Medicare, in plain English.

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.

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.

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.

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.

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.

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.

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.