What Is Medicare?

The four parts, in one place

Part	What it covers	Who runs it	2026 cost
Part A	Inpatient hospital, skilled nursing, hospice, some home health	Federal government	Usually $0 premium; $1,736 deductible per benefit period
Part B	Doctor visits, outpatient care, preventive services, equipment	Federal government	$202.90/mo standard; $283 annual deductible
Part C	Medicare Advantage — bundles A, B, usually D, plus extras	Private insurers	Plan premium, often $0, plus your Part B premium
Part D	Prescription drugs	Private insurers	Plan premium; deductible up to $615; $2,100 out-of-pocket cap

Figures come from the CMS 2026 Parts A & B fact sheet and the CMS CY2026 Part D redesign instructions.

Part A — hospital insurance

Part A covers you as an inpatient. Most people pay no premium for it because they or a spouse paid Medicare payroll taxes for at least 40 quarters — about ten years of work.

• Inpatient hospital stays, including a semi-private room, meals, and nursing care.
• Skilled nursing facility care after a qualifying hospital stay — up to 100 days per benefit period, not long-term custodial care.
• Hospice care for a terminal diagnosis.
• Some home health care.

If you don't have 40 quarters you can still buy Part A: $311 a month with 30–39 quarters, or $565 with fewer than 30, in 2026.

The deductible is per benefit period, not per year — a benefit period starts when you're admitted and ends after 60 consecutive days out of hospital, so it's possible to pay it more than once in a calendar year.

Part B — medical insurance

Part B covers care outside an inpatient admission: doctor visits, outpatient surgery, lab work, imaging, durable medical equipment, and preventive services like the annual wellness visit and most screenings.

The standard 2026 premium is $202.90 a month and it's usually deducted from your Social Security payment. Higher earners pay an income-related adjustment (IRMAA) based on income from two years earlier, taking the premium up to $689.90 a month at the top tier.

After the $283 annual deductible, Original Medicare generally pays 80% of the approved amount and you pay the remaining 20% — with no annual limit on that 20%. That open-ended exposure is the single most important thing to understand about Original Medicare, and it's why almost nobody keeps it alone.

The two paths you have to choose between

Everything else in Medicare follows from one decision.

	Path 1: Original Medicare + Medigap + Part D	Path 2: Medicare Advantage
Cards	Three — Medicare, Medigap, Part D	Usually one
Networks	None; any provider taking Medicare	HMO or PPO network
Monthly cost	Higher, predictable	Lower, often $0 plan premium
Cost when sick	Very low	Copays up to the plan maximum
Extras	Bought separately	Often bundled
Referrals / prior auth	Rare	Common

Neither is universally better. The right one depends on your doctors, your prescriptions, how much you travel, and whether you'd rather pay steadily or as you go. Compare Medicare Advantage and Medigap in detail.

What Medicare does not cover

The gaps surprise people more than the coverage does.

• Long-term custodial care — the biggest gap by far. See long-term care.
• Routine dental, vision, and hearing — including dentures, glasses, and hearing aids. See dental and vision.
• Most care outside the United States.
• Cosmetic surgery and most alternative therapies.

Medicare Advantage plans often add some dental, vision, and hearing coverage; Medigap does not. Neither covers long-term custodial care.

When you sign up — and the penalties for waiting

Your Initial Enrollment Period is 7 months — the 3 months before your 65th-birthday month, that month, and the 3 months after. Missing it has permanent consequences unless you have qualifying coverage from active employment.

• Part B late penalty — 10% of the standard premium for each full 12-month period you could have had Part B but didn't, added to your premium for as long as you have Part B.
• Part D late penalty — 1% of the national base beneficiary premium for each month you went without creditable drug coverage, permanently.
• Medigap — your one guaranteed-acceptance window is the 6 months that begin the month you're 65 or older AND enrolled in Part B, and it does not repeat.

If you're still working past 65 with employer coverage, different rules apply — see Medicare.gov on working past 65 and our enrollment periods guide.

Help if the cost is a problem

Two federal programs materially reduce what you pay, and both are underused in New Mexico.

• Medicare Savings Programs pay your $202.90 Part B premium and sometimes your deductibles and coinsurance — Medicare.gov. Apply through the New Mexico Health Care Authority.
• Extra Help zeroes out the Part D premium and deductible and caps drug copays — apply free at Social Security.

Qualifying for a Medicare Savings Program automatically qualifies you for Extra Help. Free unbiased counselling is also available from your State Health Insurance Assistance Program.

Your next step

If you're approaching 65, work out your enrollment window first, then choose between the two paths, then pick the specific plan. Doing it in that order prevents nearly every expensive mistake we see.

Start with eligibility, then enrollment periods, then how to enroll. Or use our eligibility checker to see which window you're in right now.

Not sure which of these fits you? A free 15-minute call with a licensed local advisor sorts it out — no pressure, and no cost to you. We do not offer every plan available in your area. For a complete list of every plan in your county, use Medicare Plan Compare or call 1-800-MEDICARE.

Medicare words, defined

The vocabulary trips people up more than the rules do.

• Benefit period — starts when you're admitted as an inpatient and ends after 60 consecutive days out of hospital. The Part A deductible is charged per benefit period, not per year.
• Coinsurance — a percentage of the cost you pay, such as the 20% Part B leaves.
• Copay — a flat amount per visit or prescription.
• Formulary — the list of drugs a plan covers, arranged in tiers.
• Creditable coverage — drug coverage at least as good as Part D, which protects you from the late penalty.
• Assignment — a provider accepting Medicare's approved amount as full payment.
• IRMAA — the income-related surcharge on Part B and Part D premiums.
• MOOP — the maximum out-of-pocket limit on a Medicare Advantage plan.