What Is Medicare?
Medicare is the federal health insurance program run by the U.S. government that primarily serves Americans aged 65 and older. Established in 1965 as part of the Social Security Act, Medicare now covers over 67 million people, providing essential health coverage during retirement and beyond.
For a complete breakdown of every enrollment window, including AEP, OEP, and SEPs, see our guide to Medicare enrollment periods.
But Medicare isn’t just for seniors. You may also qualify if you’re under 65 with certain disabilities, End-Stage Renal Disease (ESRD), or ALS (Lou Gehrig’s disease).
Unlike employer-sponsored health insurance, Medicare is an individual program. There are no family or couples plans. Each person enrolls separately and makes their own coverage decisions.
“Medicare can feel overwhelming at first, but once you understand the basics, the decisions become much clearer. I’ve spent over 20 years helping people navigate this process, and the most important step is simply understanding what you’re working with.” — Karl Bruns-Kyler, founder of The Big 65, licensed Medicare advisor in 33 states
The 4 Parts of Medicare Explained
Medicare is divided into four distinct parts, each covering different types of healthcare services. Understanding what each part does is the foundation of every Medicare decision you’ll make.
Medicare Part A: Hospital Insurance
Part A covers inpatient care when you’re admitted to a hospital, along with:
- Inpatient hospital stays (semi-private room, meals, nursing services, medications)
- Skilled nursing facility (SNF) care (up to 100 days per benefit period following a qualifying hospital stay)
- Hospice care (comfort care for terminally ill patients)
- Some home health care (limited skilled nursing or therapy services)
Cost: Most people pay $0 in premiums for Part A if they (or their spouse) paid Medicare taxes for at least 10 years (40 quarters). In 2026, the Part A inpatient deductible is $1,736 per benefit period.
Part A operates on benefit periods rather than calendar years. A benefit period begins when you’re admitted to a hospital and ends when you’ve been out for 60 consecutive days.
Medicare Part B: Medical Insurance
Part B covers outpatient medical services, including:
- Doctor visits and specialist appointments
- Preventive care (annual wellness visits, screenings, flu shots, mammograms)
- Outpatient surgery and procedures
- Durable medical equipment (wheelchairs, walkers, oxygen equipment)
- Mental health services
- Lab tests and diagnostic imaging
- Ambulance services
Cost: The standard Part B premium in 2026 is $202.90 per month (higher earners pay more through IRMAA surcharges). The annual deductible is $283, and after meeting it, you typically pay 20% of the Medicare-approved amount for most services.
Together, Parts A and B form “Original Medicare”, which is administered directly by the federal government.
Learn more: How Much Does Medicare Cost in 2026?
Medicare Part C: Medicare Advantage
Part C, commonly known as Medicare Advantage, is an alternative way to receive your Medicare benefits through private insurance companies approved by Medicare.
Medicare Advantage plans bundle Part A and Part B coverage into a single plan and often include additional benefits that Original Medicare doesn’t cover:
- Prescription drug coverage (most plans include Part D)
- Dental, vision, and hearing benefits
- Fitness programs and wellness incentives
- Annual out-of-pocket maximum (a cap on your yearly spending, which Original Medicare lacks)
The trade-off: Most Medicare Advantage plans use provider networks (HMO or PPO), which means you may need to use in-network doctors and hospitals. Referrals may be required for specialists.
Many Medicare Advantage plans have $0 monthly premiums beyond your Part B premium, though you still pay copays and coinsurance when you receive care.
Related: Medicare Advantage vs. Medigap: Which Is Right for You?
Medicare Part D: Prescription Drug Coverage
Medicare Part D helps cover the cost of outpatient prescription medications. These plans are offered by private insurance companies approved by Medicare.
Key things to know about Part D:
- Each plan has its own formulary (list of covered drugs)
- Drugs are organized into tiers, with different cost-sharing at each level
- There is a coverage gap (sometimes called the “donut hole”), though recent legislation has significantly reduced out-of-pocket costs in this phase
- You can get Part D as a standalone plan with Original Medicare or bundled into a Medicare Advantage plan
Important: If you don’t enroll in Part D when you’re first eligible and don’t have other creditable drug coverage, you may face a late enrollment penalty that lasts for as long as you have Part D coverage.
Who Is Eligible for Medicare?
You’re eligible for Medicare if you meet any of the following criteria:
- Age 65 or older and a U.S. citizen or permanent legal resident who has lived in the U.S. for at least five consecutive years
- Under 65 with a qualifying disability and have received Social Security Disability Insurance (SSDI) for at least 24 months
- Any age with ESRD (permanent kidney failure requiring dialysis or a kidney transplant)
- Any age with ALS (Lou Gehrig’s disease) — Medicare begins the month your disability benefits start
For premium-free Part A, you (or your spouse) must have worked and paid Medicare taxes for at least 10 years. If you don’t qualify for premium-free Part A, you can still buy into it.
How Does Medicare Work?
Once you’re enrolled, you have two main paths for receiving your Medicare benefits:
Path 1: Original Medicare (Parts A + B)
With Original Medicare, the federal government pays directly for your covered healthcare services. You can see any doctor or hospital in the U.S. that accepts Medicare, with no referrals needed for specialists.
However, Original Medicare has gaps. It doesn’t cover:
- Prescription drugs (you need a separate Part D plan)
- Routine dental, vision, and hearing care
- Long-term (custodial) care
- Care outside the U.S. (with limited exceptions)
Many people on Original Medicare add a Medicare Supplement (Medigap) plan to help cover out-of-pocket costs like deductibles, copays, and coinsurance. They also add a standalone Part D plan for prescription drug coverage.
Learn more: What Does Medicare Cover in 2026?
Path 2: Medicare Advantage (Part C)
With Medicare Advantage, a private insurance company provides all your Part A and Part B benefits (and usually Part D). These plans often include extra benefits and have an annual out-of-pocket maximum.
The trade-off is less provider flexibility. You’ll typically need to use in-network providers and may need referrals for specialists.
For a detailed comparison, see: Medicare Advantage vs. Medigap: Which Is Right for You?
Original Medicare vs. Medicare Advantage: Key Differences
| Feature | Original Medicare (Parts A + B) | Medicare Advantage (Part C) |
|---|---|---|
| Run by | Federal government | Private insurance companies |
| Provider choice | Any doctor/hospital that accepts Medicare | Usually limited to plan network |
| Referrals needed? | No | Often yes (HMO plans) |
| Prescription drugs | Requires separate Part D plan | Usually included |
| Extra benefits | None (dental, vision, hearing not covered) | Often included |
| Out-of-pocket maximum | No cap | Yes, annual cap required |
| Medigap eligible? | Yes | No (cannot use Medigap with MA) |
| Monthly cost | Part B premium + Medigap premium + Part D premium | Part B premium + plan premium (often $0) |
Neither option is universally “better.” The right choice depends on your healthcare needs, budget, preferred doctors, and how much flexibility you want. Read our full comparison: Original Medicare vs. Medicare Advantage
Medicare Supplement Insurance (Medigap)
If you choose Original Medicare, you may want to add a Medicare Supplement (Medigap) plan to help cover the costs that Original Medicare doesn’t pay.
Medigap plans are sold by private insurers but are standardized by the federal government. Each plan letter (A, B, C, D, F, G, K, L, M, N) offers the same benefits regardless of which company sells it. The only differences between insurers are price and customer service.
The most popular Medigap plans today are:
- Plan G — The most comprehensive option available to new enrollees. Covers nearly everything except the Part B deductible ($283/year in 2026).
- Plan N — Lower premiums than Plan G, but you pay small copays at office visits ($20) and ER visits ($50) plus the Part B deductible.
Key rule: You cannot have both a Medigap plan and a Medicare Advantage plan at the same time.
Not sure if you need supplemental coverage? Read: Do I Need a Medicare Supplement?
How to Enroll in Medicare
Enrolling in Medicare isn’t automatic for everyone. Here’s what you need to know about the key enrollment periods:
Initial Enrollment Period (IEP)
Your IEP is a 7-month window surrounding your 65th birthday:
- 3 months before your birthday month
- Your birthday month
- 3 months after your birthday month
This is the most important enrollment window. Signing up during the first three months ensures your coverage starts on time with no gaps.
General Enrollment Period (GEP)
If you missed your IEP, you can sign up January 1 through March 31 each year, with coverage starting July 1. Late enrollment penalties may apply.
Special Enrollment Period (SEP)
If you delayed Medicare because you had employer coverage (from an employer with 20+ employees), you get a Special Enrollment Period when that coverage ends. This 8-month window lets you enroll without penalties.
Annual Enrollment Period (AEP)
From October 15 to December 7 each year, you can switch between Original Medicare and Medicare Advantage, change your Part D plan, or make other coverage adjustments. Changes take effect January 1.
Medicare Advantage Open Enrollment Period (OEP)
From January 1 to March 31, if you’re already in a Medicare Advantage plan, you can switch to a different MA plan or return to Original Medicare.
For step-by-step guidance, read: How to Apply for Medicare
Medicare Costs at a Glance (2026)
Here’s a quick overview of what you can expect to pay:
| Cost | 2026 Amount |
|---|---|
| Part A premium | $0 for most people (with 40+ quarters of work history) |
| Part A deductible | $1,736 per benefit period |
| Part B premium | $202.90/month (standard) |
| Part B deductible | $283/year |
| Part D premium | Varies by plan (national average ~$40-55/month) |
| Medigap Plan G premium | Varies by location and age (~$100-300/month) |
| Medicare Advantage premium | Many plans $0 beyond Part B premium |
For a detailed breakdown, see: How Much Does Medicare Cost in 2026? | Also read: Medicare Premiums and Costs for 2026: Complete Breakdown
What Medicare Doesn’t Cover
Understanding Medicare’s gaps is just as important as knowing what it covers. Original Medicare does not cover:
- Routine dental care — cleanings, fillings, dentures (Does Medicare Cover Dental?)
- Routine vision care — eye exams for glasses, contact lenses
- Hearing aids and routine hearing exams
- Long-term (custodial) care — nursing home stays for daily living assistance
- Cosmetic surgery
- Care outside the U.S. (with limited exceptions)
Some of these gaps can be filled by Medicare Advantage plans (which often include dental, vision, and hearing benefits) or by purchasing separate supplemental insurance.
Medicare does cover some services people assume it doesn’t, including cataract surgery (under Part B) and many preventive screenings at no additional cost.
For the full picture: What Does Medicare Cover in 2026?
Common Medicare Misconceptions
After 20+ years of advising Medicare beneficiaries, here are the most common myths I see:
Myth 1: “Medicare is free.”
Reality: While Part A is premium-free for most people, you still pay Part B premiums, deductibles, copays, and coinsurance. Without supplemental coverage, out-of-pocket costs can add up quickly.
Myth 2: “Medicare covers everything.”
Reality: Original Medicare has significant gaps, including dental, vision, hearing, and long-term care. That’s why many beneficiaries add Medigap or Medicare Advantage coverage.
Myth 3: “I can enroll in Medicare anytime.”
Reality: Medicare has specific enrollment windows. Missing them can result in late enrollment penalties and gaps in coverage that may last months.
Myth 4: “All Medicare plans are the same.”
Reality: Medicare Advantage plans vary dramatically by insurer, network, benefits, and cost. Medigap plans are standardized by letter but premiums differ between companies. Comparing options is essential.
Myth 5: “I don’t need Medicare if I have employer coverage.”
Reality: It depends on your employer’s size. If your employer has fewer than 20 employees, Medicare becomes your primary coverage when you turn 65, and you should enroll on time. Larger employers’ plans can serve as primary, but you should still understand when and how to transition.
Medicare vs. Medicaid: What’s the Difference?
- Medicare is a federal program based primarily on age (65+) or disability. It’s available regardless of income.
- Medicaid is a joint federal-state program based on income and financial need. Eligibility and benefits vary by state.
Some people qualify for both programs simultaneously, known as “dual eligibility.” If you’re dual-eligible, Medicaid may help pay your Medicare premiums and out-of-pocket costs.
Learn more: Medicare vs. Medicaid: What’s the Difference?
Next Steps: Getting Help with Your Medicare Decisions
Choosing the right Medicare coverage is one of the most important financial and healthcare decisions you’ll make in retirement. The good news is that you don’t have to figure it all out alone.
Working with a licensed, independent Medicare advisor can help you:
- Understand which Medicare path is right for your situation
- Compare plans and costs specific to your area
- Avoid costly enrollment mistakes and penalties
- Review your coverage annually to make sure it still fits your needs
At The Big 65, Karl Bruns-Kyler has been guiding Medicare beneficiaries for over 20 years. As an independent advisor licensed in 33 states, he’s not tied to any single insurance company, which means his recommendations are based on what’s best for you.
Schedule a free consultation to get personalized help with your Medicare decisions.
For a complete overview of turning-65 enrollment timing, see our step-by-step turning 65 enrollment guide.
Frequently Asked Questions About Medicare
What is Medicare in simple terms?
Medicare is the U.S. government’s health insurance program for people aged 65 and older, as well as some younger people with disabilities. It helps pay for hospital stays, doctor visits, prescription drugs, and other medical services.
What are the 4 parts of Medicare?
Part A covers hospital and inpatient care. Part B covers doctor visits and outpatient services. Part C (Medicare Advantage) bundles A and B through private insurers with extra benefits. Part D covers prescription medications.
Is Medicare free?
Part A is premium-free for most people who paid Medicare taxes during their working years. However, Part B has a monthly premium ($202.90/month in 2026), and you’ll also pay deductibles, copays, and coinsurance for covered services.
When should I sign up for Medicare?
Most people should enroll during their Initial Enrollment Period, the 7-month window around their 65th birthday. If you have employer coverage, you may be able to delay enrollment without penalty.
What’s the difference between Medicare and Medicaid?
Medicare is based on age (65+) or disability and is available regardless of income. Medicaid is based on financial need and varies by state. Some people qualify for both.
Do I need Medicare if I’m still working at 65?
If your employer has 20 or more employees, your employer plan is primary and you can delay Medicare Part B without penalty. If your employer has fewer than 20 employees, Medicare becomes primary and you should enroll on time.
What does Medicare not cover?
Original Medicare doesn’t cover routine dental, vision, or hearing care, long-term (custodial) care, cosmetic surgery, or most care outside the U.S. Medicare Advantage plans may cover some of these additional services.
Can I have both Medicare and private insurance?
Yes. Many people pair Original Medicare with a Medigap plan and a Part D drug plan. Others choose Medicare Advantage, which is private insurance that replaces Original Medicare. You can also have employer or retiree coverage alongside Medicare.