Medicare 101

Medicare 101: Medicare Made Easier to Understand

Medicare can feel like a maze of rules, deadlines, and coverage choices—but it doesn’t have to. This guide explains Medicare Parts A and B, Medicare Advantage, Medigap, Part D drug coverage, enrollment periods, and current costs in plain language so you can understand how the pieces fit together.

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YOUR MEDICARE PATH

See How the Pieces Fit Together

  1. 1

    Start With Parts A and B

    Original Medicare provides the foundation for your hospital and medical coverage.

  2. 2

    Choose Your Coverage Path

    Keep Original Medicare or receive your Medicare benefits through a Medicare Advantage plan.

  3. Add Coverage as Needed

    Depending on your path, you may consider Part D, Medigap, or optional supporting coverage.

Your Medicare Guide

Start With the Big Picture

Medicare becomes easier to understand when you look at it in the right order. Use this guide to learn the basics, compare coverage paths, understand enrollment timing, and make sense of prescription drug coverage.

Original Medicare

Medicare Basics: What Parts A and B Cover

Original Medicare is made up of Part A and Part B. Part A generally helps cover inpatient hospital care, while Part B generally helps cover doctor services, outpatient care, preventive services, and medical equipment. Together, they form the foundation for the coverage paths explained later in this guide.

PART A

Hospital Insurance

Medicare Part A helps cover inpatient hospital care, skilled nursing facility care following a qualifying hospital stay, hospice care, and certain home health services.

Part A generally helps cover:
  • Inpatient hospital stays
  • Skilled nursing facility care
  • Hospice care
  • Certain home health services

Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes long enough. Deductibles and coinsurance may still apply.

PART B

Medical Insurance

Medicare Part B helps cover medically necessary services and preventive care provided outside an inpatient hospital stay.

Part B generally helps cover:
  • Doctor visits and outpatient care
  • Preventive services and screenings
  • Durable medical equipment
  • Certain home health and mental health services

Everyone enrolled in Part B pays a monthly premium. Higher-income beneficiaries may pay more, and an annual deductible and coinsurance generally apply.

Annual Medicare Amounts

Original Medicare Costs at a Glance

These standard Original Medicare amounts are updated annually. Your actual costs may differ based on your coverage, income, services, and eligibility.

Medicare Costs

2026

Current Year
Verify costs at Medicare.gov
Part A Monthly Premium
$0 for most people
Part A Hospital Deductible
$1,736 per benefit period
Part B Standard Premium
$202.90 per month
Part B Annual Deductible
$283 per year
Additional Part A Cost Sharing
Hospital Days 61-90
$434 per day
Lifetime Reserve Days
$868 per day
Skilled Nursing Days 21-100
$217 per day
PART B COINSURANCE
Usually 20% after the deductible
Coverage Paths

Choose How You Receive Your Medicare Benefits

Once you have Medicare Parts A and B, there are two primary ways to receive your coverage: keep Original Medicare and add coverage separately, or choose a Medicare Advantage plan. Understanding this decision first makes every other Medicare choice easier.

Original Medicare Path

Keep Original Medicare

You continue receiving your Part A and Part B benefits directly through Medicare and may add separate private coverage to help manage costs and prescriptions.

  • Parts A and B

    Original Medicare remains your primary hospital and medical coverage.

  • Medicare Supplement (Medigap)

    A standardized private policy can help pay certain deductibles, copayments, and coinsurance left by Original Medicare.

  • Standalone Part D

    A separate Medicare drug plan can help cover prescription medications.

Medicare Advantage Path

Choose Medicare Advantage (Part C)

You receive your Medicare benefits through a private plan approved by Medicare instead of receiving them directly through Original Medicare.

  • Hospital and Medical Coverage

    The plan provides your Medicare Part A and Part B benefits.

  • Prescription Coverage

    Many Medicare Advantage plans include Part D prescription drug coverage.

  • Plan Features and Rules

    Plans may offer additional benefits such as dental and vision coverage, and can use provider networks, copayments, and plan-specific coverage rules.

Optional Supporting Coverage

Hospital Indemnity

Some Medicare Advantage plans include copayments or daily cost sharing for inpatient hospital stays, emergency room visits, and ambulance services. Depending on the policy, a separate hospital indemnity plan may provide fixed cash benefits for covered events, helping offset related out-of-pocket costs. This coverage is separate from Medicare and does not replace Medicare coverage.

Enrollment Timing

Medicare Enrollment Periods: When You Can Enroll or Make Changes

Medicare enrollment periods determine when you can first enroll, add coverage, or make changes. The rules depend on whether you are new to Medicare, already enrolled, or experiencing a qualifying life event.

IEP

Initial Enrollment Period

GEP

General Enrollment Period

AEP

Annual Enrollment Period

OEP

Medicare Advantage Open Enrollment Period

SEP

Special Enrollment Period

Review Medicare enrollment periods at Medicare.gov
Prescription Drug Coverage

Medicare Part D: How Prescription Drug Coverage Works

Prescription drug coverage is available through a standalone Part D plan or may be included in a Medicare Advantage plan. Each plan has its own covered drug list, cost-sharing structure, pharmacy network, and coverage rules, making it important to review your medications and plan details each year.

Original Medicare

Add a Standalone Part D Plan

If you keep Original Medicare, you can join a separate Medicare-approved drug plan. The plan has its own premium, covered drug list, pharmacy network, and cost-sharing.

Medicare Advantage

Choose a Plan That Includes Drug Coverage

Most Medicare Advantage plans include Part D coverage with Part A and Part B benefits in one plan. If a Medicare Advantage plan does not include drug coverage, you generally cannot add a separate Part D plan.

How Part D Costs Work

Three Coverage Stages

Most Medicare drug plans move through three cost stages during the calendar year. The amounts shown below are updated annually.

2026
Current Year
01

Deductible Stage

$615 maximum

If the plan has a deductible, you generally pay the plan-negotiated cost for covered drugs until that deductible is met. Some plans have no deductible.

02

Initial Coverage

$2,100

After the deductible, you pay the plan’s copayments or coinsurance until qualifying out-of-pocket spending reaches the annual limit shown above.

03

Catastrophic Coverage

$0 for covered Part D drugs

After reaching the annual out-of-pocket limit, you pay no additional out-of-pocket costs for covered Part D drugs for the remainder of the calendar year.

What to Check in a Plan

Coverage Details That Can Affect Your Prescriptions

A plan may cover your medication but still apply specific costs, pharmacies, or coverage requirements. Review these details before enrolling and again each year.

Covered Drugs

Drug List or Formulary

A formulary is the plan’s list of covered drugs. Check that each medication you take is included before enrolling or renewing.

Cost Sharing

Drug Tiers

Plans group covered drugs into cost levels called tiers. Lower-tier drugs generally cost less, but each plan may organize its tiers differently.

Where You Fill

Pharmacy Network

Plans contract with in-network pharmacies, and preferred pharmacies may offer lower copayments or coinsurance. Out-of-network prescriptions may cost more or may not be covered.

Plan Approval

Prior Authorization

The plan may require approval before covering certain drugs. Your prescriber may need to show that the medication is medically necessary and meets the plan’s requirements.

Order of Treatment

Step Therapy

You may need to try a lower-cost drug that is effective for most people with your condition before the plan covers a more expensive alternative.

Amount Covered

Quantity Limits

A plan may limit how much of a medication it covers during a set period, such as the number of tablets covered each month.

If A Drug Isn't Covered

You May Be Able to Request an Exception

You or your prescriber may ask the plan to cover a drug that is not on its formulary, waive a coverage rule, or approve a different level of cost sharing. Your prescriber generally must provide a supporting statement explaining why the request is medically necessary.

Review Medicare drug-plan rules at Medicare.gov
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