Medicare can feel complicated. Understanding the basics can make choosing your coverage much easier.
If you are approaching age 65, retiring, helping a family member with Medicare, or already enrolled and reviewing your coverage, knowing how Medicare works can help you make more informed healthcare decisions.
At MyBlueOptions, our goal is to help you understand your options before you make a decision.
What Is Medicare?
Medicare is the federal health insurance program primarily for people age 65 and older. Certain people under age 65 may also qualify because of a disability or certain medical conditions.
Medicare is divided into different parts, and each part serves a different purpose.
Medicare Part A — Hospital Insurance
Medicare Part A primarily helps cover:
- Inpatient hospital care
- Skilled nursing facility care when Medicare requirements are met
- Hospice care
- Certain home health services
Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes long enough while working.
However, premium-free does not mean cost-free. Deductibles, coinsurance, and other out-of-pocket costs may still apply.
For 2026, the Medicare Part A inpatient hospital deductible is $1,736 per benefit period.
Medicare Part B — Medical Insurance
Medicare Part B helps cover many medically necessary and preventive healthcare services, including:
- Doctor visits
- Outpatient services
- Certain home health services
- Durable medical equipment
- Preventive screenings
- Certain vaccines
- Annual wellness visits
The standard Medicare Part B premium for 2026 is $202.90 per month, although some beneficiaries pay more based on income.
The annual Part B deductible for 2026 is $283. After meeting the deductible, beneficiaries with Original Medicare generally pay 20% of the Medicare-approved amount for many Part B-covered services.
What Is Original Medicare?
Original Medicare consists of Part A and Part B.
With Original Medicare, you can generally visit any doctor or hospital in the United States that accepts Medicare.
However, Original Medicare does not cover every healthcare expense. For example, Original Medicare generally does not have an annual out-of-pocket maximum. After the applicable deductible, you may continue to be responsible for coinsurance and other costs throughout the year.
Because of these potential expenses, some people choose additional coverage such as a Medicare Supplement policy and/or prescription drug coverage.
Medicare Part C — Medicare Advantage
Medicare Advantage, also known as Medicare Part C, is another way to receive your Medicare benefits.
Medicare Advantage plans are offered by private insurance companies approved by Medicare.
These plans provide your Part A and Part B benefits, and many Medicare Advantage plans also include Part D prescription drug coverage.
Depending on the plan and service area, plans may also offer additional benefits not covered by Original Medicare, such as:
- Routine dental services
- Routine vision services
- Hearing benefits
- Fitness programs
- Other supplemental benefits
Benefits, premiums, provider networks, copayments, deductibles, formularies, and eligibility requirements can vary significantly by plan and location.
You must continue paying your Medicare Part B premium when enrolled in a Medicare Advantage plan. Medicare Advantage plans also have an annual limit on what you pay out of pocket for covered Part A and Part B services.
Medicare Part D — Prescription Drug Coverage
Medicare Part D helps pay for prescription medications.
You can generally receive Medicare prescription drug coverage through either:
A standalone Part D prescription drug plan used with Original Medicare, or
A Medicare Advantage plan that includes prescription drug coverage.
Not every Part D plan covers medications in exactly the same way.
Before selecting a plan, it is important to review:
- Your current medications
- The plan’s formulary, or covered-drug list
- Prescription copayments or coinsurance
- Deductibles
- Preferred pharmacies
- Pharmacy networks
- Drug restrictions or prior authorization requirements
Part D premiums and costs vary by plan. Higher-income beneficiaries may also pay an additional income-related amount.
What Is Medicare Supplement Insurance (Medigap)?
Medicare Supplement Insurance, commonly called Medigap, is private insurance designed to help pay certain out-of-pocket costs associated with Original Medicare.
Depending on the standardized Medigap plan selected, coverage may help with expenses such as deductibles, copayments, and coinsurance.
Medigap works with Original Medicare, not Medicare Advantage.
In most states, Medigap policies are standardized by plan letter. This means the basic benefits of a particular standardized plan are generally the same regardless of the insurance company offering it, although premiums can vary.
Original Medicare + Medigap vs. Medicare Advantage
One of the biggest decisions Medicare beneficiaries may face is choosing how they want to receive their Medicare coverage.
With Original Medicare, you can generally use any doctor or hospital nationwide that accepts Medicare. You may add a standalone Part D prescription drug plan and, if eligible, purchase a Medigap policy to help manage certain out-of-pocket expenses.
With Medicare Advantage, your Medicare benefits are provided through a Medicare-approved private insurance plan. Depending on the plan, you may need to use a provider network, and referrals or prior authorization may be required for certain services. Many plans combine medical and prescription drug coverage and may include additional benefits.
There is no single option that is best for everyone.
How Do You Choose the Right Medicare Coverage?
Choosing Medicare coverage should not be based only on the monthly premium.
A plan with a low or even $0 additional monthly plan premium may still have copayments, coinsurance, deductibles, network restrictions, and other costs.
Consider the complete picture:
- Doctors: Are your doctors and specialists available under the coverage?
- Hospitals: Are your preferred hospitals and healthcare facilities accessible?
- Medications: Are your prescriptions covered, and what will they cost?
- Premiums: What will you pay each month?
- Out-of-pocket expenses: What could you pay when you actually use healthcare services?
- Travel: Do you spend significant time outside your plan’s service area?
- Additional benefits: Are dental, vision, hearing, or other benefits important to you?
- Health needs: Do you have chronic conditions requiring specialists, medications, or frequent treatment?
The lowest-premium plan is not automatically the lowest-cost or most appropriate option for your healthcare needs.
Don’t Ignore Your Medicare Enrollment Periods
Timing matters with Medicare.
Failing to enroll when you are first eligible can sometimes result in delayed coverage or late-enrollment penalties.
For example, the Part B late-enrollment penalty can generally add 10% to your premium for each full 12-month period you could have had Part B but did not enroll, unless you qualify for a Special Enrollment Period.
Part D may also impose a late-enrollment penalty if you go 63 consecutive days or more without Medicare drug coverage or other creditable prescription drug coverage after your applicable enrollment period.
Special rules can apply if you or your spouse are still working and have employer-sponsored health coverage, so don’t assume that everyone should make the same Medicare decision at age 65.
Can You Get Help Paying Medicare Costs?
Possibly.
People with limited income and resources may qualify for programs that help with Medicare expenses.
Depending on eligibility, assistance may be available through programs such as:
- Medicare Savings Programs
- Medicaid
- Extra Help for Medicare prescription drug costs
These programs may help eligible individuals with premiums and certain other Medicare-related expenses.
Medicare Is Personal
Two people living in the same neighborhood—even two spouses—may have very different Medicare needs.
One person may take several prescription medications and regularly see specialists. Another may prioritize access to doctors while traveling. Someone else may be primarily concerned about predictable healthcare expenses.
That is why Medicare decisions should be based on the individual’s circumstances rather than simply choosing a plan because a friend or relative has it.
Before choosing coverage, ask:
Does this option fit my doctors, prescriptions, healthcare needs, budget, and lifestyle?
That question can be much more valuable than simply asking:
Which plan has the lowest premium?
We’re Here to Help You Understand Your Medicare Options
At MyBlueOptions, we believe Medicare decisions should begin with education.
We can help you understand Medicare terminology, compare available coverage options, review important considerations, and identify questions you should ask before enrolling.
Whether you’re approaching Medicare eligibility, retiring, reviewing your current coverage, or helping a loved one understand Medicare, our goal is to make the process easier to understand.
Have Medicare questions?
Visit MyBlueOptions.net to request assistance and learn more about your Medicare coverage options.
Important Medicare Disclaimer
MyBlueOptions is not connected with or endorsed by the U.S. government or the federal Medicare program. Availability of plans, benefits, premiums, provider networks, prescription drug coverage, and cost-sharing varies by plan, service area, eligibility, and contract year.
This information is provided for general educational purposes and is not intended to provide medical, legal, tax, or individualized coverage advice. Medicare rules, costs, and plan information may change. Beneficiaries should review official plan documents and current Medicare information before making enrollment decisions.
For official Medicare information, visit Medicare.gov or call 1-800-MEDICARE (1-800-633-4227).