Medicare is a federal health insurance program with several coverage components, each serving a different purpose. Understanding how Medicare Part A, Part B, Part C, and Part D work can help people approaching Medicare eligibility evaluate premiums, deductibles, provider access, prescription coverage, and potential out-of-pocket expenses.
The right combination of coverage depends on factors such as healthcare needs, preferred doctors and hospitals, prescription medications, budget, and whether additional insurance is needed to help cover Medicare cost-sharing.
Because Medicare rules and costs can change from year to year, reviewing current plan information is important when making enrollment decisions.
The Four Parts of Medicare
Medicare is divided into four main parts. Parts A and B make up Original Medicare, while Part C refers to Medicare Advantage plans offered by private insurers. Part D provides prescription drug coverage.
Medicare Part A: Hospital Insurance
Medicare Part A helps cover eligible inpatient hospital care, skilled nursing facility care, hospice care, and certain home health services.
Most people receive premium-free Part A because they or a spouse paid Medicare taxes for a sufficient period, generally at least 10 years. People who do not qualify for premium-free Part A may be able to purchase it.
In 2026, the standard Part A deductible is $1,736 per benefit period. Hospital and skilled nursing facility costs can also involve coinsurance for longer stays.
Medicare Part B: Medical Insurance
Medicare Part B covers medically necessary physician services, outpatient care, durable medical equipment, certain preventive services, and other eligible medical expenses.
The standard Part B premium is $202.90 per month in 2026, although people with higher incomes can pay more through an income-related adjustment. The 2026 Part B deductible is $283.
After meeting the deductible, people with Original Medicare generally pay 20% of the Medicare-approved amount for covered Part B services when applicable.
Medicare Part C: Medicare Advantage
Medicare Advantage (Part C) plans are offered by private insurance companies approved by Medicare.
These plans provide an alternative way to receive Part A and Part B benefits and most Medicare Advantage plans also include prescription drug coverage.
Depending on the plan, additional benefits can include dental, vision, hearing, fitness, or other services not generally covered by Original Medicare.
Costs, provider networks, premiums, deductibles, copayments, and prior-authorization requirements vary by plan. Medicare Advantage plans also have an annual out-of-pocket limit for covered Part A and Part B services.
Medicare Part D: Prescription Drug Coverage
Medicare Part D helps cover outpatient prescription medications through private Medicare-approved drug plans.
Each plan has its own premium, covered-drug list, pharmacy network, and cost-sharing structure.
In 2026, the annual out-of-pocket limit for covered Part D drugs is $2,100. After reaching the applicable limit, the member generally pays $0 for covered Part D drugs for the remainder of the calendar year.
Original Medicare vs. Medicare Advantage
One of the major Medicare decisions is whether to receive coverage through Original Medicare or Medicare Advantage.
Original Medicare
Original Medicare consists of Part A and Part B and is administered by the federal government.
People with Original Medicare can generally visit any doctor or hospital in the United States that accepts Medicare. There is generally no annual out-of-pocket maximum under Original Medicare itself.
People can add:
- A standalone Part D prescription drug plan
- Medicare Supplement Insurance (Medigap)
- Certain employer or retiree coverage
- Medicaid, if eligible
Medigap policies are sold by private insurers and can help pay certain Medicare cost-sharing expenses, including deductibles, copayments, and coinsurance.
Medicare Advantage
With Medicare Advantage, the private plan provides an alternative to receiving Part A and Part B benefits through Original Medicare.
Many Medicare Advantage plans use provider networks, and some require referrals or prior authorization for particular services. The exact rules depend on the plan.
Medicare Advantage plans have annual out-of-pocket limits for covered Part A and Part B services. Once the applicable limit is reached, the plan generally pays 100% of covered services for the remainder of the plan year.
Unlike Original Medicare, Medicare Advantage plans generally cannot be paired with a Medigap policy.
Understanding Medicare Costs in 2026
Medicare expenses can include premiums, deductibles, copayments, and coinsurance.
Part A Costs
For most beneficiaries, Part A has no monthly premium.
The 2026 Part A hospital deductible is $1,736 for each benefit period. For inpatient hospital stays, additional daily coinsurance can apply after the initial covered period.
Part B Costs
The standard Part B premium is $202.90 per month in 2026, with higher premiums possible for people subject to income-related adjustments.
The annual Part B deductible is $283. After meeting the deductible, beneficiaries generally pay 20% of the Medicare-approved amount for covered Part B services.
Part D Costs
Part D costs vary depending on the drug plan selected.
A plan can have a monthly premium, deductible, copayments, and coinsurance. In 2026, no Medicare drug plan may have a deductible greater than $615. Covered Part D drug spending is subject to the $2,100 annual out-of-pocket limit.
Medicare Enrollment Periods
Enrollment timing can affect both coverage and costs.
Initial Enrollment Period
The Initial Enrollment Period (IEP) is generally a seven-month period surrounding a person's 65th birthday.
It begins three months before the month of eligibility, includes the month of eligibility, and ends three months afterward.
However, people who have qualifying coverage through current employment may have different enrollment considerations, so Medicare's rules should be reviewed based on the individual's circumstances.
Special Enrollment Periods
Certain circumstances can create a Special Enrollment Period (SEP).
For example, people who delay Medicare enrollment because they have qualifying coverage through current employment may have an opportunity to enroll later without the same late-enrollment consequences that can apply when someone simply delays enrollment without qualifying coverage.
Late Enrollment Penalties
Failing to enroll in certain Medicare coverage when first eligible can result in a late enrollment penalty.
For Part B, the penalty can generally increase the monthly premium and may continue for as long as the person has Part B.
Part D also has a late-enrollment penalty in certain situations. In general, people who go 63 days or more without Part D or other creditable prescription drug coverage after becoming eligible can face a penalty.
How to Compare Medicare Coverage
Medicare decisions should account for more than the monthly premium.
1. Review Your Doctors and Hospitals
If you are considering Medicare Advantage, verify that your preferred physicians, hospitals, and other healthcare providers participate in the plan's network.
With Original Medicare, you can generally use any doctor or hospital that accepts Medicare.
2. Review Prescription Medications
Make a list of current prescriptions and compare them against the plan's formulary.
Look at:
- Drug coverage
- Copayments
- Coinsurance
- Deductibles
- Preferred pharmacies
- Mail-order options
- Annual out-of-pocket exposure
Drug coverage can differ significantly between Part D plans and Medicare Advantage plans that include prescription benefits.
3. Compare Total Annual Costs
Consider the combination of:
- Monthly premiums
- Deductibles
- Copayments
- Coinsurance
- Prescription costs
- Provider costs
- Out-of-pocket limits
A plan with a lower premium can have different cost-sharing requirements when medical care is actually used.
4. Consider Provider Flexibility
If access to particular doctors or hospitals is important, compare network rules carefully.
Original Medicare generally provides broad provider access, while Medicare Advantage plans can use networks and service areas that vary by plan.
5. Evaluate Supplemental Coverage
People choosing Original Medicare can consider Medigap insurance to help cover certain deductibles, coinsurance, and copayments.
Medigap policies have standardized benefits by plan letter, although availability and premiums can vary by state and insurer.
Medicare Comparison Checklist
Before enrolling or changing coverage, review:
- Part A: Hospital coverage and applicable costs
- Part B: Premium, deductible, and coinsurance
- Part C: Medicare Advantage premiums, networks, and out-of-pocket limits
- Part D: Prescription coverage, formulary, and drug costs
- Medigap: Available supplemental coverage if using Original Medicare
- Doctors: Whether preferred providers accept Medicare or participate in a specific network
- Hospitals: Network and service-area requirements
- Prescriptions: Covered medications and pharmacy costs
- Enrollment: Applicable deadlines and potential penalties
- Total costs: Premiums plus expected healthcare and prescription expenses
Medicare involves several interconnected decisions rather than a single insurance product. Comparing Medicare plans, premiums, deductibles, provider networks, prescription coverage, and out-of-pocket limits can provide a clearer picture of the financial and healthcare trade-offs involved.
Because premiums, deductibles, plan availability, and coverage rules can change annually, Medicare beneficiaries should verify current information before enrolling or changing coverage.
