Medicare

Medicare is the federal health insurance program for people 65 and older and for younger people with certain disabilities. Congress created it in 1965, at a time when roughly half of older Americans had no health insurance, and it now covers about 70 million people ¹. For most retirees it is the backbone of health coverage from 65 on, and next to Social Security it is the federal program that touches retirement finances most directly.

Medicare is not free, and it is not one plan. It comes in lettered parts, each with its own rules and price tags, plus private policies that wrap around it. The choices you make when you first enroll, especially the choice between original Medicare and Medicare Advantage, shape your coverage for years and can be difficult to reverse later.

This article walks through who qualifies, what each part does, the 2026 costs, the gaps in coverage, and where to get free help sorting it all out.

Who Medicare covers#

Most people become eligible the month they turn 65, regardless of when they stop working; Medicare has its own clock, separate from your retirement age or Social Security claiming date. You qualify for premium-free Part A if you or your spouse paid Medicare payroll taxes for at least 10 years (40 quarters of coverage). People with shorter work histories can still enroll but pay a monthly Part A premium ².

Younger people qualify in three situations: after receiving Social Security disability benefits for 24 months, immediately upon receiving disability benefits for ALS (Lou Gehrig's disease), or at any age with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant) ². As of early 2026, about 62 million enrollees are 65 or older and about 7 million qualify through disability ¹.

Medicare is not means-tested. Income does not affect eligibility, though higher earners pay larger premiums, as described below. It is also individual coverage: there are no family or spousal plans, so a younger spouse needs separate insurance until their own 65th birthday.

Sources for this section: [1] [2]

The four parts at a glance#

Parts A and B together are called original Medicare, the traditional program run directly by the federal government. Parts C and D are delivered by private insurers under federal rules.

Part A: hospital insurance#

Part A pays for inpatient hospital care, up to 100 days of skilled nursing facility care after a qualifying hospital stay, hospice care, and some home health services. Most people pay no premium for it.

Its cost-sharing works by "benefit period" rather than calendar year. In 2026, you pay a $1,736 deductible each time a new benefit period begins, then nothing for the first 60 days in the hospital. Days 61-90 cost $434 per day, and "lifetime reserve" days beyond that cost $868 per day ³. In a skilled nursing facility, the first 20 days are fully covered and days 21-100 cost up to $217 per day in 2026 ³.

Part B: medical insurance#

Part B covers the outpatient side of medicine: doctor and specialist visits, outpatient surgery, emergency and ambulance services, lab work and imaging, durable medical equipment such as walkers and oxygen, outpatient mental health care, and a long list of preventive services (flu shots, cancer screenings, an annual wellness visit), many at no cost to you. Use an individualized preventive-care calendar to separate clinical recommendations from coverage, track current vaccine guidance, and assign follow-up rather than treating the covered-service list as a universal schedule.

Part B charges a monthly premium, $202.90 for most people in 2026, usually deducted from Social Security checks ³. After you meet the $283 annual deductible, you generally pay 20 percent of the Medicare-approved amount for covered services. There is no ceiling on that 20 percent in original Medicare, which is the main reason supplemental coverage exists.

Part C: Medicare Advantage#

Medicare Advantage plans are the private alternative: an insurer takes over your Part A and B benefits, usually folds in drug coverage, and often adds dental, vision, or hearing extras, typically for little or no premium beyond Part B. In exchange, you generally use the plan's provider network and get approval for certain services in advance. In 2026, 55 percent of eligible Medicare beneficiaries, 35.2 million people, are in Medicare Advantage plans ⁴. The tradeoffs are significant and are covered later in this article.

Part D: prescription drug coverage#

Original Medicare did not include outpatient drug coverage until 2006. Medicare Part D plans are sold by private insurers, either as stand-alone plans paired with original Medicare or built into Medicare Advantage plans. Premiums and covered-drug lists vary widely by plan, but federal rules set the outer limits: in 2026 no plan's deductible may exceed $615, and once your out-of-pocket drug spending reaches $2,100 you pay nothing more for covered drugs that year ⁵. People with limited income and assets can qualify for the Extra Help program, which cuts premiums and copays substantially.

Sources for this section: [3] [4] [5]

What Medicare costs in 2026#

These figures reset every January; CMS announces the next year's amounts each fall. The 2026 Part B premium rose $17.90 from 2025's $185.00, an increase of almost 10 percent ³.

The income surcharge (IRMAA)#

Higher-income enrollees pay an income-related monthly adjustment amount, or IRMAA, on top of the standard Part B premium (and a smaller add-on to Part D premiums). The surcharge is based on your modified adjusted gross income from two years earlier, so 2026 premiums depend on your 2024 tax return ⁶.

IRMAA works as a cliff: one dollar of extra income can push both spouses into a higher tier for a full year. Because withdrawals from tax-deferred accounts and Roth conversions count toward the income test, IRMAA planning is a standard topic in taxes in retirement. If your income has dropped because of a life event such as retirement or the death of a spouse, you can ask Social Security to use your more recent income instead by filing form SSA-44.

Sources for this section: [3] [5] [6]

What original Medicare does not cover#

The gaps surprise many new enrollees. Original Medicare pays for almost none of the following ⁷:

• Most dental care, including cleanings, fillings, dentures, and implants
• Routine eye exams, eyeglasses, and contact lenses
• Hearing aids and the exams to fit them
• Long-term custodial care, meaning help with bathing, dressing, and daily living in a nursing home, assisted living community, or at home
• Routine foot care, cosmetic surgery, and most medical care outside the United States

The dental, vision, and hearing exclusions have medical exceptions (Part B pays for cataract surgery and diagnostic hearing tests ordered by a doctor, for example), and dental, vision, and hearing coverage explains the workarounds, from Medicare Advantage extras to standalone policies. Untreated hearing loss and vision problems are common enough in later life that these gaps deserve a plan of their own.

The long-term care exclusion is the costliest. Medicare's skilled nursing benefit covers at most 100 days of rehabilitation after a hospital stay; it does not pay for the years of custodial care that many people eventually need in nursing homes or at home. Families cover that through savings, long-term care insurance, or, after assets are spent down, Medicaid.

Just as important as any single exclusion: original Medicare has no annual out-of-pocket maximum. A serious illness can generate 20 percent coinsurance bills without limit, which is why most people add coverage of one kind or another.

Sources for this section: [7]

The main decision: Medigap or Medicare Advantage#

Nearly everyone entering Medicare faces the same fork in the road, and it is worth understanding before your first enrollment window opens.

One path is original Medicare plus a Medigap policy (private insurance that fills Medicare's cost gaps, also called Medicare Supplement) plus a stand-alone Part D drug plan. You can see any doctor or hospital in the country that accepts Medicare, referrals and prior approvals are rarely required, and your out-of-pocket costs become small and predictable. The price is higher fixed premiums: a Medigap policy adds its own monthly premium, which varies with the plan letter, your age, and your state, on top of Part B and Part D premiums, and it adds no dental or vision benefits.

The other path is a Medicare Advantage plan, which usually costs little or nothing beyond the Part B premium, includes drug coverage and extra benefits, and caps your annual in-network out-of-pocket spending. In return you accept a provider network, prior authorization requirements, and cost-sharing that rises with how much care you use.

Neither choice is universally better. People who travel widely, split the year between states, or manage complex conditions often value original Medicare's go-anywhere flexibility; people in good health who want low premiums and one card in the wallet often lean toward Medicare Advantage. The catch is that the doors do not swing both ways: you can always move from Medigap to Medicare Advantage, but moving back later usually requires passing Medigap medical underwriting, which insurers in most states can use to deny coverage or charge more based on your health. The timing rules around this are covered in Medicare enrollment periods.

How and when to enroll#

If you are already receiving Social Security benefits when you turn 65, enrollment in Parts A and B is automatic and your Medicare card arrives in the mail about three months before your birthday. Everyone else must apply, and Social Security handles the paperwork: online at ssa.gov/medicare, by phone at 1-800-772-1213, or at a local office ².

Your initial enrollment period runs seven months, from three months before your 65th birthday month through three months after it. People still covered by an employer plan (their own or a spouse's, from current employment) can delay Parts B and D without penalty and use a special enrollment period later ².

Note: Missing your enrollment window without qualifying coverage triggers late penalties that are added to your premiums, in most cases for life, and can leave you uninsured for months. The enrollment periods article linked above walks through the deadlines and the penalty math.

Choosing among Part D and Medicare Advantage plans happens on medicare.gov's Plan Finder, where you can enter your drugs and pharmacies and compare total estimated costs rather than premiums alone. Coverage is annual, and the fall open enrollment period (October 15 to December 7) lets you change plans each year.

Sources for this section: [2]

Where to get free help#

Medicare decisions rarely require paying anyone for advice. Every state runs a State Health Insurance Assistance Program (SHIP), which offers free, unbiased, one-on-one counseling from trained staff and volunteers; find yours at shiphelp.org or call 877-839-2675 ⁸. SHIP counselors do not sell insurance, which distinguishes them from the brokers and agents who advertise heavily each fall and earn commissions on the plans they recommend.

The program itself staffs a 24-hour help line at 1-800-MEDICARE (1-800-633-4227), and the "Medicare & You" handbook, mailed to every household each fall and posted at medicare.gov, summarizes that year's coverage rules and costs. For premium help, Medicare Savings Programs run through state Medicaid offices can pay Part B premiums and cost-sharing for people with limited income and assets; a SHIP counselor can tell you whether you qualify.

Sources for this section: [8]

RetiredWiki. (2026, July 18). Medicare. https://retiredwiki.com/article/medicare