What Is Medicare?
Medicare is the federal health insurance program for Americans 65 and older, as well as certain younger people with disabilities or specific medical conditions. It is administered by the Centers for Medicare & Medicaid Services (CMS) and funded through payroll taxes, premiums, and general federal revenues.
Understanding Medicare starts with knowing its four parts — each covering a different aspect of your healthcare.
Medicare Part A — Hospital Insurance
Part A covers inpatient hospital care, care in a skilled nursing facility following a hospital stay, hospice care, and some home health services. Most people do not pay a premium for Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters). In 2026, the Part A inpatient hospital deductible is $1,676 per benefit period.³
Medicare Part B — Medical Insurance
Part B covers doctor visits, outpatient hospital services, preventive care, lab tests, medical equipment, and most services you receive outside a hospital. In 2026, the standard Part B premium is $202.90 per month.¹ Part B also has an annual deductible of $257 in 2026, after which Medicare pays 80% of approved costs and you pay the remaining 20% — with no ceiling on your out-of-pocket exposure unless you have supplemental coverage.
Why the 20% matters: There is no out-of-pocket maximum under Original Medicare Parts A and B. A serious illness could result in tens of thousands of dollars in personal cost. This is why Medigap (Medicare Supplement) plans and Medicare Advantage plans exist — to cap your exposure.
Medicare Part C — Medicare Advantage
Medicare Advantage (MA) plans are an alternative way to receive your Medicare benefits through a private insurance company that contracts with Medicare. These plans must cover everything Original Medicare covers, and most also include prescription drug coverage, dental, vision, and hearing. Most plans have a $0 monthly premium in addition to your Part B premium, and all have a maximum out-of-pocket cap — which Original Medicare lacks.
The tradeoff is that MA plans use provider networks. You must generally see doctors and use hospitals within the plan's network to receive full benefits. Choosing between Original Medicare and Medicare Advantage is one of the most important decisions you will make, and the right answer depends entirely on your situation.
Medicare Part D — Prescription Drug Coverage
Part D covers prescription medications. It is offered through private insurance companies and can be added to Original Medicare as a standalone plan. In 2026, the national base premium is $38.99 per month.² A major 2025 change: the annual out-of-pocket cap on prescription drugs is now $2,000, the first cap in Medicare's history.⁵
Never skip Part D: Even if you take no medications today, skipping Part D triggers a permanent late enrollment penalty of 1% per month for every month you go without creditable drug coverage. That penalty is added to your premium for life.⁴
Original Medicare vs. Medicare Advantage — Which Is Right for You?
Original Medicare (Parts A + B)
See any provider that accepts Medicare nationwide. No network restrictions. Add a Medigap plan to cap costs. Best for people who travel frequently or want maximum provider flexibility.
Medicare Advantage (Part C)
Private plan bundling A, B, and usually D. Lower or zero premium, annual out-of-pocket cap, often includes dental/vision. Best for people with stable local providers who want coordinated coverage.
What Medicare Does Not Cover
Original Medicare does not cover routine dental, vision, or hearing care. It does not cover long-term custodial care, most care received outside the United States, or cosmetic procedures. Many Medicare Advantage plans fill some of these gaps — particularly dental, vision, and hearing. A local independent agent can help you identify plans that cover what matters most to you.
The Next Step
Understanding the basics is a strong start — but Medicare decisions are personal. Your doctors, your prescriptions, your income, and your geography all affect which combination of coverage serves you best. A licensed independent agent who knows your community can compare your specific options across 29 carriers and help you make a confident, informed choice.