What Is Medicare?

Medicare is a federal health insurance program administered by the Centers for Medicare and Medicaid Services (CMS). It was signed into law in 1965 under President Lyndon B. Johnson and today covers more than 67 million Americans. Unlike private health insurance, Medicare is not tied to employment. Eligibility is based on age, disability status, or specific medical conditions. Understanding what Medicare is, what it covers, and how it is structured is the starting point for anyone approaching age 65 or helping a loved one navigate their coverage options.

Who Is Eligible for Medicare?

Most people become eligible for Medicare when they turn 65, provided they are a U.S. citizen or have been a lawful permanent resident for at least five continuous years. Younger people can also qualify if they have received Social Security Disability Insurance (SSDI) for 24 months, have been diagnosed with End-Stage Renal Disease (ESRD), or have Amyotrophic Lateral Sclerosis (ALS), which qualifies immediately upon diagnosis without a waiting period.

The Four Parts of Medicare

Medicare is divided into four distinct parts, each covering a different category of healthcare services. Parts A and B together make up what is called Original Medicare. Parts C and D are optional additions that provide additional coverage through private insurers.

Medicare Part A: Hospital Insurance

Part A covers inpatient care in hospitals, critical access hospitals, and skilled nursing facilities (SNFs). It also covers hospice care and some home health services. Most people do not pay a premium for Part A because they or their spouse paid Medicare taxes for at least 40 quarters (10 years) while working. In 2026, the Part A deductible is $1,676 per benefit period, which is not an annual deductible but resets each time you begin a new benefit period after being out of the hospital for 60 consecutive days.

• Inpatient hospital care: Days 1-60 covered after the $1,676 deductible; days 61-90 require a $419/day coinsurance; days 91+ draw from 60 lifetime reserve days at $838/day

• Skilled nursing facility: Days 1-20 fully covered after a qualifying hospital stay; days 21-100 require $209.50/day coinsurance; day 101 and beyond not covered

• Hospice care: Covered for terminally ill patients with a life expectancy of 6 months or less; small copays may apply for drugs and respite care

• Home health care: Covered when medically necessary and ordered by a physician; must be homebound and need skilled nursing or therapy

Medicare Part B: Medical Insurance

Part B covers two broad categories: medically necessary services (doctor visits, outpatient procedures, lab tests, ambulance services, durable medical equipment) and preventive services (annual wellness visits, screenings, vaccines). In 2026, the standard Part B premium is $185 per month, though higher-income beneficiaries pay more through the Income-Related Monthly Adjustment Amount (IRMAA). After the $257 annual deductible, Medicare pays 80% of approved costs and you pay the remaining 20% with no annual out-of-pocket cap under Original Medicare alone.

Medicare Part C: Medicare Advantage

Medicare Advantage (Part C) is an alternative way to receive your Medicare benefits through a private insurer approved by CMS. These plans must cover everything Original Medicare covers, but they do so through their own networks of doctors and hospitals. Most Medicare Advantage plans also include Part D drug coverage and extra benefits such as dental, vision, hearing, and fitness programs. In exchange for these extras, you typically agree to use a network of providers and may need referrals to see specialists.

All Medicare Advantage plans must have an annual out-of-pocket maximum. In 2026, the federal limit is $9,350 for in-network services. Once you reach that cap, the plan pays 100% of covered costs for the rest of the year. You still pay your Part B premium even when enrolled in Medicare Advantage. For a detailed comparison, see our guide to Medicare Advantage vs. Medicare Supplement.

Medicare Part D: Prescription Drug Coverage

Part D covers outpatient prescription drugs. It is available as a standalone Prescription Drug Plan (PDP) for people with Original Medicare, or bundled into a Medicare Advantage Prescription Drug (MAPD) plan. In 2026, the most significant change to Part D is the implementation of the $2,000 annual out-of-pocket cap, a result of the Inflation Reduction Act of 2022. Once your total drug costs reach $2,000, you pay nothing for covered drugs for the rest of the year. The coverage gap (donut hole) that previously existed has been eliminated.

Medicare Supplement Insurance (Medigap)

Medigap is not technically a part of Medicare, but it is an important component of many beneficiaries' coverage strategy. Medigap plans are sold by private insurers and are designed to fill the cost-sharing gaps in Original Medicare, such as the Part A deductible, Part B coinsurance, and hospital costs beyond Medicare's limits. In 2026, the most popular Medigap plans are Plan G (which covers nearly all gaps after the Part B deductible) and Plan N (which has lower premiums but includes small copays). For more information, see our guide to choosing a Medigap policy.

What Medicare Does Not Cover

Original Medicare has notable coverage gaps that surprise many new enrollees. Understanding what is not covered helps you plan for supplemental coverage.

• Routine dental care, including cleanings, fillings, extractions, and dentures

• Routine vision care and eyeglasses (except after cataract surgery)

• Hearing aids and routine hearing exams

• Long-term custodial care (help with daily activities such as bathing and dressing)

• Most care received outside the United States

• Cosmetic surgery

• Most prescription drugs (covered under Part D, not Parts A or B)

How to Enroll in Medicare

If you are already receiving Social Security or Railroad Retirement Board benefits when you turn 65, you will be automatically enrolled in Parts A and B. Your Medicare card will arrive in the mail about three months before your 65th birthday. If you are not yet receiving those benefits, you must actively sign up. The Initial Enrollment Period (IEP) spans 7 months: the 3 months before your birthday month, your birthday month, and the 3 months after. You can enroll online at ssa.gov, by calling Social Security at 1-800-772-1213, or by visiting your local SSA office.

Original Medicare vs. Medicare Advantage: Which Is Right for You?

Frequently Asked Questions