Medicare Parts A, B, C, and D Explained: A Complete Beginner's Guide

The Big Picture: The Four Parts of Medicare

Medicare is the federal health insurance program for people age 65 and older, plus certain younger people with disabilities. It has four "parts," and each one covers a different piece of your health care. Once you understand what each letter does, the whole system gets a lot less intimidating.

Here is the quick version:

• Part A covers hospital stays, skilled nursing, hospice, and some home health care.
• Part B covers doctor visits, outpatient care, preventive services, and durable medical equipment.
• Part C, better known as Medicare Advantage, is a private bundled alternative that combines A, B, and usually D into one plan with extras.
• Part D covers prescription drugs you pick up at the pharmacy.

Parts A and B together are called Original Medicare. From there, you pick a pathway: either add a Medigap policy plus a standalone Part D plan, or replace Original Medicare's delivery with a Medicare Advantage plan. This is one of the most important decisions you will make, and we cover it in depth in our Medigap vs Medicare Advantage comparison.

Part A: Hospital Insurance

Part A pays for inpatient care. Think hospital admissions, skilled nursing facility stays after a qualifying hospitalization, hospice, and limited home health.

2026 Part A costs

Most people pay no Part A premium because they (or a spouse) paid Medicare taxes long enough while working, generally at least 10 years. If you do not qualify for premium-free Part A, the 2026 monthly premium is $311 for those with 30 to 39 quarters of work history, or $565 for those with fewer than 30 quarters.

Even with $0 premium, Part A has real cost sharing per benefit period:

The Part A inpatient hospital deductible increased to $1,736 in 2026, up $60 from $1,676 in 2025. Daily coinsurance for days 61 to 90 is $434, and lifetime reserve day coinsurance is $868 per day. Skilled nursing facility coinsurance for days 21 to 100 is $217 per day.

A benefit period starts when you are admitted and ends after 60 days out of the hospital or SNF, which means you can owe multiple deductibles in a single year. For a deeper look at these numbers, see our Part A and Part B coverage guide. If a hospital stay leads to rehab, our guide to the skilled nursing 100-day rule explains how that coinsurance kicks in.

Part B: Medical Insurance

Part B covers the outpatient side of health care: doctor visits, lab work, imaging, preventive screenings, mental health, outpatient surgery, physical therapy, and durable medical equipment like walkers and CPAP machines.

2026 Part B costs

The standard monthly premium for Medicare Part B enrollees is $202.90 for 2026, an increase of $17.90 (about 9.7%) from $185.00 in 2025. The annual deductible for all Part B beneficiaries is $283 in 2026, an increase of $26 from $257 in 2025. Higher-income beneficiaries pay more through IRMAA (Income-Related Monthly Adjustment Amounts), with surcharges pushing premiums as high as $689.90 per month at the top bracket ($500,000 or more single, $750,000 or more joint). Learn more about the 2026 IRMAA brackets and appeals.

After you meet the deductible, Medicare pays 80% of the approved amount and you pay the remaining 20% with no annual out-of-pocket cap. That last point is the reason most beneficiaries add supplemental coverage. A single serious illness could otherwise mean tens of thousands in coinsurance.

Part B is optional in the strict legal sense, but skipping it usually triggers a lifetime penalty. More on that in the enrollment section below. Our guide to gaps a Medigap plan can fill unpacks the coverage holes in more detail, and if you want DVH coverage you can compare options in our dental, vision, and hearing guide.

Part C: Medicare Advantage (the Bundled Alternative)

Part C, or Medicare Advantage, is a private plan option that replaces the way Original Medicare delivers your benefits. You keep Medicare, but a private insurer administers your Part A and Part B coverage, usually adds Part D, and typically layers on extra benefits.

What Medicare Advantage typically includes

Medicare Advantage enrollment is projected at roughly 34 million in 2026 (a small dip from 34.9 million in 2025), representing close to half of all Medicare beneficiaries. Nearly all individual Medicare Advantage plans (98% or more) offer vision, dental, and hearing benefits, and most bundle in a Part D drug benefit (MA-PD).

2026 Part C costs

In 2026, the average monthly Medicare Advantage/Part C premium decreased to $14.00, down from $16.40 in 2025. Even better, about 75% of enrollees in individual Medicare Advantage plans with prescription drug coverage pay no plan premium other than the Medicare Part B premium.

Advantage plans always have an out-of-pocket maximum, an important protection Original Medicare lacks. In 2026, the CMS-allowed maximum in-network out-of-pocket limit is $9,250 (down $100 from $9,350 in 2025), and $13,900 for combined in-network and out-of-network services. These caps apply only to Part A and Part B covered services. Many plans set lower limits: KFF's enrollment-weighted averages are $5,421 for in-network services and $9,825 for in-network and out-of-network services combined.

But you also give up some flexibility: most plans use HMO or PPO networks, and many services require prior authorization. Some Advantage plans also offer a Part B premium giveback that reduces what you pay for Part B each month. If you want a fuller side-by-side, our Medicare Advantage Part C explainer walks through the trade-offs.

Part D: Prescription Drug Coverage

Part D covers self-administered prescription drugs. It is offered by private insurers either as a standalone plan (PDP) that pairs with Original Medicare, or bundled inside a Medicare Advantage plan (MA-PD).

2026 Part D costs

The Inflation Reduction Act reshaped Part D in a big way. For 2026:

• The standard Part D deductible is $615, up $25 from $590 in 2025. Plans may charge less, but not more.
• The Part D out-of-pocket threshold is $2,100, up from $2,000 in 2025. Once you reach this cap, you pay nothing more for covered Part D drugs for the rest of the year.
• The average stand-alone Part D plan total premium is projected at $34.50 in 2026, down $3.81 from $38.31 in 2025.
• The 2026 national base beneficiary premium is $38.99, which is the figure Medicare uses to calculate Part D late enrollment penalties.

Every Part D plan has its own formulary (list of covered drugs) with tiered copays. That is why two plans with identical premiums can produce wildly different annual costs depending on your medications. Our Part D shopping guide walks through how to use the Plan Finder to compare total annual cost, not just premium. If you will pair a PDP with a supplement, our guide on pairing Medigap and Part D covers exactly how to do that without a coverage gap. To see what the new cap means in practice, read our explainer on the closing donut hole.

The Two Pathways: How the Parts Fit Together

Once you have Parts A and B, you build out your coverage in one of two ways. You cannot combine these paths. Choose one.

Path 1: Original Medicare + Medigap + standalone Part D

You keep Parts A and B, add a Medigap (Medicare Supplement) policy to cover the deductibles and 20% coinsurance, and buy a standalone Part D plan for drugs. This is the most flexible option and the most predictable in terms of medical bills.

Because Medigap plans sold today cannot include drug coverage, you will pair them with a Part D plan. For a decision framework on which Medigap plan letter fits your situation, see our full Medigap plans comparison chart or dig into the most popular option in our Plan G coverage and costs guide. Budget-conscious shoppers can also look at High Deductible Plan G, which trades a lower premium for a $2,950 annual deductible.

Path 2: Medicare Advantage (Part C)

Instead of Medigap and a separate PDP, you enroll in a single Advantage plan that bundles A, B, usually D, and extras. Premiums are often $0, but you accept the plan's network, copays, and prior authorization rules.

Advantage tends to work well for healthy retirees who want low upfront costs and value dental/vision/hearing bundling. Medigap tends to work better for people who travel, want top provider flexibility, or expect significant health care use. For a total-dollar comparison, see our breakdown of the average cost of Medicare per month.

Enrollment, Timing, and Penalties You Must Know

The Initial Enrollment Period (IEP)

Generally, you can first sign up for Part A and Part B during the 7-month period that begins 3 months before the month you turn 65 and ends 3 months after the month you turn 65. If your birthday falls on the first of the month, your window starts 4 months before your birthday month instead of 3.

Enrolling in the first three months of your IEP is best because Medicare coverage always starts on the first of a month, and enrolling early avoids delays in when coverage begins. Our step-by-step enrollment guide walks through exactly how to sign up online, by phone, or in person.

Late enrollment penalties

Delay enrolling without qualifying employer coverage and you will face penalties that follow you for life:

• Part B penalty: You pay an extra 10% for each full 12-month period you could have signed up for Part B but did not. On the 2026 base premium of $202.90, that is roughly $20.29 per month added for every year of delay, paid as long as you have Part B.
• Part D penalty: 1% of the 2026 national base Part D premium ($38.99) multiplied by the number of months you went without creditable drug coverage (once you hit a 63-day gap). Added to your Part D premium for life, and it recalculates each year as the base premium rises (the 2027 base is set at $41.33).

For a deeper walk-through of both penalties and how to appeal them, see our guide on avoiding Medicare late enrollment penalties.

If you are still working, our working past 65 guide covers Special Enrollment Periods and how to coordinate employer coverage with Medicare. If you have other coverage like VA, TRICARE, or FEHB, our Medicare coordination guide explains how the payers stack. Helping a parent through the process? See our caregiver's playbook.

Which parts are optional?

• Part A: Usually automatic and free, so almost everyone takes it.
• Part B: Optional but penalized if delayed without creditable coverage.
• Part C: Fully optional; it is an alternative to Original Medicare.
• Part D: Optional but penalized if you go 63+ days without creditable drug coverage.

How to Decide Which Pathway Is Right

There is no universally "best" path. It depends on your health, your budget, and what you value most.

Choose Original Medicare + Medigap + Part D if you:

• Want to see any doctor or specialist in the country without referrals
• Travel frequently or split time between states
• Want predictable, capped out-of-pocket costs
• Expect ongoing or complex medical care

Choose Medicare Advantage if you:

• Want the lowest possible monthly premium
• Value bundled dental, vision, hearing, and fitness benefits
• Are comfortable using an in-network provider
• Live in an area with strong plan options and your doctors participate

Remember: your Medigap Open Enrollment Period is the 6-month window starting when Part B begins, and it is the one time you can buy any Medigap plan without medical underwriting. Missing it can make switching from Advantage back to Medigap difficult later.

Frequently Asked Questions

Do I have to sign up for all four parts of Medicare?

No. Part A is nearly automatic and free for most people, so almost everyone takes it. Part B is technically optional but delaying it without creditable employer coverage triggers a lifetime penalty. Parts C and D are voluntary; Part C is an alternative to Original Medicare, and Part D is optional drug coverage that you will want unless you have creditable drug coverage from another source.

Can I have both Medicare Advantage and a Medigap policy?

No. Federal law prohibits selling you a Medigap policy if you are enrolled in a Medicare Advantage plan, because Medigap only works with Original Medicare. You have to pick one pathway. If you enroll in Advantage and later want to switch back to Original Medicare with Medigap, you may face medical underwriting depending on your state and timing.

What does Medicare Part A actually cost in 2026?

For most beneficiaries, Part A has a $0 monthly premium because they worked enough quarters. But cost sharing still applies: a $1,736 hospital deductible per benefit period, $434 per day for hospital days 61 to 90, and $217 per day for skilled nursing days 21 to 100 in 2026. These gaps are exactly what a Medigap plan or Medicare Advantage plan is designed to reduce.

When should I enroll in Medicare if I'm still working past 65?

If your employer has 20 or more employees, you can usually delay Part B (and Part D) without penalty and enroll during your 8-month Special Enrollment Period after employment or coverage ends. Most people still enroll in premium-free Part A at 65, but be careful: enrolling in Part A ends your ability to contribute to an HSA. If your employer has fewer than 20 employees, you generally need to enroll in Medicare at 65 because Medicare becomes your primary payer.

Is Medicare Advantage cheaper than Original Medicare with a Medigap plan?

Usually cheaper on a monthly premium basis, yes. About 75% of Medicare Advantage enrollees with drug coverage pay $0 in plan premium beyond their Part B premium in 2026. But "cheaper" depends on how much health care you use. Medigap plans have higher premiums but much lower out-of-pocket costs when you actually need care, so heavy utilizers often pay less in total with Medigap. Compare projected total annual costs, not just premiums.