What Is Medicare? Parts A, B, C, D and Medigap Explained

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Medicare Part A: Hospital Insurance

Part A covers inpatient hospital care, skilled nursing facility care (after a qualifying 3-day hospital stay), hospice care, and some home health services. For most Americans who worked at least 40 quarters (10 years) and paid Medicare taxes, Part A is free — no premium. Those with fewer quarters pay a premium ($278–$505/month in 2026).

Part A cost-sharing in 2026: $1,676 deductible per benefit period (not per year — a new benefit period starts 60 days after the prior one ends). After the deductible, days 1–60 are fully covered. Days 61–90 cost $419/day. Days 91+ (lifetime reserve days) cost $838/day. Most people enroll in Part A at 65 even if delaying Part B, since it's free for those who qualify.

Medicare Part B: Medical Insurance

Part B covers doctor visits, outpatient care, preventive services, medical equipment, mental health services, and some home health. The standard 2026 premium is $185.00/month — but higher-income beneficiaries pay IRMAA surcharges that can push the premium above $600/month per person. The annual Part B deductible is $257 in 2026; after that, Medicare covers 80% of approved costs and you pay 20%.

The 20% coinsurance has no annual maximum under Original Medicare — which is why most beneficiaries add a Medigap plan or switch to Medicare Advantage. A $200,000 hospital bill would leave you with $40,000 in coinsurance under Original Medicare alone.

Medicare Part C: Medicare Advantage

Medicare Advantage (Part C) replaces Original Medicare (Parts A+B) with private insurance approved by Medicare. Plans typically include Part D drug coverage and often add dental, vision, and hearing benefits. Monthly premiums are often $0–$80/month, but copays apply for services and there's a maximum out-of-pocket limit (often $5,000–$10,000/year).

The trade-off: network restrictions (you must use plan providers in most cases), prior authorization requirements for some services, and variable coverage depending on the plan. Medicare Advantage works well for healthy beneficiaries who stay local and want lower premiums. It can be risky for those with complex medical needs or who travel frequently.

Medicare Part D: Prescription Drug Coverage

Part D provides prescription drug coverage through private insurers. The average premium is $55–$65/month in 2026, but ranges from $15 to $100+ depending on the drugs covered. There's a standard deductible of $590 in 2026. Beginning in 2025 (INFLATION Reduction Act), out-of-pocket drug costs are capped at $2,000/year — a significant improvement over prior years when costs could be much higher for expensive medications.

Failing to enroll in Part D when first eligible (and not having creditable drug coverage elsewhere) triggers a permanent late enrollment penalty of 1% per month of delay, added to your premium for as long as you have Medicare.

Medigap: Supplemental Coverage for Original Medicare

Medigap (Medicare Supplement) plans, sold by private insurers, cover the cost-sharing gaps in Original Medicare — primarily the 20% coinsurance and various deductibles. The most popular plans:

• Plan G: Covers everything except the Part B deductible ($257). Most comprehensive. Monthly premium: $130–$250+ depending on age and insurer.
• Plan N: Covers most costs except the Part B deductible and some copays ($20 for office visits, $50 for ER visits). Lower premium than Plan G.
• Plan A: Basic coverage. Lowest premium but leaves more gaps.

Medigap plans are standardized by letter — a Plan G from Blue Cross and a Plan G from Aetna cover exactly the same services. Shop on price and company financial stability. Note: if you enroll in Medicare Advantage, you cannot have a Medigap plan — they are mutually exclusive.

What Medicare Does NOT Cover

• Routine dental care (cleanings, fillings, crowns)
• Routine vision care (eyeglasses, contact lenses)
• Hearing aids and exams
• Most long-term care (nursing home, assisted living)
• Cosmetic procedures
• Services outside the US (except rare border situations)

These gaps are significant — especially dental, vision, and hearing. Budget $1,500–$3,000/year for these out-of-pocket, or explore Medicare Advantage plans that include some coverage, or purchase standalone supplemental dental/vision insurance.

To estimate your total annual Medicare costs including IRMAA surcharges, see the Medicare Cost Calculator. For the detailed cost breakdown including premiums, deductibles, and out-of-pocket estimates, read how much does Medicare cost in retirement.