Understanding the parts of Medicare

Medicare is divided into distinct parts, each covering a different category of care, and understanding what each one actually covers is the foundation for every other decision you'll make about your coverage.

Part A: hospital insurance

Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Most people don't pay a monthly premium for Part A, since it's typically premium-free if you or your spouse paid Medicare taxes for at least 10 years (40 quarters) of work. Part A does carry its own deductible for each benefit period, along with coinsurance for extended hospital or skilled nursing stays beyond a certain number of days.

Part B: medical insurance

Part B covers doctor visits, outpatient care, preventive services, durable medical equipment, and some home health care. Unlike Part A, nearly everyone pays a monthly premium for Part B, along with an annual deductible before Medicare starts sharing costs, typically through 20% coinsurance for most covered services.

Part C: Medicare Advantage

Part C, commonly called Medicare Advantage, is an alternative way to receive your Medicare benefits through a private insurance company approved by Medicare, rather than through Original Medicare directly. These plans must cover everything Original Medicare covers, and often include additional benefits like dental, vision, or hearing coverage, frequently bundled with Part D prescription drug coverage. Medicare Advantage plans often have lower premiums than a Medigap supplement would cost, but may use provider networks and referral requirements similar to an HMO or PPO.

Part D: prescription drug coverage

Part D covers prescription medications, either as a standalone plan paired with Original Medicare, or built into many Medicare Advantage plans. Part D plans each maintain their own specific formulary (list of covered drugs) and cost-sharing structure, so comparing your specific medications across available plans each year is worth the time, since formularies and costs can change annually.

Medigap: supplemental coverage

A Medigap (Medicare Supplement) plan is private insurance that works alongside Original Medicare to help cover some or all of your remaining out-of-pocket costs, your deductibles, copayments, and coinsurance. Medigap plans don't work alongside Medicare Advantage; you generally choose either a Medigap supplement with Original Medicare, or a Medicare Advantage plan, not both.

Understanding your enrollment periods

When you actually enroll in Medicare, and whether you do it on time, is one of the most consequential decisions in the entire process, since missing certain windows can mean a permanent penalty.

• Initial Enrollment Period (IEP): your IEP is a seven-month window centered on your 65th birthday, three months before, your birthday month, and three months after. If you're already receiving Social Security benefits when you turn 65, you may be automatically enrolled in Parts A and B.
• Special Enrollment Period (SEP): if you're still working past 65 and have creditable coverage through an employer group health plan, you may be able to delay Medicare enrollment without a penalty, and enroll later during a Special Enrollment Period once that employer coverage ends.
• General Enrollment Period: if you miss your Initial Enrollment Period and don't qualify for a Special Enrollment Period, you can enroll during the General Enrollment Period, which runs January 1 through March 31 each year, though this may mean paying a late enrollment penalty depending on how long you delayed.
• Medicare Open Enrollment (Oct 15 - Dec 7): this annual period lets anyone already enrolled in Medicare switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, or switch Part D plans, for coverage beginning the following January.

Late enrollment penalties: what they actually cost

Delaying enrollment in Medicare without qualifying creditable coverage elsewhere can trigger permanent penalties that stick with you for as long as you have the coverage.

Because these penalties compound and persist, it's worth confirming your specific enrollment timeline and whether any coverage you currently have counts as "creditable" well before you turn 65, rather than assuming you can sort it out later without consequence.

Understanding IRMAA: the income-related surcharge

IRMAA, the Income-Related Monthly Adjustment Amount, is an additional premium surcharge that higher-income Medicare beneficiaries pay on top of their standard Part B and Part D premiums. Whether you owe an IRMAA surcharge, and how much, is based on your modified adjusted gross income (MAGI) from two years prior, meaning your 2026 premiums are based on your 2024 tax return.

For 2026, the IRMAA surcharge begins to apply once an individual's MAGI exceeds $109,000, or $218,000 for a married couple filing jointly. Beneficiaries subject to IRMAA can see their total Part B premium range significantly higher than the standard rate, depending on which income tier they fall into.

It's worth knowing that IRMAA isn't necessarily permanent if your income was temporarily elevated, for example due to a one-time capital gain, a Roth conversion, or selling a business. You can request a reconsideration of your IRMAA determination with the Social Security Administration if you've had a qualifying life-changing event, such as retirement, divorce, or the death of a spouse, that reduced your income since the tax year being used to calculate the surcharge.

What Medicare doesn't cover

Understanding what Medicare doesn't cover is just as important as understanding what it does. Original Medicare generally does not cover routine dental care, routine vision exams or eyewear, routine hearing exams or hearing aids, and long-term custodial care (as opposed to short-term skilled nursing care). Many Medicare Advantage plans include some coverage for these categories as an added benefit, which is one of the reasons people consider Medicare Advantage over Original Medicare in the first place, alongside potentially lower overall premiums.

A quick checklist before you enroll or make changes

• Confirm your specific Initial Enrollment Period dates based on your 65th birthday, and mark your calendar well in advance.
• If you're still working, confirm directly with your employer's benefits office whether your current coverage counts as "creditable" for Medicare purposes, to avoid a late enrollment penalty.
• Compare your specific prescriptions against each Part D or Medicare Advantage plan's formulary before enrolling, rather than assuming all plans cover your medications the same way.
• If your income was temporarily elevated in a prior tax year, consider whether you may be able to request an IRMAA reconsideration based on a life-changing event.
• Decide between Medigap and Medicare Advantage based on your specific priorities, provider flexibility versus potentially lower premiums and added benefits, since you generally can't have both.
• Mark the annual Open Enrollment window (October 15 - December 7) on your calendar every year, even if you're satisfied with your current plan, since costs and coverage can change annually.

For the authoritative, non-commercial sources on this topic, Medicare.gov publishes official information on enrollment periods, costs, and plan comparisons directly, and the Centers for Medicare & Medicaid Services (CMS) publishes the official annual premium, deductible, and IRMAA figures.

Frequently asked questions about Medicare

Have a question that isn't answered below? Our full health insurance FAQ page covers more, and our blog has deeper guides on specific coverage topics.