Medicare Explained for Beginners: Parts A, B, C, and D

Medicare covers 65 million Americans — and confuses nearly all of them. The four-part structure, multiple enrollment periods, and coverage gaps catch people off guard every year. Understanding how it works before you turn 65 can save thousands in penalties and out-of-pocket costs.

Medicare Part A: Hospital insurance

Part A covers inpatient care and related services.

What it covers:

• Hospital stays (inpatient)
• Skilled nursing facility care after a qualifying hospital stay
• Hospice care
• Some home health care

What it costs:

• Premium: $0 for most people (you paid Medicare taxes during your working years)
• Deductible: $1,632 per benefit period in 2026
• Coinsurance: $0/day for days 1–60 in hospital; $408/day for days 61–90; $816/day beyond 90 days (lifetime reserve days)

Medicare Part B: Medical insurance

Part B covers outpatient care and preventive services.

What it covers:

• Doctor visits and specialist appointments
• Lab tests and imaging
• Outpatient surgery and procedures
• Durable medical equipment
• Preventive services (annual wellness visit, screenings, vaccines)
• Mental health services

What it costs:

• Standard premium: $174.70/month in 2026 (higher earners pay IRMAA surcharges)
• Annual deductible: $240
• Coinsurance: 20% of Medicare-approved amount after deductible

Medicare Part C: Medicare Advantage

Medicare Advantage plans are private insurance alternatives that replace Original Medicare (Parts A and B). They must cover everything Original Medicare covers and usually include Part D drug coverage plus extras.

Common extras: Dental, vision, hearing, gym memberships, over-the-counter allowances

Cost: $0–$100+/month in addition to your Part B premium. Many plans have $0 additional premium, but trade-offs in network restrictions or cost-sharing.

Trade-offs vs. Original Medicare:

• Usually restricted to a plan network (HMO or PPO)
• Prior authorization often required for specialist care
• Out-of-pocket maximums capped (~$8,850 for in-network in 2026)

Medicare Advantage has grown to cover over 50% of Medicare enrollees. It's popular for the extras and out-of-pocket cap, but can be problematic for those who travel or want to see any doctor.

Medicare Part D: Prescription drug coverage

Standalone Part D plans cover prescription drugs and work alongside Original Medicare. Medicare Advantage plans typically include drug coverage.

2026 key numbers:

• Deductible: up to $590/year for standard plans
• Out-of-pocket maximum: $2,000 (new in 2025 under Inflation Reduction Act)
• Premium: averages $40–$80/month

Important: If you don't enroll in Part D when first eligible and don't have creditable drug coverage, you face a permanent penalty of 1% of the national base premium for each month you delayed.

Enrollment windows: don't miss these

Initial Enrollment Period (IEP): 7-month window — 3 months before your 65th birthday, your birth month, and 3 months after. Best time to enroll.

Special Enrollment Period (SEP): If you have employer coverage at 65+, you can delay without penalty and enroll within 8 months of losing that coverage.

Annual Enrollment Period: October 15 – December 7 each year. Change your Medicare Advantage or Part D plan.

Medicare Advantage Open Enrollment: January 1 – March 31. Switch between Advantage plans or return to Original Medicare.

Medigap (Medicare Supplement): filling the gaps

Original Medicare leaves significant gaps — the Part A deductible, Part B 20% coinsurance, and no out-of-pocket maximum. Medigap plans (sold by private insurers) fill these gaps.

Popular Medigap plans:

• Plan G: Covers everything except the Part B deductible. Most comprehensive for new enrollees since 2020.
• Plan N: Lower premiums with small copays ($20 for office visits, $50 for ER).

Cost: $100–$300/month depending on age and state, but eliminates most surprise costs.

Frequently Asked Questions

What are the four parts of Medicare? Medicare Part A covers hospital stays, skilled nursing facility care, hospice, and some home health care. Part B covers doctor visits, outpatient care, preventive services, and medical equipment. Part C (Medicare Advantage) is a private insurance alternative to Original Medicare that combines A+B and usually includes Part D drug coverage. Part D covers prescription drugs.

When should I enroll in Medicare? You should enroll in Medicare during your Initial Enrollment Period (IEP), which begins 3 months before your 65th birthday and ends 3 months after. If you have employer coverage, you may delay Part B without penalty. Missing your enrollment window without qualifying coverage results in permanent premium penalties — 10% for each 12-month period you delay Part B.

Is Medicare free? Part A is free for most people (those who worked and paid Medicare taxes for at least 10 years). Part B has a standard premium of $174.70/month in 2026 (higher earners pay more). Part D drug plans have monthly premiums averaging $40–$80. Medicare Advantage (Part C) plans range from $0 to $100+/month, often bundling additional benefits.