Medicare Explained: The Complete Guide

Medicare is the federal health insurance program for Americans 65 and older, plus younger people with certain disabilities or end-stage renal disease. It covers about 67 million people and is run by the Centers for Medicare and Medicaid Services (CMS). If you're approaching 65 or helping a parent figure out their options, this guide covers what Medicare is, what it costs, and how to enroll.

The Four Parts of Medicare

Medicare is split into four parts, each covering different services. Most people need to understand at least Parts A and B. Parts C and D are optional add-ons.

Part A: Hospital Insurance

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. Most people don't pay a premium for Part A because they or a spouse paid Medicare taxes for at least 10 years. The Part A deductible for 2026 is $1,736 per benefit period.

Part B: Medical Insurance

Part B covers doctor visits, outpatient care, preventive services, durable medical equipment, and some home health care. The standard Part B premium for 2026 is $202.90 per month, with a $283 annual deductible. After the deductible, you typically pay 20% coinsurance for most services. Higher-income beneficiaries pay more through IRMAA surcharges.

Part C: Medicare Advantage

Part C is Medicare Advantage, offered by private insurers approved by Medicare. These plans bundle Parts A and B (and usually D) into one plan, often with additional benefits like dental, vision, and hearing. Over 35 million people are enrolled in Medicare Advantage as of 2026, representing about 54% of all Medicare beneficiaries. The average MA plan premium is $14 per month, and 67% of plans charge $0.

Part D: Prescription Drug Coverage

Part D covers prescription medications through private plans. You can get Part D as a standalone plan alongside Original Medicare or as part of a Medicare Advantage plan. The standard Part D deductible for 2026 is $615. Under the Inflation Reduction Act, out-of-pocket drug costs are capped at $2,000 per year starting in 2025, eliminating the old catastrophic coverage gap.

Original Medicare vs. Medicare Advantage

Original Medicare (Parts A and B) lets you see any doctor or hospital that accepts Medicare, anywhere in the country. No referrals, no network restrictions. The downside: no cap on out-of-pocket costs unless you buy a Medigap supplement, and no dental, vision, or hearing coverage.

Medicare Advantage plans use networks (HMO or PPO), may require referrals, and limit you to a service area. But they cap your out-of-pocket spending (max $9,250 in-network for 2026) and often include extras like dental, vision, hearing, gym memberships, and over-the-counter allowances.

When to Enroll

Your Initial Enrollment Period starts 3 months before you turn 65, includes your birthday month, and extends 3 months after. Missing it can mean late enrollment penalties that last for life. The Annual Enrollment Period runs October 15 through December 7 each year, when you can switch between Original Medicare and Medicare Advantage or change Part D plans. The Medicare Advantage Open Enrollment Period runs January 1 through March 31, letting MA enrollees switch plans or go back to Original Medicare.

What Medicare Doesn't Cover

Original Medicare has notable gaps: no routine dental, vision, or hearing. No long-term care. Limited coverage for care outside the U.S. No out-of-pocket spending cap. That's why many people either buy a Medigap policy to fill the gaps or choose a Medicare Advantage plan that includes these extras.