Medicare Guide 2026: Parts A, B, C & D Explained
Medicare's four parts cover very different things — and the costs, gaps, and enrollment windows catch millions of Americans off guard every year. Here's everything you need to know before you turn 65.
Medicare at a Glance — What You're Actually Getting
Medicare is federal health insurance for people 65 and older, plus certain younger people with disabilities. It is not free, it does not cover everything, and the structure of four separate "Parts" confuses nearly everyone approaching 65. Understanding what each part does — and doesn't cover — is the essential first step.
🗺 How to Use This Guide: Start with the four Parts section to understand what each covers, then check the costs section for 2026 numbers, the enrollment windows section to know your deadlines, and finally the planning section to decide between Original Medicare and Medicare Advantage.
Medicare Parts A, B, C & D — Side by Side
Think of Medicare in two layers. The bottom layer is Original Medicare — Part A (hospital) and Part B (medical). The top layer is optional add-ons: Part C (Medicare Advantage, a private plan that replaces Parts A+B) and Part D (prescription drugs). You must understand both layers to choose correctly.
- Inpatient hospital stays (after deductible)
- Skilled nursing facility care (days 1–100, with conditions)
- Home health care (medically necessary, intermittent)
- Hospice care (comfort care for terminal illness)
- Inpatient mental health care
- Inpatient rehab facility stays
- Doctor visits and specialist consultations
- Outpatient surgery and procedures
- Diagnostic tests (lab work, imaging, X-rays)
- Preventive screenings (mammograms, colonoscopies, etc.)
- Durable medical equipment (wheelchairs, walkers)
- Mental health services (outpatient)
- Physical, occupational, and speech therapy
- Some home health care and ambulance services
- Everything in Parts A and B (required by law)
- Usually includes Part D drug coverage
- Often includes dental, vision, and hearing benefits
- Annual out-of-pocket maximum (~$8,850 in-network 2026)
- May include extras: gym memberships, transportation
- HMO, PPO, PFFS, and SNP plan types available
- Prescription medications on the plan's formulary (drug list)
- Covered drugs at retail pharmacies and mail-order
- Out-of-pocket cap: $2,000/year starting 2025 (IRA)
- Medicare Prescription Payment Plan (monthly installments)
- Coverage in 4 stages: deductible → initial → catastrophic
🚫 The Three Big Medicare Gaps: Original Medicare (Parts A+B) does not cover dental care, vision and eyeglasses, or hearing aids — three of the most common and expensive health needs for people 65+. It also does not cover long-term custodial care or most care received outside the US. Medicare Advantage plans often (but not always) fill some of these gaps.
Medicare Costs in 2026 — Premiums, Deductibles & Out-of-Pocket
Medicare has three types of cost-sharing: premiums (what you pay monthly regardless of use), deductibles (what you pay before coverage kicks in), and coinsurance/copays (your share of each service). Here are the official 2026 figures from CMS.
⚠️ IRMAA Cliff Warning: IRMAA (Income-Related Monthly Adjustment Amount) is calculated using your tax return from 2 years prior. So your 2026 Medicare premiums are based on your 2024 income. A Roth conversion, home sale, or one-time income event can spike you into a higher bracket for a full year. You can appeal using Form SSA-44 if your income has since dropped due to a life-changing event.
2026 Monthly Medicare Cost by Income Level (Part B Premium + IRMAA Surcharge)
Source: CMS.gov 2026 Medicare Costs · Single filer income thresholds shown · Married filing jointly thresholds are approximately double. Plootus Research 2026.
* IRMAA thresholds shown are for single filers. MFJ thresholds: $212K / $266K / $334K / $400K / $750K. IRMAA is recalculated annually. Source: CMS.gov (2026).
Medicare Enrollment Periods — Every Deadline You Need to Know
Missing your enrollment window is one of the most expensive Medicare mistakes you can make — penalties are permanent and follow you for life. Here are all the enrollment periods and when each applies to you.
Late Enrollment Penalties — How Bad Are They?
| Part | Penalty Amount | Duration | Example Calculation | How to Avoid |
|---|---|---|---|---|
| Part A | 10% premium surcharge | Twice the number of years you delayed | Delayed 2 years → pay penalty for 4 years | Most people qualify for premium-free Part A — enroll at 65 regardless |
| Part B | +10% per 12-month period delayed | Permanent — for life | Delayed 3 years: $185 × 1.30 = $240.50/mo forever | Enroll at 65 or use SEP if covered by employer group plan |
| Part D | 1% of national base premium × months without coverage | Permanent — for life | 24 months uncovered: 24% × $46 ≈ $11/mo penalty added | Enroll when first eligible or maintain creditable drug coverage (employer plan) |
| Part C (Medicare Advantage) | No separate penalty | N/A | Part B penalty still applies if Part B was delayed | Enroll during IEP, SEP, or AEP |
Factor Medicare Into Your Retirement Healthcare Budget
Plootus models your projected Medicare costs — including IRMAA surcharges based on your income — alongside your full retirement plan.
Original Medicare vs. Medicare Advantage — How to Choose
After deciding when to enroll, the most consequential Medicare choice you'll make is whether to stay in Original Medicare (Parts A+B, usually with a Medigap supplement and Part D) or switch to Medicare Advantage (Part C). They're fundamentally different systems.
| Factor | Original Medicare + Medigap + Part D | Medicare Advantage (Part C) |
|---|---|---|
| Provider choice | Any Medicare-accepting provider in the US | In-network only (HMO) or higher cost out-of-network (PPO) |
| Out-of-pocket maximum | None in Original Medicare; Medigap fills the gap | Required cap — $9,350 in-network (2026) |
| Monthly cost | $185 (Part B) + ~$150 Medigap + ~$46 Part D = ~$380/mo | $185 (Part B) + ~$17 MA = ~$202/mo (avg.) |
| Dental / vision / hearing | Not covered — must buy separate | Often included |
| Drug coverage | Separate Part D plan required | Usually bundled (MAPD plans) |
| Predictability | Very high — Medigap covers most gaps | Variable — copays add up; prior authorization required |
| Travel / out-of-area care | Any US Medicare provider — great for travel | In-network restrictions; often poor out-of-area coverage |
| Medigap availability later | Always eligible to switch back to Original Medicare | May face medical underwriting if switching to Medigap later |
| Best for | People with ongoing health needs, heavy travel, or specialist care | Healthy people in stable markets, cost-conscious retirees, those wanting extra benefits |
⚠️ The Medigap Lock-In Risk: When you first turn 65 and enroll in Part B, you have guaranteed issue rights for Medigap — insurers must sell you any plan at standard rates regardless of health. If you join Medicare Advantage first and later want to switch to Original Medicare + Medigap, most states allow insurers to deny your Medigap application or charge higher rates based on your health history. This is the primary reason some experts recommend starting with Original Medicare + Medigap, even if costs are higher initially.
Medigap (Medicare Supplement) Plans — Filling the Gaps
Original Medicare pays 80% of approved costs after your deductible — leaving you responsible for 20% with no annual cap. On a $500,000 hospital stay, that's $100,000 out of pocket. Medigap plans (sold by private insurers) cover some or all of that remaining 20%, giving you cost predictability.
| Medigap Plan | Part A Coinsurance | Part B Coinsurance (20%) | Part A Deductible | Part B Deductible | Foreign Travel Emergency | Best For |
|---|---|---|---|---|---|---|
| Plan G ⭐ Most Popular | 100% | 100% | 100% | Not covered | 80% (up to limits) | Most comprehensive for new enrollees; best value after Plan F discontinued |
| Plan N | 100% | Up to $20 copay/visit | 100% | Not covered | 80% | Lower premium than G; accepts small copays; healthy people with few doctor visits |
| Plan F (pre-2020 only) | 100% | 100% | 100% | 100% | 80% | Only available if you turned 65 before Jan 1, 2020 — most comprehensive ever offered |
| Plan K | 50% | 50% | 50% | Not covered | Not covered | Lower premium; OOP max ~$7,220 (2026); cost-sharing tradeoff |
| Plan L | 75% | 75% | 75% | Not covered | Not covered | Middle ground; OOP max ~$3,610 (2026) |
Medigap plans are standardized by letter — Plan G from any insurer covers the same benefits as Plan G from any other insurer. Only premiums differ. Premiums vary significantly by state, age, and insurer. Compare multiple carriers. Note: Medigap does not include Part D drug coverage — add a standalone Part D plan.
Medicare Planning — What to Do and When
- 📅
Start Planning at Age 64 — Not 65
Your Initial Enrollment Period begins 3 months before your 65th birthday. That means you need to start researching plans, comparing Medigap carriers, and evaluating Part D formularies at least 3–4 months before you turn 65. If you wait until your birthday to start, you may miss the optimal enrollment window or scramble to compare plans under time pressure.
- 💼
Coordinate With Employer Coverage Carefully
If you're still working at 65 with employer group health coverage, you can delay Medicare Parts A and B without penalty — but only if the employer plan is for an active employee. Retiree coverage, COBRA, or ACA marketplace plans do not count. When you do lose qualifying employer coverage, you have 8 months to enroll in Part B without penalty. Don't rely on COBRA as a bridge — it does not trigger a Special Enrollment Period.
- 📊
Watch Your Income 2 Years Before Medicare Starts
IRMAA surcharges are based on your Modified Adjusted Gross Income from 2 years prior. A large Roth conversion, business sale, or other income event at age 63 could spike your Medicare premiums at 65 by $74–$443/month per person. If you're doing Roth conversions, model the IRMAA impact carefully — it may be worth spreading conversions over multiple years or taking smaller conversions to stay below thresholds.
- 💊
Review Your Part D Plan Every October During AEP
Drug plan formularies, premiums, and pharmacy networks change every year. A drug that was Tier 2 (preferred generic) in your plan last year may be Tier 4 (non-preferred brand) next year, tripling your cost. Medicare's Plan Finder tool (medicare.gov/plan-compare) lets you enter your specific drugs and compare total annual costs across all available Part D plans in your area. This 20-minute annual review routinely saves beneficiaries $500–$2,000/year.
- 🏥
Budget for the Gaps Original Medicare Doesn't Cover
Dental, vision, and hearing aid costs are not covered by Original Medicare and are often inadequately covered by Medicare Advantage plans. A single dental implant can cost $3,000–$5,000; hearing aids can run $1,500–$7,000 per pair. Build a dedicated healthcare reserve fund or dental savings plan into your retirement budget — don't assume Medicare covers these just because you're 65.
- 🌎
Original Medicare Wins for Travelers — Medicare Advantage Doesn't Travel Well
If you plan to travel significantly in retirement — including spending winters in another state — Original Medicare with Medigap Plan G is almost always better than Medicare Advantage. Most MA plans are HMOs or PPOs tied to local provider networks. Out-of-network emergency coverage exists but routine care outside your plan's service area is often not covered or very expensive. Original Medicare is accepted by any Medicare-participating provider anywhere in the US.
Medicare FAQ
Sources
CMS.gov — 2026 Medicare Costs (Medicare.gov/costs) · Medicare & You 2026 Handbook (CMS) · Kaiser Family Foundation (KFF) Medicare Policy Data 2024 · Fidelity Retiree Health Care Cost Estimate 2024 · SSA.gov — Medicare Enrollment Periods · CMS IRMAA 2026 Income Thresholds · IRA Inflation Reduction Act Part D Out-of-Pocket Cap ($2,000) · CMS Medicare Advantage OOP Maximum 2026 · Medigap standardized plan benefits (CMS) · National base beneficiary premium 2026 (CMS.gov/medicare/Part-D)
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