[Last updated August 25, 2025]
Signing up for Medicare is an important step in securing or maintaining health insurance coverage for people who turn 65. However, understanding the options can be a challenge. This article aims to explain Medicare, including what it is, what it covers, the parts and how they work, and how to enroll.
About Medicare
Original Medicare is the federal health insurance program available to:
- People aged 65 and older.
- Some younger individuals with qualifying disabilities, end-stage renal disease, or ALS.
It is provided by the federal government and funded through payroll taxes, premiums, and federal general revenues.
Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance). With Medicare, you can use any doctor or hospital nationwide that accepts Medicare without requiring prior authorization. You can also purchase Part D (prescription coverage) and Medigap (Medicare Supplement Insurance) as add-ons that help cover the costs original Medicare does not, such as copayments and deductibles.
Medicare Advantage (Part C) is a private insurance alternative to original Medicare that bundles hospital, medical, and often prescription drug, dental, vision, and hearing coverage. With Medicare Advantage, you will likely be restricted to the insurer’s network of doctors and hospitals, and you will need prior authorization for many services.
Keep in mind that although they sound similar, Medicare and Medicaid are different. Medicare is age- and condition-based health insurance, while Medicaid is income-based coverage for qualifying individuals and families.
Medicare Part A (hospital insurance)
Medicare Part A is half of original Medicare.
What it covers:
- Inpatient hospital care.
- Skilled nursing facility care (after a qualifying hospital stay).
- Hospice care.
- Some limited home health services.
Fixed costs:
- Most people don’t pay a premium if they or their spouse worked and paid Medicare taxes for a certain amount of time, usually 10 years.
- If you don’t meet that requirement, you may owe a monthly premium of $285 or $518 in 2025.
Usage-based costs:
- You will also be responsible for a deductible of $1,676 per hospital stay in 2025, plus coinsurance.
Is it optional?
Yes, technically, Medicare Part A is optional. If you’re receiving Social Security benefits when you turn 65, you’ll be automatically enrolled and could lose Social Security benefits if you then decline. Most people enroll at 65 because it’s free. However, you can’t be forced to enroll if you don’t qualify for premium-free coverage.
Medicare Part B (medical insurance)
Part B is the other half of original Medicare.
What it covers:
- Doctor visits.
- Outpatient care.
- Preventive services (such as screenings and vaccines).
- Durable medical equipment.
Fixed costs:
- A standard monthly premium is projected to increase to $206.50 in 2026, up from $185 in 2025. This premium typically adjusts each year, and some people will pay more based on their income. High-income beneficiaries can pay as much as $628.90 for their 2025 Part B premium.
Usage-based costs:
- The Medicare Part B annual deductible is projected to be $288 in 2026, up from $257 in 2025, plus 20% coinsurance for most covered services.
Is it optional?
Yes, Medicare Part B is optional. You can delay Part B without penalty if you have qualifying coverage through an employer. Otherwise, late enrollment usually results in permanent penalties once you enroll.
Medicare Part C (Medicare Advantage)
Medicare Part C, also called Medicare Advantage, is not part of original Medicare. Instead, it’s an alternative offered by private insurers. Choosing Medicare Advantage means you opt out of original Medicare and instead use your plan’s provider networks.
What it covers:
- Combines hospital (Part A) and medical (Part B) coverage.
- Often includes prescription drug coverage (Part D).
- May offer extras like dental, vision, and hearing care coverage.
Fixed costs:
- You still pay your Part B premium, plus any additional premium charged by the Medicare Advantage plan (often $0).
Usage-based costs:
- Out-of-pocket costs vary by plan, with annual maximums set by the insurer.
Medicare Part D (prescription drug coverage)
Part D is optional private coverage for prescription drugs.
What it covers:
- Outpatient prescription medications.
- Many vaccines not covered under Part B.
Fixed costs:
- A monthly premium, which varies by plan and by income, but in 2025 averages about $39 nationwide.
Usage-based costs:
- Out-of-pocket spending for prescription drugs is capped at $2,100 for 2026, up from $2,000 for 2025. Annual deductible limits are projected at $615 in 2026, up from $590 in 2025 but can be as low as $0 depending on your plan.
Is it optional?
Yes, Medicare Part D is optional. However, if you don’t sign up when you’re first eligible and lack other creditable drug coverage, you may pay a late enrollment penalty for as long as you have Part D.
Medigap (Medicare Supplement Insurance)
Medigap is supplemental coverage that works alongside original Medicare but is not part of it. Private insurers sell these policies to cover the “gaps” in original Medicare coverage. These gaps include:
- Copayments.
- Coinsurance.
- Deductibles.
Why it exists:
Original Medicare leaves beneficiaries responsible for significant out-of-pocket costs, including up to 20% of Medicare-approved billings. Medigap helps cover some of these expenses.
Fixed costs:
- Monthly premiums range from $100 to $300 in 2025, in addition to Part B and Part D premiums (if applicable).
- Premiums vary by plan type, insurer, and location.
Usage-based costs:
- Costs vary with the Medigap plan you choose. It can cover up to 100% of what original Medicare doesn’t pay.
Critical details:
You cannot have both Medigap and Medicare Advantage. You must choose one. Also, all plans are available to you when you first enroll in Medicare, but you may be denied or pay increased premiums if you purchase them later.
What does original Medicare not pay for?
Original Medicare does not pay for everything related to health care, contrary to what many people believe. Key exclusions include:
- Prescription drugs.
- Routine dental, vision, or hearing care.
- Most wellness programs and gym memberships.
- Long-term or custodial care (e.g., assisted living or long-term nursing home care and room and board).
- Personal home care (e.g., help with bathing or dressing).
- Senior living facility costs.
- Cosmetic procedures.
- Alternative or complementary medicine.
- Health care outside the U.S.
Some of these exclusions (particularly dental, vision, hearing, and wellness care) may be partially covered by some Medicare Advantage plans. However, those plans may require that you stay within the plan’s provider networks and possibly obtain prior authorization.
How much does Medicare cost?
Medicare costs vary depending on your combination of parts and supplemental coverage. Below is a simplified summary table with your fixed-cost commitment under each part.
| Part/plan | Original Medicare? | Covers | Typical premium* | Can combine with other plans? |
|---|---|---|---|---|
Part A | Yes | Hospital, short-term skilled nursing, hospice | Usually $0 if eligible; if not, $285 or $518/month (2025) | Yes, with Parts B, D, and Medigap |
Part B | Yes | Outpatient and medical services | Projected at $206.50 (2026) | Yes, with Parts A, D, and Medigap |
Part C (Advantage) | No | A and B, plus possible drug coverage and other extras | Varies; often $0 plus Part B premium | No; replaces Parts A and B; may include D |
| Part D | No | Prescription drugs | Varies; averages ~$39/month (2025) | Yes, with Parts A and B; or Part C, if D is not included |
| Medigap | No | Deductibles, copays, and coinsurance for A and B | Varies; ~$100 to $300/month (2025) | Yes, with Parts A and B only |
*Premiums vary by location, plan, and individual circumstances and may increase yearly.
When should you sign up for Medicare?
You should sign up for Medicare when you turn 65 to avoid incurring penalties, although there may be reasons not to do so. Here are the four primary enrollment periods:
Initial enrollment period (IEP):
- The seven-month window around your 65th birthday, including three months before, the month of, and three months after your birthday.
- Sign up for Parts A, B, and D to avoid late enrollment penalties if you enroll later, unless you have qualified employer health insurance.
General enrollment period (GEP):
- January 1 to March 31 of each year, if you missed your IEP.
- Late penalties may apply unless you qualify for a special enrollment period.
Special enrollment period (SEP):
- Triggered by qualifying life events, such as:
- Losing employer coverage.
- Moving.
- Plan termination.
- Typically lasts two to three months after the event.
- Allows penalty-free enrollment in Parts A and B if you had qualifying coverage.
Annual enrollment period (AEP):
- October 15 to December 7 of each year.
- You can:
- Join or switch Medicare Advantage plans.
- Enroll in or change Part D prescription drug plans.
- Switch back to original Medicare.
Summary
Medicare offers several paths to coverage:
- Original Medicare (Parts A and B) is the federal program providing hospital and medical insurance.
- Medicare Advantage (Part C) is private insurance that replaces original Medicare and often adds extra benefits.
- Prescription drug plans (Part D) are available to original Medicare beneficiaries from private insurers.
- Medigap private insurance helps cover costs that original Medicare does not pay.
Understanding the fixed premiums versus potential usage costs is key. Fixed premiums give you your minimum financial commitment, while usage-based costs reflect what you might pay if you actually need services.
Being familiar with enrollment windows is also critical to avoiding penalties. Knowing the structure and options lets you confidently choose the combination that best meets your needs while controlling your financial exposure..
