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Medicare 101 — how Medicare actually works

A plain-English guide to Parts A, B, C, and D. The enrollment windows you can't miss. The penalties that last a lifetime. The choices that matter most.

The four parts of Medicare

Medicare is the federal health insurance program for people 65 and older (and some younger people with disabilities or specific conditions). It's split into four "parts" — each one covers something different.

Part A — Hospital insurance

Covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people pay no premium for Part A because they (or a spouse) paid into Medicare through payroll taxes for at least 10 years.

What's not covered: long-term custodial care, most dental, vision, hearing.

Part B — Medical insurance

Covers doctor visits, outpatient care, preventive services, durable medical equipment, and limited prescription drugs (those administered in a doctor's office). Most people pay a monthly premium for Part B (currently around $175/month for 2026, more if your income is higher — see IRMAA below).

Heads up: Part B has a 20% coinsurance with no out-of-pocket max. A serious illness without supplemental coverage = unlimited liability.

Part C — Medicare Advantage

An alternative to Original Medicare (Parts A + B), offered by private insurance companies approved by Medicare. Bundles hospital, medical, and usually drug coverage into one plan, often with extra benefits like dental and vision. You're still in Medicare — you just get your benefits through the private plan instead of directly from the government.

→ Full guide to Medicare Advantage

Part D — Prescription drug coverage

Standalone prescription drug coverage from a private insurer. Pairs with Original Medicare or with a Medicare Supplement plan. Medicare Advantage plans often include Part D coverage built in.

→ Full guide to Medicare Part D

The two basic choices most people face

Once you understand the parts, the real decision is between two paths:

Path A: Original Medicare + Supplement + Part D

You stay on Original Medicare (Parts A + B), add a Medicare Supplement (Medigap) plan to cover the gaps, and add a standalone Part D plan for prescriptions.

Best for: people who want maximum doctor freedom, predictable costs, and travel a lot. Higher monthly premium, lower surprise costs.

Path B: Medicare Advantage

You enroll in a single Medicare Advantage plan that bundles A, B, and usually D into one plan from a private insurer.

Best for: people who want lower (or $0) monthly premiums, are okay with networks, and like extra perks (dental/vision/hearing/gym).

Neither is universally better. Which one fits depends on your doctors, your prescriptions, your budget, your travel, and your tolerance for upfront cost vs. predictable copays. Book a free call and we'll work through it together.

Enrollment windows you can't miss

Medicare has specific windows when you can enroll, change plans, or sign up without penalty. Miss them, and you may face lifelong late-enrollment penalties.

Initial Enrollment Period (IEP) — 7-month window: 3 months before the month you turn 65, your birthday month, and 3 months after. This is your first chance to enroll.
Annual Enrollment Period (AEP) — October 15 to December 7 every year. You can switch Medicare Advantage plans, switch from Advantage back to Original Medicare, or change Part D plans. Changes take effect January 1.
Medicare Advantage Open Enrollment Period — January 1 to March 31. If you're already in Medicare Advantage, you get one more chance to switch plans or go back to Original Medicare.
Special Enrollment Period (SEP) — triggered by life events: losing employer coverage, moving out of plan area, qualifying for Extra Help, etc.

The penalties to avoid

Three big ones — all can be permanent:

Part B late enrollment penalty: 10% of your Part B premium for every full 12-month period you could have had Part B but didn't sign up. This penalty lasts as long as you have Part B (often the rest of your life).
Part D late enrollment penalty: 1% of the national base beneficiary premium for every month you went without creditable drug coverage after your IEP. Also typically permanent.
Medicare Supplement Open Enrollment: if you skip your one-time 6-month Medigap Open Enrollment window (starts the month you turn 65 AND have Part B), insurers can use medical underwriting to deny you or charge you more. There are some state exceptions, but the safest move is enrolling during the window.

Costs in real dollars (2026)

Approximate, will vary by state and plan:

Part A premium: $0 for most people (if you have 40+ work credits)
Part A inpatient deductible: ~$1,676 per benefit period
Part B premium: ~$175/month standard (more for higher incomes — see IRMAA)
Part B annual deductible: ~$240, then 20% coinsurance with no cap
Medicare Advantage premiums: often $0 (because they include rebates from Part B), can range to $200+/month
Medicare Supplement Plan G premiums: $130-$300+/month depending on age, gender, state, and carrier
Part D premiums: $0-$80/month depending on plan and your medications

IRMAA (Income-Related Monthly Adjustment Amount) increases your Part B and Part D premiums if your modified adjusted gross income is above ~$103K (single) or ~$206K (married joint). It's based on your tax return from two years prior.

What happens next

If you're within a year of turning 65 — or already on Medicare and reviewing — there are two ways to dig in:

Watch the free Medicare 101 webinar → Book a free 30-min call →