Medicare · Cornerstone
Medicare, in plain English.
Last reviewed May 8, 20269 min readBy the Goodsurance editorial team Reviewed by the Goodsurance editorial team
Medicare is the federal health-insurance program for Americans 65 and older, plus some younger people with specific disabilities. Most enrollees face four practical decisions: when to enroll without a penalty, whether you'll owe extra in income-related premiums, whether to stick with Original Medicare or switch to a Medicare Advantage plan, and whether to layer Part D drug coverage or a Medigap supplement on top. This article walks each decision in the order it actually arrives, not the order the government numbered the parts.
§1The four parts, in plain language
Medicare is divided into four parts, and the names are confusingly numbered. Each covers a different category of healthcare.
Parts A and B together are called Original Medicare. Part C, despite the letter, is not an addition, it's a substitution, where a private insurer administers your A+B coverage in place of the federal government.
| Part | What it covers | 2026 cost |
|---|---|---|
| Part A | Hospital, skilled nursing, hospice | Free for most |
| Part B | Doctors, outpatient, preventive | $202.90/mo |
| Part C (Advantage) | Bundles A, B, often D, plus extras | Often no added premium |
| Part D | Prescription drugs | $0 to $60/mo |
Source: CMS, 2026 Medicare costs.
§2When to enroll (and when to wait)
You become eligible for Medicare on the first day of the month you turn 65. The Initial Enrollment Period runs seven months: the three months before your birth month, your birth month, and the three months after.
Missing this window costs real money. Part B carries a permanent 10% late-enrollment penalty for every full 12-month period you delayed without credible coverage. Part D adds 1% per month of delay. Both penalties stick to your premium for as long as you have Medicare.
The exception that matters: if you're still working at 65 and have credible employer coverage through a company with 20 or more employees, you can defer Part B without penalty and enroll later through a Special Enrollment Period. Smaller employers are a different conversation, Medicare typically becomes the primary payer at 65 regardless of what your group plan says.
Your Initial Enrollment Period: 7 months
Part B adds 10% for every full 12 months you delay; Part D adds 1% of the base premium per month. Both stay on your premium for as long as you have Medicare.
§3Original Medicare vs. Medicare Advantage
This is the decision most enrollees agonize over, and it's worth slowing down for.
Original Medicare (Parts A + B) is the federal program. You can see any doctor in the United States who accepts Medicare, which is most of them. There's no network. Part B pays 80% of approved charges; you owe the other 20%, with no annual cap. That uncapped 20% is the structural reason most Original Medicare enrollees also buy a Medigap policy (see §5).
Medicare Advantage (Part C) is a private plan that takes over your A+B benefits, usually with prescription coverage bundled in. Monthly premiums are often $0, the federal government pays the insurer a per-member fee. In exchange, you accept a network of doctors (often HMO or PPO), prior authorization for certain services, and an annual out-of-pocket maximum that caps your worst-case year.
The honest summary: Original + Medigap maximizes flexibility at higher monthly cost. A Medicare Advantage plan offers a lower monthly cost and the safety of a defined worst-case cap; however, it does mean dealing with administrative friction, networks, authorizations, and sometimes referrals.
Your 20% has no annual cap
§4What Part D actually pays for
Part D is prescription drug coverage. Every Part D plan has a formulary, a list of which drugs it covers and at what tier (often Tier 1 generic, Tier 2 preferred brand, Tier 3 non-preferred, Tier 4 specialty). Two plans available in the same ZIP code can have wildly different formularies; the same medication can cost $0 on one plan and $400 on another.
The right way to choose: list your current medications by name, dose, and frequency, then use medicare.gov's Plan Finder to filter to plans that cover all of them. Do not pick by premium alone. A $20/month plan with a bad formulary will cost you more by July than a $60/month plan that covers everything.
§5Medigap plans, demystified
Medigap (also called Medicare Supplement) fills the 20% gap in Original Medicare. Plans are standardized by letter: a Plan G from one carrier covers exactly what a Plan G from another carrier covers. The only difference is price.
The two most common today are Plan G (covers everything except the Part B deductible) and Plan N (slightly lower premium, small copays for office visits and ER). You can only buy Medigap if you're on Original Medicare; they don't pair with Medicare Advantage.
The critical timing rule: you get a 6-month Open Enrollment window starting the month you turn 65 and have Part B. During that window, no carrier can deny you coverage or charge more based on health history. After that window, in most states, they can, and they do.
§6IRMAA: when your income raises your premium
The Income-Related Monthly Adjustment Amount is a surcharge on Parts B and D for higher earners. The IRS uses your tax return from two years ago to determine the current year's IRMAA, so 2026 IRMAA is based on your 2024 modified adjusted gross income.
The first surcharge tier begins above $109,000 of income for a single filer, or $218,000 for a couple filing jointly. From there, six tiers ramp the Part B premium upward.
If your income dropped after a qualifying life event such as retirement, the death of a spouse, or a divorce, SSA Form SSA-44 lets you ask Social Security to recalculate your IRMAA using your current income instead of the tax return from two years ago. Many people never learn the form exists, so it is worth knowing about before you accept a surcharge that no longer fits your situation.
2026 Part B premium by IRMAA tier
Part B premium by IRMAA tier. Source: CMS / SSA, 2026.
§7Switching plans during AEP
The Annual Election Period runs October 15 to December 7 each year. During AEP you can switch from Original Medicare to Medicare Advantage (or vice versa), switch between Medicare Advantage plans, or switch between Part D plans. Changes take effect January 1.
Medicare Advantage enrollees also get a January 1 to March 31 Open Enrollment window to make one more switch, either to a different Advantage plan or back to Original Medicare.
The mistake to avoid: assuming your plan is the same every year. Carriers change formularies, networks, and out-of-pocket maximums annually. The Annual Notice of Change you received in September lists the changes for the next plan year; if you didn't read it, AEP is your last reasonable chance to react.
Windows to change plans
Common questions about Medicare
Quick answers to common questions
Tap any question to expand. Each question links to a fuller standalone answer.
Is Medicare free?
No, Medicare is not free for most people in 2026.
Many people pay nothing for Part A (the part that covers hospital stays) because they paid Medicare taxes while working, but Part B (the part that covers doctor visits and outpatient care) has a standard premium, meaning a monthly amount you pay, of $202.90 in 2026. Part B also has a yearly deductible, the amount you pay before Medicare starts to share costs, of $283 in 2026. If you choose drug coverage under Part D, that has its own premium too. So while one part may cost you nothing, Medicare overall carries monthly premiums and out-of-pocket costs for most people.
What are the parts of Medicare?
Medicare has four parts, labeled A, B, C, and D.
Part A covers inpatient hospital stays, skilled nursing care, and some home health care. Part B covers doctor visits, outpatient care, preventive services, and durable medical equipment. Together, Part A and Part B are called Original Medicare. Part C, also called Medicare Advantage, is a way to get your Part A and Part B benefits bundled through a private plan, often with extra benefits. Part D covers prescription drugs. You can keep Original Medicare and add a separate Part D drug plan, or you can choose a Part C plan that may include drug coverage. Each path has different costs and rules.
Do I have to sign up for Medicare?
Not always, but many people are enrolled automatically.
If you are already getting Social Security benefits when you turn 65, you are usually enrolled in Part A (hospital coverage) and Part B (doctor and outpatient coverage) automatically. If you are not yet getting Social Security, you generally need to sign up yourself during your Initial Enrollment Period, the seven-month window around your 65th birthday. Signing up is not always required, since some people delay Part B if they have qualifying coverage from a current employer. But if you wait without qualifying coverage, you may owe a late enrollment penalty, an amount added to your premium for as long as you have it. Whether you must enroll depends on your current coverage and your situation.
At what age do you qualify for Medicare?
Most people qualify for Medicare at age 65.
You become eligible the month you turn 65, and your Initial Enrollment Period, the seven-month window for signing up, starts three months before your birthday month and ends three months after. Some people qualify before 65: if you have received Social Security disability benefits for 24 months, or if you have certain conditions such as end-stage kidney disease or ALS, you may become eligible earlier. Age 65 is the standard milestone, but a qualifying disability can open the door sooner.
What is the difference between Medicare and Medicaid?
Medicare and Medicaid are two different programs that are easy to confuse.
Medicare is a federal health insurance program based mainly on age, covering people 65 and older and some younger people with disabilities, regardless of income. Medicaid is a joint federal and state program based on income and need, helping people with limited income and resources pay for care. The names sound alike, but the qualifying rules are different: Medicare looks at your age or disability, while Medicaid looks at your income. Some people qualify for both programs at the same time, which is called being dually eligible, and the two can work together to cover costs.
What does Medicare Part A cover?
Medicare Part A covers inpatient hospital care, meaning care you get when you are formally admitted to a hospital.
It also covers skilled nursing facility care after a qualifying hospital stay, some home health care, and hospice care for people who are terminally ill. Part A is the hospital side of Original Medicare. It does not cover routine doctor visits or outpatient services; those fall under Part B. Part A also does not cover long-term custodial care, meaning help with daily activities like bathing or dressing when that is the only care you need. For inpatient stays, you pay an inpatient deductible of $1,736 per benefit period in 2026 before Part A begins covering your share.
Does Original Medicare have an out-of-pocket cap?
No, Original Medicare does not have a yearly out-of-pocket cap.
With Part A (hospital coverage) and Part B (doctor and outpatient coverage), there is no limit on the total amount you could pay in coinsurance, your share of costs after the deductible, in a single year. This is one of the most important things to understand about Original Medicare. To help manage this, many people add a Medigap policy, also called Medicare Supplement Insurance, which is private coverage that helps pay some of the costs Original Medicare leaves to you. Medicare Advantage plans, the bundled private option, do include a yearly out-of-pocket limit. The lack of a built-in cap is a key reason people consider extra coverage.
What is the difference between Original Medicare and Medicare Advantage?
Original Medicare and Medicare Advantage are two different ways to get your Medicare coverage.
Original Medicare is the federal program made up of Part A (hospital) and Part B (doctor and outpatient). It lets you see any provider that accepts Medicare, but it has no yearly out-of-pocket cap and no built-in drug coverage. Medicare Advantage, also called Part C, is offered by private plans that bundle your Part A and Part B benefits, usually add a yearly out-of-pocket limit, and often include drug coverage and extra benefits. The trade-off is that Medicare Advantage plans typically use provider networks, meaning you may need to use certain doctors. Which fits you depends on your priorities around cost, flexibility, and benefits.
Does Original Medicare cover prescription drugs?
No, Original Medicare does not cover most prescription drugs you take at home.
Part A (hospital coverage) and Part B (doctor and outpatient coverage) cover some drugs given in a hospital or clinic setting, but they do not cover the everyday medications you pick up at a pharmacy. To get that coverage, you add Part D, the prescription drug part of Medicare, which is offered through private plans. You can pair a standalone Part D plan with Original Medicare. If you skip drug coverage when you are first eligible and do not have other qualifying coverage, you may owe a late enrollment penalty later. So Original Medicare alone leaves a gap that Part D is designed to fill.
Can I get Medicare before 65?
Yes, you can get Medicare before 65 in specific situations.
If you have received Social Security Disability Insurance for 24 months, you become eligible automatically in month 25. People with End-Stage Renal Disease (permanent kidney failure that needs dialysis or a transplant) can qualify regardless of age, and people diagnosed with ALS qualify the month their disability benefits begin, with no 24-month wait. Outside of these paths, the standard eligibility age remains 65. Your work history, or your spouse's, still determines whether your Part A is premium-free. To check whether you qualify early and what it would cost, reach out to a licensed Goodsurance advisor at 1-888-301-8091 (TTY 711), Mon to Fri 8 am to 5 pm PT.
Do I qualify for Medicare if I never worked?
You can still qualify for Medicare even if you never worked, though the cost of Part A may differ.
Medicare eligibility itself is based on age (65) or a qualifying disability or condition, not on your own work record. What your work history affects is whether your Part A (hospital coverage) is premium-free: you earn that by paying Medicare taxes for about 10 years, or roughly 40 work credits. If you did not earn enough credits, you may qualify through a current, former, or deceased spouse's record, or you can buy into Part A by paying a monthly premium. Part B (medical coverage) carries a standard premium for everyone regardless of work history. To see which path fits you, reach out to a licensed Goodsurance advisor at 1-888-301-8091 (TTY 711), Mon to Fri 8 am to 5 pm PT.
Is Medicare based on income?
No, basic Medicare eligibility is not based on income.
You qualify by reaching age 65, or earlier through a qualifying disability or condition, regardless of how much you earn or own. Income does affect two things, but not your right to enroll. First, your Part A (hospital coverage) is premium-free if you or your spouse paid Medicare taxes long enough; otherwise you can buy in. Second, higher earners pay an income-related surcharge on their Part B and Part D premiums, called IRMAA (Income-Related Monthly Adjustment Amount). Lower-income enrollees may also qualify for help with costs through programs like Medicare Savings Programs. To understand how your income affects what you pay, reach out to a licensed Goodsurance advisor at 1-888-301-8091 (TTY 711), Mon to Fri 8 am to 5 pm PT.
References
- Medicare.govOfficial source for benefits, costs, and the Medicare Plan Finder.
- CMS.gov, Centers for Medicare & Medicaid ServicesFederal rule documents, regulations, and Medicare policy.
- SSA.gov, Social Security AdministrationIRMAA determinations and appeal forms (SSA-44).
- Kaiser Family Foundation (kff.org)Independent Medicare research, enrollment data, and analysis.
- Medicare Rights Center (medicarerights.org)Non-profit advocacy and free Medicare counseling.