Medicare Plans Explained 2026

Medicare is federal health insurance primarily for Americans 65 and older, as well as younger people with certain disabilities or conditions. With over 65 million beneficiaries, Medicare provides essential coverage for hospital care, doctor visits, and prescription drugs. Understanding the different parts and plan options helps you make informed decisions about your healthcare coverage and costs.

Medicare can be confusing with its multiple parts, plan types, and enrollment periods. Making the wrong choice could mean paying more than necessary, lacking coverage for services you need, or being locked out of certain options for years. This guide breaks down everything you need to know to choose the right Medicare coverage for your situation.

Medicare Parts Explained

Part A - Hospital Insurance

Part A covers inpatient hospital stays, skilled nursing facility care (following a qualifying hospital stay), hospice care, and some home health services. Most people pay no premium for Part A because they (or a spouse) paid Medicare taxes for at least 10 years (40 quarters) while working.

Part A does have costs: a deductible of $1,632 per benefit period (2026), coinsurance for extended hospital stays, and costs for skilled nursing facility stays beyond day 20. A "benefit period" starts when you're admitted and ends when you haven't received inpatient care for 60 consecutive days.

Part B - Medical Insurance

Part B covers doctor visits, outpatient services, preventive care, lab tests, mental health services, durable medical equipment (wheelchairs, walkers), and ambulance services. The standard monthly premium is $174.70 in 2026, though higher earners pay more (up to $578.30/month based on income).

Part B has an annual deductible ($240 in 2026) after which you typically pay 20% coinsurance for most services. Unlike private insurance, there's no annual out-of-pocket maximum with Original Medicare - your 20% responsibility is unlimited.

Part C - Medicare Advantage

Medicare Advantage plans are private insurance alternatives that provide all Part A and Part B benefits (and usually Part D) through a single plan. These plans may offer additional benefits Original Medicare doesn't cover: dental, vision, hearing, fitness memberships, and transportation to appointments.

Medicare Advantage plans often have $0 or low monthly premiums (you still pay Part B premium) and annual out-of-pocket maximums that limit your exposure. However, they typically use provider networks - you may pay more or be unable to see providers outside the network. Plans vary significantly by location.

Part D - Prescription Drug Coverage

Part D covers prescription medications through private insurance plans approved by Medicare. You can get Part D as a standalone plan (with Original Medicare) or as part of Medicare Advantage. Plans vary in premiums ($0-80+/month), deductibles, and which drugs they cover (formulary).

Part D has coverage phases: deductible, initial coverage (you pay copays, plan pays most), coverage gap (formerly "donut hole" - you pay 25% of drug costs), and catastrophic coverage (minimal costs after spending threshold). The Inflation Reduction Act capped out-of-pocket drug costs at $2,000 annually starting in 2025.

Original Medicare vs. Medicare Advantage

Original Medicare (Parts A + B + Optional D + Optional Medigap)

With Original Medicare, you can see any doctor or hospital that accepts Medicare anywhere in the country - no networks or referrals needed. You pay deductibles and 20% coinsurance with no maximum limit unless you add a Medigap policy. Original Medicare doesn't cover dental, vision, or hearing.

Best for: People who want maximum flexibility in provider choice, frequent travelers, those with existing provider relationships, and people willing to pay more for comprehensive Medigap coverage.

Medicare Advantage (Part C)

Medicare Advantage bundles coverage through a private insurer with network requirements (HMO, PPO, etc.). Plans have annual out-of-pocket maximums protecting you from unlimited costs. Many plans include extra benefits (dental, vision, hearing, fitness, transportation). Premiums can be $0 but you may face higher costs at point of service.

Best for: People who want predictable costs with out-of-pocket limits, those seeking extra benefits like dental/vision, healthy individuals who rarely see specialists, and people comfortable using network providers.

Medicare Supplement (Medigap) Plans

Medigap policies sold by private insurers help pay costs Original Medicare doesn't cover: deductibles, coinsurance, and copayments. Standardized plans are labeled A through N, with each letter offering specific, consistent benefits regardless of which company sells it (only prices vary).

Popular Medigap Plans

• Plan G - Most comprehensive option available to new enrollees. Covers Part A and B coinsurance, Part A deductible, skilled nursing coinsurance, Part B excess charges, and foreign travel emergencies. You pay only the Part B deductible ($240/year).
• Plan N - Similar to Plan G but with lower premiums. You pay up to $20 copay for office visits and $50 for ER visits that don't result in admission. Good for people willing to pay small copays for lower premiums.
• Plan F - Most comprehensive plan covering everything including Part B deductible. Only available to those eligible for Medicare before January 1, 2020.

Important Medigap Rules

You have a 6-month Medigap Open Enrollment Period starting when you're both 65+ AND enrolled in Part B. During this window, you're guaranteed acceptance regardless of health conditions. After this period, insurers can deny coverage or charge more based on health - making timing critical.

Medicare Costs Summary

• Part A Premium - $0 for most people; up to $506/month if you didn't work enough quarters
• Part A Deductible - $1,632 per benefit period
• Part B Premium - $174.70/month standard (higher for high earners)
• Part B Deductible - $240/year
• Part B Coinsurance - 20% of Medicare-approved amounts (no maximum)
• Part D Premiums - Vary by plan ($0-80+/month)
• Part D Out-of-Pocket Max - $2,000/year (as of 2025)
• Medigap Premiums - Vary by plan, age, location, and company ($50-300+/month)
• Medicare Advantage Premiums - Often $0, some plans charge monthly
• Medicare Advantage Out-of-Pocket Max - $8,300 maximum for in-network services (2026)

Important Enrollment Periods

Initial Enrollment Period (IEP)

A 7-month window around your 65th birthday: 3 months before your birth month, your birth month, and 3 months after. This is when you first sign up for Medicare Parts A and B. Missing this window can result in late enrollment penalties and delayed coverage.

Annual Enrollment Period (AEP)

October 15 - December 7 each year. During AEP, you can switch from Original Medicare to Medicare Advantage (or vice versa), change Medicare Advantage plans, and join, drop, or switch Part D plans. Changes take effect January 1.

Medicare Advantage Open Enrollment Period (OEP)

January 1 - March 31 each year. Only for people already in Medicare Advantage. You can switch to a different Medicare Advantage plan or switch to Original Medicare and add a standalone Part D plan. Limited to one change during this period.

Special Enrollment Periods (SEPs)

Certain life events trigger SEPs allowing enrollment or changes outside normal periods: losing employer coverage, moving to a new service area, qualifying for Extra Help/Medicaid, or institutional changes (entering/leaving nursing facilities).

Getting Help with Medicare Decisions

• SHIP (State Health Insurance Assistance Program) - Free, unbiased counseling available in every state. Counselors help you understand options, compare plans, and enroll without selling anything.
• Medicare.gov - Official plan comparison tool lets you enter your drugs and preferences to compare costs across plans in your area.
• Licensed Insurance Agents/Brokers - Can help you compare and enroll in plans. They're paid by insurance companies, not you. Work with agents who represent multiple companies for broader options.
• Social Security Administration - Handles Medicare enrollment for Parts A and B.

Frequently Asked Questions

When should I sign up for Medicare?

Sign up during your Initial Enrollment Period (around age 65) unless you have creditable employer coverage. If you have employer coverage, you can delay enrollment without penalty and have a Special Enrollment Period when that coverage ends.

Can I have Medicare and employer insurance?

Yes. If you work past 65 with employer coverage, Medicare can be primary or secondary depending on employer size. Generally, Medicare is secondary if the employer has 20+ employees.

Can I switch between Original Medicare and Medicare Advantage?

Yes, during the Annual Enrollment Period (October 15 - December 7). However, if switching from Medicare Advantage to Original Medicare, you may have difficulty getting a Medigap policy if you're past your initial Medigap Open Enrollment Period.

Getting Started

Start by visiting Medicare.gov or calling 1-800-MEDICARE three months before turning 65. Consider consulting with a SHIP counselor for free, unbiased advice. Evaluate whether Original Medicare plus Medigap or Medicare Advantage better fits your healthcare needs, budget, and provider preferences.