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Medicare Basics: Parts A, B, C, and D Explained

Medicare's alphabet of parts trips up a lot of people right before they need it most. Here's what each part actually covers, when you can sign up, and where the costs and penalties come from.

Part A: hospital insurance

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people do not pay a monthly premium for Part A if they or a spouse paid Medicare payroll taxes for enough working years, generally 40 quarters, or about 10 years, of work. People with fewer work credits may still get it by paying a premium.

Part B: medical insurance

Part B covers outpatient care: doctor visits, preventive services, durable medical equipment, and outpatient procedures. Unlike Part A, almost everyone pays a monthly premium for Part B. The standard premium for 2026 is $202.90 per month, and the amount can be higher for people with higher income, an income-related surcharge known as IRMAA. The premium is reset each year, so check the current figure.

Part C: Medicare Advantage

Medicare Advantage plans are an alternative way to get Medicare benefits, sold by private insurers approved by Medicare. They bundle Parts A and B, and usually Part D, into one plan, often with extra benefits like dental or vision, but typically restrict you to a network of providers. Advantage plans also have an annual limit on what you pay out of pocket for covered services, which Original Medicare does not have.

Part D: prescription drug coverage

Part D covers outpatient prescription drugs through private, Medicare-approved insurers. It is optional, but going without it or without other creditable drug coverage once you are eligible can trigger a permanent late-enrollment penalty added to your premium. Each plan has its own formulary, the list of covered drugs, so compare plans against the medicines you actually take.

Eligibility mostly starts at 65

Most people become eligible for Medicare at age 65, regardless of whether they have retired. People under 65 can also qualify earlier due to certain disabilities or specific conditions like end-stage renal disease. You generally must be a US citizen or a lawful permanent resident of at least five continuous years.

The Initial Enrollment Period is a 7-month window

This window is centered on your 65th birthday month: it starts 3 months before, includes the birthday month, and extends 3 months after. Enrolling late without other qualifying coverage can mean a delay in coverage and a permanent premium penalty. If you already receive Social Security benefits, you are usually enrolled in Parts A and B automatically when you turn 65.

Medigap fills gaps in Original Medicare

Medigap, or Medicare Supplement, policies are separate private plans that help cover the deductibles, copays, and coinsurance that Original Medicare (Parts A and B) leaves you to pay. Medigap and Medicare Advantage are not used together; they are two different approaches to filling the same gaps.

Annual Open Enrollment lets you change plans each fall

Every year, a window from October 15 to December 7 lets people already on Medicare switch Advantage plans, switch drug plans, or move between Original Medicare and Medicare Advantage for the coming year. Dates can be adjusted by Medicare, so confirm them on Medicare.gov each year. Medicare Advantage enrollees also get a separate, narrower window early in the year to switch plans or return to Original Medicare.

How the Part B late penalty works

If you do not sign up for Part B when first eligible and do not have qualifying employer coverage, the penalty is 10 percent of the standard premium for each full 12-month period you could have had Part B but did not. It is added to your monthly premium for as long as you keep Part B, which can mean the rest of your life. Someone who waited two full years pays 20 percent more.

How the Part D late penalty works

The Part D penalty is 1 percent of the national base beneficiary premium for each month you were eligible but went without creditable drug coverage, once a gap reaches 63 days or more. The total is rounded to the nearest 10 cents and added to your Part D premium for as long as you have coverage. The base premium changes every year, so the dollar amount of the penalty can change too. Creditable coverage from an employer or union plan avoids it, as can qualifying for Extra Help.

Special enrollment if you keep working

If you or your spouse are still working and covered by an employer group health plan, you can generally delay Part B without a penalty. When that employment or coverage ends, you typically get a Special Enrollment Period of 8 months to sign up for Part B. COBRA and retiree coverage do not count as current employment coverage for this purpose, so people who rely on them can face penalties. Employers with fewer than 20 employees often require Medicare as the primary payer, so confirm your situation with the benefits office.

Medigap timing matters

The best time to buy a Medigap policy is during your Medigap Open Enrollment Period, a six-month window that starts when you are 65 or older and enrolled in Part B. During it, insurers generally cannot deny you coverage or charge more because of health problems. After it ends, in most states insurers may use medical underwriting and can refuse or price you out. Rules differ in a few states.

Why the parts are lettered instead of named

Medicare was created in 1965 covering hospital and medical insurance, which became Parts A and B. Part C (Medicare Advantage) and Part D (drug coverage) were added decades later as the program expanded, which is why the letters do not map neatly onto 'basic' vs 'extra' coverage the way a newcomer might expect.

Original Medicare vs Medicare Advantage is the real fork in the road

The biggest practical decision most new enrollees face is not which letter to pick but whether to stay on Original Medicare, Parts A and B, optionally paired with a Medigap policy and a standalone Part D plan, or switch to a Medicare Advantage plan. Each path has different trade-offs around provider networks, extra benefits, and out-of-pocket cost predictability. Original Medicare lets you see any provider that accepts Medicare, while Advantage plans typically require staying in a network and may require approval before some services.

The late-enrollment penalties are permanent, not one-time

Delaying Part B or Part D enrollment without another form of qualifying coverage does not just cost you a one-time late fee. It typically adds a permanent increase to your premium for as long as you have that coverage, which is why understanding your enrollment window matters even years before you turn 65.

Notes on using this information

This page is general information about the US Medicare program, not insurance, legal, or financial advice. Rules, premiums, and dates change, and individual situations differ, so confirm your own enrollment dates and costs with Medicare.gov, Social Security, or a licensed counselor.

Frequently Asked Questions

Do I need to sign up for Medicare if I am still working at 65?

It depends on the size of your employer and your current coverage. Many people with qualifying employer coverage can delay Part B without a penalty, but the rules are specific enough that it is worth confirming your situation directly with Medicare or your employer's benefits office before your Initial Enrollment Period ends.

Is Medicare free?

No single part of Medicare is entirely free for most people. Part A usually has no premium if you have enough work history, but Part B, Part D, and any supplemental coverage generally carry a monthly premium, plus deductibles and coinsurance depending on the services you use.

What is the difference between Medicare and Medicaid?

They are separate programs despite the similar names. Medicare is a federal program primarily based on age or disability, regardless of income, while Medicaid is a joint federal-state program based primarily on income and, in some cases, other eligibility factors, with rules that vary by state.

Can I have both Medicare and employer or marketplace insurance?

In some cases yes, but coordination-of-benefits rules determine which plan pays first, and the details depend on the type of other coverage and your specific situation, so it is worth checking rather than assuming. Marketplace plan subsidies generally end once you are eligible for premium-free Part A.

Does Original Medicare cover dental, vision, or hearing?

Generally not routine dental, vision, or hearing care. Many Medicare Advantage plans include some of these benefits, and separate stand-alone plans exist, so check what a specific plan covers.

Can I switch between Medigap and Medicare Advantage?

You can change, but switching is not always simple. Leaving an Advantage plan for Original Medicare is possible during certain windows, and buying a Medigap policy later may involve medical underwriting outside your guaranteed-issue periods, so think through the long-term implications before switching.