Medicare 101: a plain-English guide to how Medicare works

What is Medicare?

Medicare is the federal health insurance program for people 65 and older. It also covers some people under 65 with qualifying disabilities, end-stage renal disease (ESRD), or ALS. It’s not free (most people pay some combination of premiums, deductibles, and copays), but it’s heavily subsidized and serves as the foundation of healthcare coverage for most retirees.

A few things Medicare isn’t: it’s not Medicaid (the joint federal-state program for people with limited income), it’s not employer insurance (though the two sometimes work alongside each other), and it’s not a single plan but a program made of several parts you can mix and match.

Who qualifies for Medicare?

You’re generally eligible if any of these apply:

• You’re 65 or older. Premium-free Part A typically requires 10 or more years of Medicare-taxed work (yours or your spouse’s). Without it, you can still enroll but pay a Part A premium.
• You’re under 65 and have received Social Security disability benefits for 24 months.
• You have ALS, in which case coverage starts as soon as disability benefits do.
• You have end-stage renal disease (permanent kidney failure), regardless of age.

You don’t have to be retired to enroll. You can be working, have employer insurance, and still sign up, though the coordination rules get nuanced, which is where a licensed advisor helps.

The four parts of Medicare

Part A: Hospital Insurance covers inpatient hospital stays, skilled nursing care after a qualifying hospital stay, hospice, and some home health services. For most people Part A is premium-free, because payroll taxes paid for it during your working years. There are still costs when you use it (an inpatient deductible, plus daily coinsurance for longer admissions), but the monthly cost is usually zero.

Part B: Medical Insurance covers doctor visits, preventive care, lab work, outpatient procedures, durable medical equipment (wheelchairs, walkers, oxygen), mental health care, and certain clinic-administered drugs. Part B has a monthly premium for everyone. After you meet an annual deductible, you typically pay 20% of the Medicare-approved amount, with Medicare covering the other 80%.

Part C: Medicare Advantage is an alternative way to get Parts A and B rather than separate coverage. Instead of receiving them directly from the government, you get them through a private insurer that contracts with Medicare. Most Medicare Advantage plans bundle in Part D (drug coverage) and add extras like dental, vision, and hearing. The trade-off: these plans typically use defined provider networks, and specifics vary by plan and region.

Part D: Prescription Drug Coverage covers medications you pick up at the pharmacy. It’s sold by private insurers, either as a standalone plan (paired with Original Medicare) or built into a Medicare Advantage plan. Each plan has its own formulary (the list of drugs it covers and what tier each falls into), so the same medication can cost very different amounts depending on the plan. As of 2025, Part D has a hard annual cap on what you pay out of pocket for covered drugs (in 2026 the cap is $2,100, and once you hit it your plan covers 100% of covered medications for the rest of the year). There’s also an optional Medicare Prescription Payment Plan that lets you spread drug costs into monthly installments instead of paying at the pharmacy counter.

Original Medicare vs. Medicare Advantage: the two main paths

Once the parts make sense, the big decision is which of two paths to take.

Path 1: Original Medicare (+ optional Medigap + optional Part D). Parts A and B straight from the federal government, with the freedom to see any doctor or hospital that accepts Medicare (most do). No networks, no referrals. The catch: Original Medicare has no annual out-of-pocket maximum, so the 20% coinsurance can add up if something serious happens. Most people on this path add a Medigap (Medicare Supplement) policy from a private insurer to fill those gaps, plus a standalone Part D plan for prescriptions. So the full picture is usually: Part A + Part B + Medigap + Part D.

Path 2: Medicare Advantage (Part C). A single plan from a private insurer that bundles Parts A, B, and usually D, often with extras like dental and vision. Premiums are typically lower (sometimes $0 on top of your Part B premium), and there’s a built-in annual out-of-pocket cap. The trade-off: you work within a network, sometimes with referrals required. If you travel often or split time between states, network limits matter.

Which is better? Neither, in the abstract. Original Medicare with a Medigap is often a good fit if you value provider flexibility, plan to travel, or want predictable costs: higher monthly premium, very stable when you use care. Medicare Advantage is often a good fit if you want lower premiums and like the idea of bundled benefits and don’t mind a network: lower monthly cost, more variable when you use care. It’s also a decision you can revisit.

Medigap, explained

Medigap is private insurance that pays for some or all of the gaps in Original Medicare: deductibles, coinsurance, and copays you’d otherwise owe. It’s only for people on Original Medicare, and you can’t pair it with Medicare Advantage.

Medigap policies are federally standardized and labeled with letters (Plan G and Plan N are the most popular for new enrollees). A Plan G from one company has identical benefits to a Plan G from another. What varies is price, the insurer’s reputation, and how the premium changes over time.

The best time to buy is during your Medigap Open Enrollment Period: a six-month window that starts when you are 65 or older and enrolled in Part B. During this window, insurers must sell you any policy they offer at the best rate, regardless of your health. Outside that window, most states let insurers ask health questions and charge more, or decline coverage. That timing protects you for decades, so it matters.

What does Medicare cost in 2026?

Part A: $0/month for most people. Inpatient hospital deductible $1,736 per benefit period. Hospital coinsurance is $434/day for days 61-90 and $868/day for lifetime reserve days. Skilled nursing facility coinsurance is $217/day for days 21-100.

Part B: Standard monthly premium $202.90 (higher for higher-income beneficiaries). Annual deductible $283. Coinsurance after the deductible is generally 20%.

Part D: Maximum annual deductible $615 (many plans set it lower or at zero). Annual out-of-pocket cap on covered drugs $2,100, after which the plan pays 100% for the rest of the year. Insulin capped at $35/month. Recommended adult vaccines covered with no cost sharing.

Medicare Advantage and Medigap vary widely. Medicare Advantage premiums can be as low as $0 on top of Part B. Medigap premiums often range from roughly $100 to $300+/month depending on the plan letter, insurer, and where you live.

A note on income: if your modified adjusted gross income is above $109,000 (individual) or $218,000 (couple filing jointly) in 2026, you’ll pay extra on top of standard Part B and Part D premiums. This surcharge is called IRMAA (Income-Related Monthly Adjustment Amount). It’s based on your tax return from two years prior, so 2026 premiums look at your 2024 income. If your income has since dropped because of a life-changing event like retirement, you can file Form SSA-44 with Social Security to request a reduction.

When can you enroll?

Several enrollment windows matter. Missing them can mean penalties or delayed coverage.

Initial Enrollment Period (IEP): your seven-month window around your 65th birthday: three months before, the month of, and three months after. If you’re already on Social Security at 65, you’ll be auto-enrolled in Parts A and B. Otherwise you sign up through the Social Security Administration. Signing up in the three months before your birthday means coverage starts the month you turn 65.

Annual Enrollment Period (AEP / Fall Open Enrollment): October 15 to December 7 each year. Anyone with Medicare can switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, or join/drop/change a Part D plan. Changes take effect January 1.

Medicare Advantage Open Enrollment Period: January 1 to March 31. If you’re in a Medicare Advantage plan, you can switch to a different MA plan or drop it and return to Original Medicare.

General Enrollment Period: January 1 to March 31, for people who missed their IEP and don’t qualify for a Special Enrollment Period. Coverage starts the month after enrollment. Late penalties may apply.

Special Enrollment Periods (SEPs): triggered by certain life events: losing employer coverage, moving, qualifying for Extra Help, or your plan ending its Medicare contract.

About late enrollment penalties: if you go without Part B or creditable drug coverage when you were eligible (and didn’t have qualifying coverage elsewhere like a current employer), you can be charged a permanent penalty added to your monthly premium for as long as you have Medicare. The penalties aren’t usually catastrophic, but they’re permanent, which is why understanding your timeline early matters.

How to think about choosing

A useful sequence of questions:

1. What does your healthcare look like today, and what might it look like in five years? Generally healthy? Managing chronic conditions? On multiple prescriptions? These shape what matters most.
2. Which doctors and hospitals do you want to keep? Check whether they accept Medicare and whether they’re in-network for any Medicare Advantage plans you’re considering.
3. What prescriptions do you take? Check the formulary, tier, and actual cost on each plan. The same medication can vary dramatically by plan.
4. Do you travel or split time between locations? Original Medicare works the same anywhere in the country. Medicare Advantage networks are typically regional.
5. How do you feel about predictability vs. lower premiums? Medigap means higher premium, stable costs when you use care. Medicare Advantage means lower premium, more variable costs.

What matters most varies from person to person. A licensed Medicare advisor can walk through these questions with you and surface trade-offs you might not have considered on your own.

Common questions

Do I have to enroll at 65 if I’m still working? Not necessarily, but the details matter. If you (or your spouse) have active group health coverage through an employer with 20 or more employees, you can usually delay Part B without penalty. If the employer has fewer than 20 employees, Medicare typically becomes the primary payer at 65, and delaying Part B can leave you with major coverage gaps. One important caveat: COBRA, retiree health plans, and VA benefits do not count as active employer coverage for this purpose, so they don’t protect you from late-enrollment penalties. Confirm your specific situation before deciding.

What’s the difference between Medicare and Medicaid? Medicare is federal, primarily for people 65+ and certain people with disabilities. Medicaid is a joint federal-and-state program for people with limited income, run differently in each state. Some people qualify for both, which is called being “dual eligible.”

Do I have to re-enroll every year? No. Once you’re enrolled in Original Medicare, you stay enrolled unless you actively cancel. Medicare Advantage, Part D, and Medigap plans auto-renew each year too, so you don’t have to do anything to keep your coverage. What you can do each year, during the Annual Enrollment Period, is review your plan and switch if your needs have changed. Your insurer is required to send you an Annual Notice of Change each fall outlining what’s different about your plan for the coming year, which is a good prompt to take a fresh look.

Does Medicare cover dental, vision, or hearing? Original Medicare generally doesn’t cover routine dental, vision, or hearing care. Many Medicare Advantage plans do. You can also buy standalone dental and vision policies separately.

Does Medicare cover long-term care? Medicare covers limited skilled nursing care after a qualifying hospital stay, but not long-term custodial care (help with bathing, dressing, etc.). Long-term care insurance, Medicaid, or out-of-pocket payment are the usual routes.

What if I change my mind after enrolling? You have options. The Annual Enrollment Period (Oct 15 to Dec 7) lets you change Medicare Advantage and Part D plans or switch between Original Medicare and Medicare Advantage. The Medicare Advantage Open Enrollment Period (Jan 1 to Mar 31) gives you another chance to leave an MA plan each year. Switching Medigap plans is possible any time, though outside your initial window insurers in most states can underwrite based on health.

State-specific rules and resources

Medicare itself is federal, but a few important pieces depend on where you live. Medigap (Medicare Supplement) rules vary by state, and Medicaid, Medicare Savings Programs, and consumer protections are administered at the state level. Find your state in the sections that follow for the details that apply to you, plus links to official resources for going deeper.

Washington

Washington has some of the most consumer-friendly Medigap rules in the country. If you’ve been enrolled in a Medigap policy for at least 90 days, you can switch to a different Medigap policy at any time, with any participating insurer, without medical underwriting. For Plans B through N, you can switch to any other Plan B through N. For Plan A, you can switch to another Plan A on the same guaranteed-issue basis, but not to the richer-benefit plans. There’s no annual window to time, no health questionnaire, no waiting period. Washington also requires Medigap premiums to be community-rated, so your rate won’t rise just because you get older.

Free, unbiased Medicare counseling is available through Statewide Health Insurance Benefits Advisors (SHIBA), administered by the state Office of the Insurance Commissioner. Washington’s Medicaid program is Apple Health, administered by the Health Care Authority, which also handles Medicare Savings Program applications with income limits that are more generous than the federal floor. For insurance complaints or to verify an agent’s license, contact the Washington State Office of the Insurance Commissioner.

To compare plans available in your area, use Medicare’s Plan Finder or the OIC’s annual approved Medigap plans list.

Oregon

Oregon has a “birthday rule” for Medigap. Each year, starting 30 days before your birthday and ending 30 days after, you have a window to switch to a Medigap policy of equal or lesser benefits from any insurer, with no medical underwriting. The rule lets you re-shop without health questions, but it’s one-direction only: you can move to a similar or leaner plan, not upgrade to richer benefits. Oregon also requires Medigap insurers to offer plans to people under 65 who qualify for Medicare through disability, with a second open enrollment when the enrollee turns 65.

Free Medicare counseling is available through Senior Health Insurance Benefits Assistance (SHIBA), part of the Oregon Department of Human Services. Oregon’s Medicaid program is the Oregon Health Plan (OHP), which also administers Medicare Savings Programs. For insurance complaints or license verification, contact the Oregon Division of Financial Regulation.

SHIBA publishes a free annual “Oregon Guide to Medicare Insurance Plans” each fall, and Medicare’s Plan Finder shows what’s available in your area.

Georgia

Georgia follows federal default rules for the initial Medigap open enrollment (a one-time 6-month window when you first enroll in Part B at 65), with no annual birthday rule. One quiet advantage: Georgia prohibits Medigap insurers from using attained-age rating on policies issued since 2009, which means your premium won’t increase simply because you get older (though general rate increases for the whole policy class are still allowed). Georgia also requires Medigap insurers to offer plans to people under 65 with Medicare, though premiums for under-65 enrollees can be substantially higher. A second 6-month open enrollment opens at age 65, allowing a rate reset.

Free Medicare counseling is available through GeorgiaCares, the state’s SHIP, administered by the Department of Human Services Division of Aging Services. Georgia’s Medicaid program is Georgia Medicaid, which handles Medicare Savings Program applications. For insurance complaints or license verification, contact the Georgia Office of the Commissioner of Insurance and Safety Fire.

Medicare’s Plan Finder shows what’s available in your area. Because Georgia doesn’t have an annual switching window for healthy enrollees, the initial 6-month window is when most of your long-term flexibility gets locked in, so choose carefully or work with an advisor.

Tennessee

Tennessee follows federal default rules for the initial Medigap open enrollment (a one-time 6-month window when you first enroll in Part B at 65), with no annual birthday rule. Many Tennessee Medigap policies use attained-age rating, so premiums rise as you age, on top of any general rate increases. That makes annual re-shopping worth considering even though there’s no special state window: if your health still passes underwriting, you may save substantially by switching. Tennessee also requires Medigap insurers to offer plans to people under 65 with Medicare, though under-65 premiums are typically much higher. A second 6-month open enrollment opens at age 65.

Free Medicare counseling is available through Tennessee SHIP (TN SHIP), administered by the Department of Disability and Aging. Tennessee’s Medicaid program is TennCare, which handles Medicare Savings Program applications through TennCare Connect. For insurance complaints or license verification, contact the Tennessee Department of Commerce and Insurance.

Medicare’s Plan Finder shows what’s available in your area. Because Tennessee uses attained-age pricing without an annual switching window, working with an advisor who can help you re-shop on your own schedule is especially valuable.

All other states

If your state isn’t one of those covered earlier, the following resources can connect you to authoritative, state-specific information for your situation.

For free, unbiased Medicare counseling in any state, the federal SHIP locator will direct you to your state’s program. SHIPs are federally funded but locally administered, and program names vary (HICAP in California, SHIBA in Washington and Oregon, GeorgiaCares in Georgia, and so on). To find your state’s Medicaid program (which handles Medicare Savings Programs), use the Medicaid.gov state lookup. For your state’s insurance regulator (Medigap rules, complaints, agent license verification), use the NAIC state insurance department directory.

For federal-level Medicare information that applies in every state, Medicare.gov is the official source for plan comparison, Medigap shopping, enrollment timelines, and the annual “Medicare & You” handbook. The federal Medicare Savings Programs page describes the four MSP categories (QMB, SLMB, QI, and QDWI) and the federal income floors. Most states are more generous than the floor, so it’s worth applying even if you think you don’t qualify.

Medigap rules vary significantly across states. A growing number of states have some form of Medigap “birthday rule” or annual guaranteed-issue switching window, with specifics that differ from state to state, and the count keeps growing. Your state SHIP is the best place to find out what applies to you.

Next steps

If you’re approaching 65, start early. A brief conversation six months before your birthday can clarify your timeline and surface options. If you’re already enrolled and your situation has changed (new prescriptions, providers, location, or diagnosis), your current plan may not be the best fit anymore. The Annual Enrollment Period is the natural moment to revisit.

A licensed Medicare advisor can walk through your specific situation, compare the plans actually available where you live, and help you weigh trade-offs.

Disclaimer

This page provides general educational information about Medicare. It is not individualized advice or a recommendation to enroll in any specific plan. Plan availability and eligibility vary by location and personal circumstances. Costs and figures cited reflect 2026 amounts set by the Centers for Medicare & Medicaid Services.