What Is Medicare Part A, B, C, and D? A Plain-English Guide (2026)

Medicare has four parts — A, B, C, and D — and each one covers different healthcare services at different costs. If you're approaching 65 or helping a parent navigate enrollment, this guide explains exactly what each part covers, what it costs in 2026, and how the pieces fit together.

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How Medicare Is Structured

Medicare isn't a single insurance plan. It's a system of four interlocking parts, each designed to cover a specific category of healthcare:

• Part A — Hospital insurance (inpatient stays, skilled nursing, hospice)
• Part B — Medical insurance (doctor visits, outpatient care, preventive services)
• Part C — Medicare Advantage (private plans that bundle A + B + usually D)
• Part D — Prescription drug coverage

Parts A and B together are called Original Medicare — the traditional government-run program. Parts C and D are delivered through private insurance companies approved by Medicare.

Most people choose one of two paths:

1. Original Medicare (A + B) plus a standalone Part D drug plan, often with a Medigap supplement
2. Medicare Advantage (Part C), which wraps A, B, and usually D into one private plan

There's no single "best" choice — it depends on your health, medications, doctors, and budget. Understanding what each part covers is the first step.

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Medicare Part A: Hospital Insurance

Part A covers inpatient hospital care — the big, expensive events. If you're admitted to a hospital, Part A is what kicks in.

What Part A Covers

• Inpatient hospital stays — room, meals, nursing care, medications administered during your stay, lab tests, surgeries
• Skilled nursing facility (SNF) care — up to 100 days per benefit period, after a qualifying 3-day hospital stay
• Home health services — part-time skilled nursing or therapy if you're homebound
• Hospice care — comfort care for terminal illness, including medications for symptom management
• Inpatient psychiatric care — up to 190 days lifetime in a psychiatric hospital

What Part A Does NOT Cover

• Long-term custodial care (help with daily activities like bathing, dressing)
• Nursing home stays that are purely custodial (not skilled care)
• Private-duty nursing

Part A Costs in 2026

Most people pay $0/month for Part A because they (or their spouse) worked at least 10 years and paid Medicare taxes. About 99% of beneficiaries qualify for premium-free Part A. For a detailed cost breakdown of all four parts, see our guide on how much Medicare costs in retirement.

If you don't qualify for premium-free Part A:

Even with premium-free Part A, you'll still pay deductibles and coinsurance when you use hospital services:

For skilled nursing facility stays:

See your potential hospital costs: Use our Medicare out-of-pocket maximum calculator to estimate what a hospital stay would cost under your coverage.

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Medicare Part B: Medical Insurance

Part B covers the medical services you use outside of a hospital — doctor visits, lab work, outpatient procedures, and preventive care. If Part A is for the big events, Part B is for everything else.

What Part B Covers

• Doctor and specialist visits — office visits, second opinions, consultations
• Outpatient care — surgeries, procedures, and treatments that don't require hospital admission
• Preventive services — annual wellness visits, flu shots, cancer screenings, cardiovascular screening (most at no cost to you)
• Lab tests and diagnostic imaging — blood work, X-rays, MRIs, CT scans
• Durable medical equipment (DME) — wheelchairs, walkers, oxygen equipment, hospital beds for home use
• Mental health services — outpatient therapy, psychiatrist visits
• Ambulance services — when medically necessary
• Some home health services — physical therapy, occupational therapy

What Part B Does NOT Cover

• Routine dental care (cleanings, fillings, dentures)
• Routine vision care (eyeglasses, contact lenses, eye exams for prescriptions)
• Hearing aids and exams for fitting hearing aids
• Cosmetic surgery
• Most care received outside the United States

Part B Costs in 2026

The Part B premium increased nearly 10% from 2025 ($185.00 to $202.90), partly driven by coverage projections for new Alzheimer's treatments — CMS.

The 20% coinsurance has no cap. Unlike most private insurance, Original Medicare has no out-of-pocket maximum. A single outpatient surgery could leave you with thousands in coinsurance charges. This is the main reason many retirees add supplemental coverage through Medigap or Medicare Advantage.

Estimate your Part B premium: Our Medicare Part B premium calculator shows your exact premium based on your income level.

IRMAA: Income-Based Premium Surcharges

If your income is above certain thresholds, you pay more for Part B (and Part D). These surcharges are called IRMAA — Income-Related Monthly Adjustment Amounts. Medicare uses your tax return from two years prior to determine your bracket.

At the highest bracket, you'd pay $689.90/month — more than triple the standard premium. IRMAA catches many retirees off guard, especially those doing large Roth conversions or selling a home.

Check your IRMAA bracket: Use our IRMAA income bracket calculator to see if your income puts you in a higher premium tier.

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Medicare Part C: Medicare Advantage

Medicare Advantage (MA) is an alternative way to get your Medicare benefits. Instead of the government paying your healthcare providers directly (Original Medicare), a private insurance company manages your coverage. You still have Medicare — you're just getting it delivered through a private plan.

How Medicare Advantage Works

• You must be enrolled in both Part A and Part B to join an MA plan
• You continue paying your Part B premium ($202.90/month) plus any plan-specific premium
• The plan replaces Original Medicare for most services — you use the plan's provider network and rules
• Most MA plans include Part D drug coverage (called MA-PD plans)
• Plans must cover everything Original Medicare covers, but they can add extras

What Medicare Advantage Typically Includes (Beyond Original Medicare)

Nearly all MA plans offer supplemental benefits that Original Medicare does not cover:

Source: KFF Medicare Advantage 2026 analysis

Medicare Advantage Costs in 2026

The out-of-pocket maximum is a big deal. Original Medicare has no cap on what you can pay out of pocket. Medicare Advantage plans are required by law to cap your costs. For retirees worried about catastrophic medical expenses, this built-in protection is one of MA's strongest selling points.

Medicare Advantage Enrollment in 2026

Medicare Advantage has crossed a major milestone: 55% of eligible Medicare beneficiaries now choose MA over Original Medicare, with 35.2 million enrollees out of 64.2 million eligible — KFF.

The Trade-Offs

Compare your options: Our Medicare Advantage vs. Original Medicare calculator walks through the cost comparison for your specific situation.

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Medicare Part D: Prescription Drug Coverage

Part D covers outpatient prescription medications. It's optional but highly recommended — even if you take few medications now, the late enrollment penalty for delaying can add up permanently.

How to Get Part D Coverage

• Standalone Part D plan (PDP) — if you have Original Medicare, you add a separate drug plan
• Medicare Advantage with drug coverage (MA-PD) — most MA plans bundle prescription coverage in

Part D Costs in 2026

How the Benefit Phases Work

The Inflation Reduction Act (IRA) fundamentally changed Part D starting in 2025 by eliminating the infamous "donut hole" and capping out-of-pocket costs. Here's the 2026 structure:

The $2,100 annual out-of-pocket cap is transformative. Before the IRA took effect, seniors on expensive medications could pay $10,000+ per year with no ceiling. Now, once you've spent $2,100 out of pocket, you pay nothing more for covered drugs for the rest of the year.

IRA Drug Price Negotiations

Starting January 1, 2026, the first 10 drugs with prices negotiated directly between Medicare and pharmaceutical companies take effect. If you take any of these medications, your costs may drop significantly. More drugs will be added in future years.

Part D IRMAA Surcharges

Like Part B, higher-income beneficiaries pay surcharges on Part D:

Estimate your Part D costs: Our Part D premium calculator and donut hole calculator show what you'll pay based on your medications and income.

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Who Is Eligible for Medicare?

Most people become eligible at 65. If you're still working and covered by an employer plan with 20+ employees, you can delay enrollment without penalty — but you should understand the enrollment windows to avoid costly mistakes.

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Medicare Enrollment Periods: When to Sign Up

Missing your enrollment window can result in permanent premium penalties. Here are the key periods:

Late Enrollment Penalties

The penalties for delaying enrollment are permanent — you pay them for as long as you have Medicare:

• Part B penalty: +10% of the standard premium for each full 12-month period you could have enrolled but didn't. Two years late means a 20% surcharge on your premium — an extra $40.58/month in 2026, for life.
• Part D penalty: +1% of the national base premium ($38.99) per month without creditable drug coverage. Two years without coverage adds ~$9.36/month permanently.

Calculate your potential penalty: Our Medicare enrollment penalty calculator shows exactly what delaying enrollment would cost you.

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What Most People Get Wrong About Medicare

1. "Medicare is free"

Part A is premium-free for most people, but Part B costs $202.90/month, Part D averages $35/month, and coinsurance is 20% with no cap. A typical retiree couple pays $5,000–$7,000/year in Medicare premiums alone — before using any services.

2. "Medicare covers everything"

Original Medicare does not cover dental, vision, hearing aids, or long-term care. These gaps cost retirees thousands per year. You need supplemental coverage (Medigap or Medicare Advantage) to fill them.

3. "I can sign up whenever I want"

Missing your Initial Enrollment Period triggers permanent premium penalties. Every year you delay Part B costs you an extra 10% on your premium — forever.

4. "Medicare Advantage is always cheaper"

MA plans often have lower premiums and include extras, but they restrict you to a network. If you need specialists or travel frequently, Original Medicare's nationwide flexibility may save you more in the long run.

5. "IRMAA won't affect me"

A one-time income spike — selling a home, taking a large IRA distribution, doing a Roth conversion — can push you into a higher IRMAA bracket two years later. Many retirees don't realize their Roth conversion strategy is raising their Medicare premiums until the bill arrives.

6. "I don't need Part D if I'm healthy"

Even if you take zero medications today, skipping Part D means a permanent penalty when you do enroll later. Drug coverage is inexpensive now — the penalty for waiting compounds every month.

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How Medicare Costs Add Up: A Real Example

Here's what a typical 65-year-old retiree with standard income might pay in 2026:

For a couple, double most of these numbers. That's $12,000–$13,000/year in healthcare costs — even in a healthy year with no major medical events.

See your full healthcare cost picture: Our retirement healthcare cost calculator projects your total healthcare spending across your entire retirement, including inflation.

For a deeper look at all the costs beyond Medicare — including pre-65 coverage, long-term care, and dental — see our guide on how much healthcare costs in retirement.

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How Medicare Fits Into Your Retirement Plan

Healthcare is typically the second- or third-largest expense in retirement, behind only housing and sometimes taxes. Understanding your Medicare costs isn't just about picking the right plan — it's about building those costs into your overall retirement budget.

If you want to see how Medicare premiums, IRMAA surcharges, and out-of-pocket costs fit into your total retirement picture, the Plan Builder lets you model healthcare expenses alongside your income, savings, and withdrawal strategy using your real numbers.

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Frequently Asked Questions

What is the difference between Original Medicare and Medicare Advantage?

Original Medicare (Parts A and B) is the traditional government-run program that lets you see any doctor who accepts Medicare, anywhere in the country. Medicare Advantage (Part C) is a private insurance plan that bundles the same coverage, usually adds extras like dental and vision, and requires you to use a network of providers. You choose one or the other — not both.

How much does Medicare cost per month in 2026?

Most people pay $0 for Part A and $202.90/month for Part B. Add a Part D drug plan at roughly $35/month and optional Medigap coverage at $100–$200/month. Total monthly costs range from about $240 for basic coverage to $500+ with supplemental insurance, before any income-based surcharges.

Do I have to sign up for Medicare at 65?

If you're already receiving Social Security benefits, you'll be enrolled in Parts A and B automatically. If you're still working and covered by an employer plan with 20 or more employees, you can delay Part B without penalty. However, if your employer has fewer than 20 employees, Medicare is your primary coverage and you should enroll at 65.

What does Medicare not cover?

Original Medicare does not cover routine dental care, most vision care (glasses, contacts), hearing aids, long-term custodial care (nursing homes for daily living assistance), or care outside the United States. Medicare Advantage plans often include some dental, vision, and hearing benefits.

What is IRMAA and who pays it?

IRMAA stands for Income-Related Monthly Adjustment Amount. It's a surcharge on your Part B and Part D premiums if your modified adjusted gross income exceeds $109,000 (single) or $218,000 (married filing jointly) based on your tax return from two years ago. About 7% of Medicare beneficiaries pay IRMAA.

Can I switch between Original Medicare and Medicare Advantage?

Yes. During the Annual Enrollment Period (October 15–December 7), you can switch from Original Medicare to Medicare Advantage, or vice versa. MA enrollees also get an Open Enrollment Period (January 1–March 31) to switch to a different MA plan or return to Original Medicare.

Is there an out-of-pocket maximum with Medicare?

Original Medicare has no out-of-pocket maximum — you're responsible for 20% coinsurance on Part B services with no cap. Medicare Advantage plans are required to have an out-of-pocket maximum, averaging $5,421 for in-network care in 2026. This is a key reason many people choose Medicare Advantage.

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This article is for educational purposes only and is not personalized financial advice. Consult a qualified financial advisor or Medicare counselor (SHIP) for guidance specific to your situation. Data sources: CMS 2026 Medicare Premiums & Deductibles Fact Sheet, KFF Medicare Advantage 2026 reports, Medicare.gov.

Last updated: October 2026