Understanding Medicare: How It Works & Costs
A comprehensive guide to Medicare coverage, costs, and enrollment for 2026
What is Medicare?
Medicare is a federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (ESRD). Medicare helps cover the cost of healthcare, but it doesn't cover everything, and you'll typically pay deductibles, coinsurance, and copayments.
The Four Parts of Medicare
Understanding each part helps you make informed decisions about your coverage
Part A: Hospital Insurance
Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services.
What It Covers:
- Inpatient hospital care
- Skilled nursing facility care
- Hospice care
- Some home health care services
Costs:
Part B: Medical Insurance
Covers doctor visits, outpatient care, medical supplies, preventive services, and other medical services not covered by Part A.
What It Covers:
- Doctor visits and outpatient care
- Preventive services
- Medical supplies and equipment
- Laboratory tests and X-rays
- Mental health services
Costs:
Part C: Medicare Advantage
Alternative to Original Medicare offered by private insurance companies. Includes all Part A and Part B benefits, often with additional coverage.
What It Covers:
- All Part A and Part B benefits
- Often includes prescription drugs (Part D)
- Additional benefits like dental, vision, hearing
- Wellness programs and fitness memberships
Costs:
Part D: Prescription Drug Coverage
Helps cover the cost of prescription drugs. Offered by private insurance companies approved by Medicare.
What It Covers:
- Prescription medications
- Varies by plan formulary
- May include mail-order pharmacy options
Costs:
2026 Medicare Costs
Understanding what you'll pay for Medicare coverage
Part A Costs
Monthly Premium
For most people (if you have 40+ quarters of Medicare-covered employment)
Inpatient Hospital Deductible
Per benefit period
Daily Coinsurance (Days 61-90)
Per day
Daily Coinsurance (Lifetime Reserve)
Per day (up to 60 days lifetime)
Skilled Nursing Facility (Days 21-100)
Per day
Part B Costs
Monthly Premium (Standard)
Per month
Annual Deductible
Per year
Coinsurance
Of Medicare-approved amount for most services
Income-Related Adjustments
If your income is above certain limits, you may pay more for Part B and Part D premiums. In 2026, individuals with income above $109,000 (or $218,000 for joint filers) pay higher premiums.Learn more about income-related adjustments
How Medicare Works
Original Medicare (Part A & B)
Original Medicare is fee-for-service coverage. You can see any doctor or hospital that accepts Medicare, anywhere in the U.S. You typically pay a deductible and coinsurance for services. Many people add a Medigap (Medicare Supplement) policy to help cover out-of-pocket costs, and a Part D plan for prescription drugs.
Medicare Advantage (Part C)
Medicare Advantage plans are offered by private insurance companies approved by Medicare. These plans provide all your Part A and Part B coverage, and often include Part D prescription drug coverage and additional benefits like dental, vision, and hearing. Most plans have networks of providers, and you may need referrals for specialists.
Medicare Supplement (Medigap)
Medigap policies are sold by private insurance companies to help pay for costs that Original Medicare doesn't cover, like deductibles, copayments, and coinsurance. You must have Original Medicare (Part A and B) to buy a Medigap policy. You cannot use Medigap with Medicare Advantage.
When Can You Enroll?
Understanding enrollment periods helps you avoid penalties and get coverage when you need it
Initial Enrollment Period (IEP)
Annual Enrollment Period (AEP)
Medicare Advantage Open Enrollment
Special Enrollment Period (SEP)
Medicare and Your VA Benefits
How They Work Together
Medicare and VA benefits work independently - they don't coordinate with each other. This means:
- You can use VA facilities for VA-covered services
- You can use Medicare for services outside the VA system
- Each system pays for its own services - no coordination needed
- Having both gives you maximum flexibility and provider choice
Why Consider Medicare if You Have VA Benefits?
Even if you have VA benefits, Medicare can provide additional value:
- Access to a broader network of providers outside the VA system
- Coverage when traveling or living far from VA facilities
- Protection if your VA eligibility changes in the future
- Additional benefits through Medicare Advantage plans (dental, vision, hearing)
Need Help Understanding Your Medicare Options?
Our licensed agents can help you understand Medicare costs, coverage options, and how Medicare works with your VA benefits.