Medicare is the federal health insurance program for people 65 and older, plus some younger people with disabilities, end-stage renal disease or ALS. It has four parts. Part A covers hospital care, Part B covers doctors and outpatient care, Part C (Medicare Advantage) is a private-plan alternative, and Part D covers prescription drugs.
The federal Centers for Medicare & Medicaid Services (CMS) runs it. Medicaid is a different, income-based program run with the states. Our comparison of Medicare and Medicaid explains the difference and how some people qualify for both. All figures below are for 2026 unless a 2027 number is marked as officially announced.
Who qualifies for Medicare
Most people become eligible the month they turn 65. You need to be a US citizen or a permanent resident who has lived in the country for at least five years in a row. Younger people can qualify in three ways:
- Disability: after receiving Social Security disability benefits for 24 months, coverage starts automatically.
- End-stage renal disease (ESRD): permanent kidney failure that requires dialysis or a transplant.
- ALS (Lou Gehrig’s disease): coverage begins the same month disability benefits start, with no 24-month wait.
If you already get Social Security retirement benefits when you turn 65, you are enrolled in Parts A and B automatically. If you are not collecting benefits yet, you sign up yourself through Social Security.
The four parts of Medicare at a glance
| Part | What it covers | Who runs it | Main 2026 costs |
|---|---|---|---|
| Part A (hospital insurance) | Inpatient hospital stays, skilled nursing facility care after a hospital stay, hospice, some home health care | Federal government | $0 premium for most people; $1,736 deductible per benefit period |
| Part B (medical insurance) | Doctor visits, outpatient care, lab tests, preventive care, durable medical equipment | Federal government | $202.90 standard monthly premium; $283 yearly deductible; usually 20% coinsurance |
| Part C (Medicare Advantage) | Everything in Parts A and B, often with drug coverage and extras such as dental or vision | Private insurers approved by Medicare | Varies by plan; you still pay the Part B premium |
| Part D (prescription drugs) | Outpatient prescription drugs | Private insurers approved by Medicare | Premium varies by plan; deductible up to $615; out-of-pocket cap of $2,100 |
Parts A and B together are called Original Medicare. You can then add a Part D drug plan and, if you want, a Medigap policy. Alternatively, you can choose a Medicare Advantage plan that bundles everything.
Part A: hospital insurance and premium-free rules
Part A pays for care when you are formally admitted to a hospital. It also covers up to 100 days in a skilled nursing facility after a qualifying hospital stay, plus hospice care.
About 99% of people pay no premium for Part A. That is because they or a spouse worked and paid Medicare taxes for at least 40 quarters, which is roughly 10 years. If you have fewer quarters, you can still buy in. For 2026, the premium is $311 a month with 30 to 39 quarters and $565 a month with fewer than 30.
Premium-free does not mean free care, though. The 2026 inpatient deductible is $1,736 for each benefit period. After 60 days in the hospital, you pay $434 a day for days 61 through 90. In a skilled nursing facility, days 21 through 100 cost $217 a day in 2026.
Part B: doctors, outpatient care and IRMAA
Part B covers medically necessary services outside the hospital. That includes doctor visits, outpatient surgery, lab work, ambulance rides and many screenings. Most preventive services, such as flu shots, cost nothing if your doctor accepts Medicare’s rates.
According to the CMS fact sheet on 2026 premiums and deductibles, the standard Part B premium is $202.90 a month. The yearly deductible is $283. After that, you usually pay 20% of the Medicare-approved amount, and Original Medicare has no yearly cap on that 20%.
Higher earners pay more because of the income-related monthly adjustment amount, or IRMAA. It is based on your tax return from two years earlier. For 2026, it starts when modified adjusted gross income on your 2024 return was above $109,000 for a single filer or $218,000 for a joint return. At that first tier, the Part B premium becomes $284.10. At the top tier, it reaches $689.90 a month. IRMAA also adds a surcharge to Part D premiums, from $14.50 to $91.00 a month. If your income dropped after retirement, you can ask Social Security to use newer figures.
The 2027 Part B premium has not been announced as of mid-October 2026. CMS usually publishes it in the fall, often in November.
Part C: Medicare Advantage vs Original Medicare (and Medigap)
Medicare Advantage is another way to get your Part A and Part B benefits. Instead of the government paying claims directly, a private insurer approved by Medicare does it. Most plans also include Part D drug coverage. Many add benefits Original Medicare does not cover, such as routine dental, vision or hearing care.
The trade-offs are real, so compare them carefully:
- Doctors and hospitals: Original Medicare works with any provider in the US that accepts Medicare. Most Advantage plans use networks, often HMOs or PPOs, and may require referrals.
- Prior approval: Advantage plans often require approval before certain services. Original Medicare rarely does.
- Out-of-pocket limit: every Advantage plan has a yearly cap on what you pay for covered Part A and B services. Original Medicare has none unless you add Medigap.
- Costs: many plans have low or $0 premiums, but you still pay the Part B premium. Copays then vary by plan, county and service.
In practice, Advantage plans suit people who stay in one area. Original Medicare plus Medigap suits people who travel or want predictable bills.
Medigap: filling the gaps in Original Medicare
Medigap, or Medicare Supplement Insurance, is a private policy that helps pay what Original Medicare leaves to you. That includes deductibles, coinsurance and the 20% Part B share. Plans are standardized and labeled with letters, such as Plan G or Plan N. So a Plan G from one insurer covers the same things as a Plan G from another, although prices differ.
Medigap does not work with Medicare Advantage, and it does not cover drugs. The best time to buy is your six-month Medigap Open Enrollment Period. It starts the month you are 65 or older and enrolled in Part B. During that window, insurers cannot charge you more or refuse you because of your health. After it ends, most states let insurers use medical underwriting. California has some extra protections, including a yearly window around your birthday to switch to a plan with equal or fewer benefits.
Part D: prescription drug coverage
Part D plans are sold by private insurers. You can buy a stand-alone drug plan to pair with Original Medicare, or get drug coverage inside a Medicare Advantage plan. Each plan has its own list of covered drugs, called a formulary.
Since 2025, Part D has had a yearly cap on out-of-pocket drug costs. For 2026, the cap is $2,100. Once your deductible, copays and coinsurance for covered drugs reach that amount, you pay nothing more for covered drugs that year. The standard deductible in 2026 can be no higher than $615.
For 2027, CMS has already set the numbers in its 2027 Part D rate announcement. The out-of-pocket cap rises to $2,400 and the maximum deductible to $700.
Enrollment periods, late penalties and free help
Timing matters, because a missed window can cost you for life.
- Initial Enrollment Period: seven months around your 65th birthday. It covers the three months before, your birthday month and the three months after.
- General Enrollment Period: January 1 to March 31 each year, for people who missed their initial window. Coverage starts the month after you sign up.
- Open Enrollment: October 15 to December 7. You can switch between Original Medicare and Advantage or change drug plans. Changes take effect January 1.
- Medicare Advantage Open Enrollment: January 1 to March 31, for people already in an Advantage plan who want to switch plans or return to Original Medicare once.
- Special Enrollment Periods: for events such as losing job-based coverage or moving.
This year’s Open Enrollment runs from October 15 to December 7, 2026, for 2027 coverage. Plans change their premiums, networks and drug lists every year, so check your Annual Notice of Change before December 7. The Medicare Plan Finder lets you compare plans by your drugs and ZIP code.
Late penalties are added to your premium, not charged once. According to Medicare’s page on avoiding penalties, the Part B penalty adds 10% for each full 12 months you could have had Part B but did not. You usually pay it for as long as you have Part B. The Part D penalty adds 1% of the national base premium ($38.99 in 2026) for each month without creditable drug coverage. That applies if you go 63 days or more without coverage after your initial window. If you buy Part A, the premium can rise 10% for twice the number of years you delayed. If you are still working with employer coverage, you can often delay without penalty, but check that the coverage counts first.
Where to get free help
Every state has a State Health Insurance Assistance Program, or SHIP, that gives free, unbiased counseling. Counselors do not sell plans, but they can compare options and help with appeals. You can find your state’s office through SHIP’s national locator.
In California, the program is called HICAP, the Health Insurance Counseling and Advocacy Program. You can reach a local office at 1-800-434-0222. You can also call 1-800-MEDICARE (1-800-633-4227) at any hour. For more health explainers, see our health and sports guides.
This is general information, so check with Medicare or a SHIP counselor about your own situation.
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Frequently asked questions
What is Medicare, in simple terms?
It is federal health insurance for people 65 and older and for some younger people with disabilities, ESRD or ALS. It is split into hospital (A), medical (B), private-plan (C) and drug (D) coverage.
What is Medicare Advantage?
Medicare Advantage, or Part C, is a private plan approved by Medicare that replaces Original Medicare for your A and B benefits. Most plans include drug coverage and a yearly out-of-pocket limit, but they usually use provider networks.
What is the difference between Medicare and Medicare Advantage?
Original Medicare is run by the government and lets you see any provider that accepts Medicare. Medicare Advantage is run by private insurers, often with networks and extra benefits. With Advantage, your costs and covered doctors depend on the plan you pick.
Can I change my Medicare plan now?
Yes. Open Enrollment runs from October 15 to December 7, 2026. Any changes you make take effect January 1, 2027.
Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.
Sources
- cms.gov/newsroom/fact-sheets/2026-medicare-parts-b-premiums-dedu…
- cms.gov/files/document/2027-announcement.pdf
- medicare.gov/basics/costs/medicare-costs
- medicare.gov/basics/costs/medicare-costs/avoid-penalties
- medicare.gov/plan-compare
- shiphelp.org
- aging.ca.gov/Programs_and_Services/Medicare_Counseling