if you have to pay a premium), the penalty is 10% for twice the number of years you delayed. For Part D, the penalty is 1% of the national base beneficiary premium ($38.99 in 2026) for every month you went without creditable drug coverage. That adds up to 12% per year of delay, tacked onto your premium indefinitely.
There’s an important exception: if you’re still working at 65 and have health coverage through your employer (or your spouse’s employer), you can delay enrolling without penalty. Once that employer coverage ends, you’ll get a special enrollment period to sign up.
How the Costs Add Up
Here’s a realistic picture of what you’d pay in 2026 under Original Medicare. Part A has no monthly premium for most people, but you’d owe $1,736 if you’re admitted to the hospital. Part B costs $202.90 per month, and after a $283 annual deductible, you pay 20% of covered services. If you add a Part D drug plan, premiums vary but you’ll never pay more than $2,000 out of pocket for prescriptions in a year. A Medigap policy, if you want one, adds another monthly premium that depends on your age, location, and the plan you choose.
People with higher incomes pay more for Part B and Part D. The government adjusts premiums upward based on your tax return from two years prior, so a higher reported income means a higher monthly bill.
Medicare Advantage plans often have $0 premiums beyond the standard Part B premium you’re already paying, which is part of their appeal. But you’ll still face copays and coinsurance for services until you hit the plan’s yearly out-of-pocket maximum.