How it actually works — in plain English. Updated for 2026.
Medicare is split into four parts. Each one covers something different. Most people end up with Parts A and B (called "Original Medicare"), plus either a Medigap supplement OR a Medicare Advantage plan, plus a Part D drug plan. We'll get to that choice in a minute.
| Part | What it covers | Who pays for it |
|---|---|---|
| Part A | Hospital stays, skilled nursing, hospice, some home health | Free for most people if you or your spouse paid Medicare taxes for 10+ years |
| Part B | Doctor visits, outpatient care, preventive care, durable medical equipment | $185/month standard premium in 2026 (higher for high earners — IRMAA) |
| Part C | Medicare Advantage — a private-plan alternative that bundles A + B + usually D | Premium varies by plan ($0 plans exist, but they have other costs) |
| Part D | Prescription drug coverage | Premium varies by plan, plus a possible income-based surcharge |
Original Medicare = Parts A + B. They cover most of what you need but leave gaps. People close those gaps in one of two ways: by adding a Medigap supplement (Plan G, Plan N, etc.) plus a separate Part D plan, OR by switching to a Medicare Advantage plan that wraps everything together.
Miss an enrollment window and you can pay a penalty for the rest of your life. This is the part Medicare really doesn't make easy to find out.
Starts 3 months before your birthday month, includes your birthday month, and ends 3 months after. Sign up during this window to avoid late penalties.
For coverage starting Jan 1. This is when most people switch Medicare Advantage plans, switch Part D plans, or move from Original to Advantage (or vice versa).
If you're already in a Medicare Advantage plan, you get one chance during this window to switch to a different MA plan or back to Original Medicare.
Triggered by life events: moving, losing employer coverage, becoming dual-eligible (Medicare + Medicaid), your plan getting non-renewed, etc.
If your Medicare Advantage plan was non-renewed for 2026 (over 1 million people had this happen), you have a Special Enrollment Period through February 28, 2026 to find a new plan. After that, you may be stuck with Original Medicare and a guaranteed-issue Medigap option only.
Here are the headline numbers. Real costs depend on your specific plan, your income, and your medications.
| Item | 2026 amount |
|---|---|
| Part A premium (most people) | $0 |
| Part A hospital deductible (per benefit period) | $1,716 |
| Part B standard premium | $185.00/mo |
| Part B annual deductible | $257 |
| Part D max deductible | $615 |
| Part D out-of-pocket cap (NEW) | $2,100/yr |
IRMAA (Income-Related Monthly Adjustment Amount): if your income is above certain thresholds, you pay extra on Part B and Part D premiums. We'll go through your specific bracket on a call.
Almost every Medicare-eligible person faces this decision. There's no universally "right" answer — but there are predictable trade-offs.
| Medicare Advantage (Part C) | Original + Medigap + Part D | |
|---|---|---|
| Monthly cost | Often lower (some $0 premium plans) | Higher (Medigap + Part D premiums) |
| Out-of-pocket max | Required (varies; can be high) | Medigap covers most cost-sharing |
| Network restrictions | Yes (HMO/PPO networks) | No — any provider that accepts Medicare |
| Travel coverage | Limited (network-based) | Nationwide |
| Extra benefits | Often dental, vision, OTC card, gym (variable) | None — buy separately |
| Prior authorization | Common | Rare |
| Annual changes | Plan benefits + networks change every year | Medigap is more stable |
If you travel a lot, want maximum predictability, and don't mind paying more in premium for less hassle later → Original Medicare + Medigap + Part D usually wins. If you want to minimize monthly cost, get extra benefits, and you're okay with networks + prior auth → Medicare Advantage usually wins. The "best" choice depends on your specific doctors, medications, ZIP code, and health.
2026 simplified Part D significantly. The old 4-stage system (deductible → initial → donut hole → catastrophic) became 3 stages. The donut hole is gone for good.
| Stage | What you pay |
|---|---|
| 1. Deductible | Up to $615 (varies by plan) |
| 2. Initial coverage | 25% coinsurance until you hit the $2,100 OOP cap |
| 3. Catastrophic | $0 for the rest of the year |
New for 2025-2026: instead of paying that $2,100 in big lumps when you fill prescriptions, you can spread it across the year in monthly installments — at no interest. Useful if you have big drug costs early in the year. Two missed payments = you're out of the program. Ask us if it's right for you.
Starting January 2026, Medicare negotiates prices on the first 10 high-cost drugs: Eliquis, Jardiance, Xarelto, Januvia, and others. Prices on these drugs dropped 38–79% off the list price. If you take any of these, that's real money in your pocket.
Reality: Part A is free for most. Part B has a premium of $185/mo in 2026. Most people also pay for either Medigap + Part D, or a Medicare Advantage plan with cost-sharing. Medicare costs the average beneficiary $5,000–$8,000 per year all-in.
Reality: there can be 30+ different MA plans available in a single ZIP code, with very different networks, drug formularies, copays, and benefits. The "right" plan depends on your specific doctors, medications, and how often you use care.
Reality: Your friend's plan was right for their doctors, their medications, and their county. Probably not right for yours. Same plan, different ZIP code = different network, sometimes different benefits.
Reality: yes, but you'll likely pay a late penalty for the rest of your life. The penalty math gets ugly fast.
Reality: Medicare covers up to 100 days of skilled nursing after a hospital stay — and only if you're improving. It does not cover custodial long-term care (assisted living, nursing home for chronic conditions). That's a different problem you plan for separately.
Either book a free 15-minute call with Megan, or save your seat for the free Tuesday class — both cover this material with your specific situation in mind.
For information on every plan in your area (not just the ones we offer), visit medicare.gov or call 1-800-MEDICARE (TTY 1-877-486-2048).