What You Must Know About the Different Parts of Medicare

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Medicare can be complicated, especially if you are a new enrollee or someone reviewing their plan during the Medicare open enrollment period, which runs October 15 to December 7 annually.

It's important to understand what benefits you will receive so you can decide if you want Part D prescription drug coverage, a Medicare Advantage plan, or additional coverage through Medigap. Staying up-to-date about changes to Medicare taking effect in 2026 will help you select the best plan when the time comes. Below is a quick explanation of each part of Medicare.

The 2026 version of the Medicare & You handbook is out; you can download a PDF copy. The publication has a rundown of Medicare benefits, health and drug plans, your rights and protections, and answers to the most frequently asked questions about Medicare.

If you're in a Medicare Advantage Plan or other Medicare plan, your plan might have different rules. But your plan must give you at least the same coverage as original Medicare. Some services may only be covered in certain facilities or for patients with certain conditions.

1. Medicare Part A

Part A covers inpatient care at hospitals and skilled nursing facilities, as well as hospice and some home health care. If you paid Medicare payroll taxes for at least 40 quarters, the Part A premium is free.

For 2026, there is a deductible of $1,736, an increase of $60 from 2025. You also must pay co-insurance for hospital stays longer than 60 days. For more details about what you'll pay for hospital co-insurance amounts, read What You Will Pay for Medicare in 2026.

However, Medicare doesn't cover the cost of long-term custodial care, which includes help with daily activities such as bathing and dressing, in a nursing home or at home for an extended period of time.

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2. Medicare Part B

Part B pays for doctor visits, outpatient care and some home health care. For 2026, the deductible is $283, and the base premium is $202.90 per month. After hitting the deductible, you pay 20% of expenses unless you have either Medicare Advantage or supplemental coverage.

The penalty for failing to enroll at age 65 is a permanent 10% of the monthly premium multiplied by the number of years you could have enrolled but didn't. Exceptions are made for those with coverage through a qualifying employer health plan.

You might notice that Part B doesn't cover expenses for routine dental, vision or hearing care. There are exceptions when the care is provided as a result of a specific diagnosis.

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3. Medicare Part C

Part C is commonly called Medicare Advantage. Beneficiaries are covered for Parts A and B through private insurers instead of traditional government-administered Medicare. Most Advantage plans include prescription drug coverage. For 2026, the average monthly premium is $14.00

The number of Medicare Advantage plans is set to shrink in 2026. UnitedHealthcare, Humana, and Aetna (CVS Health) will scale back both the number of plans and the areas they cover. Participants in these plans will need to select new coverage for 2026. To find out if you are impacted, read the Annual Notice of Change that your plan provider must furnish by September 30.

One of the biggest drawbacks of many Medicare Advantage plans is that beneficiaries are restricted to a preselected network of doctors and hospitals. Most MA plans impose prior authorization requirements that don't exist in original Medicare.

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4. Medicare Part D

Part D refers to standalone prescription drug coverage through private insurers. If your Advantage plan includes prescription drugs, you don't need Part D. If you elect original Medicare and want medications covered, you will need a Part D plan.

Modern Medigap plans don't cover prescription drugs, but if you purchased a policy before Jan. 1, 2006, and still have that plan, then your Medigap policy might include drug coverage.

The average total monthly premium for Medicare Part D coverage is expected to be approximately $34.50 in 2026.

If you decide after your initial enrollment period that you want Part D, you'll pay a permanent 1% penalty of the base premium multiplied by the number of months that you went without the coverage.

In 2026, people with Part D plans won’t have to pay more than $2,100 in out-of-pocket costs. The $2,100 cap is indexed to the growth in per capita Part D costs, so it might rise in 2027. Part D enrollees will also have the option of spreading out their out-of-pocket costs over the year rather than face high out-of-pocket costs in any given month.

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5. Medigap

Supplemental coverage is commonly referred to as Medigap. This is private insurance to supplement original Medicare coverage. The plans cover part or most of the cost sharing, such as co-insurance and co-payments, for Parts A and B, depending on which lettered Medigap plan you choose.

There are 10 plans, but as of 2020, new Medicare enrollees are ineligible for Plans C and F. All plans with the same letter provide the same benefits, but the cost could vary by insurance company.

Medigap plans typically have higher monthly premiums than Advantage plans but lower out-of-pocket expenses.

You can pick any Medigap plan available in your area within six months after you initially sign up for Medicare Part B.

After that, Medigap insurers in almost all states can reject you or charge more based on your health and pre-existing conditions. Delaying enrollment in a Medigap policy can lead to higher premiums and denial of coverage in most states.