Medicare Basics: Parts, Costs, and Enrollment in 2026

Medicare basics come down to this: it’s the federal health insurance program for people 65 and older, along with certain younger people who have disabilities or permanent kidney failure. The Centers for Medicare & Medicaid Services runs it under Title XVIII of the Social Security Act of 1965, and it covers tens of millions of Americans today.¹ The program is split into four parts, each covering different services at different costs, and the enrollment rules carry real financial consequences if you miss a deadline.

Who Qualifies

Most people become eligible the month they turn 65, provided they are U.S. citizens or have been lawful permanent residents for at least five continuous years.² You don’t have to be retired. If you’re already receiving Social Security benefits when you turn 65, enrollment in Part A and Part B is automatic.³

People under 65 qualify in three situations:

After 24 months of Social Security Disability Insurance benefits, enrollment is automatic.⁴
For ALS (Lou Gehrig’s disease), the 24-month wait is waived. Medicare starts the same month disability benefits begin.³
End-Stage Renal Disease, requiring regular dialysis or a kidney transplant, qualifies you at any age if you or a family member has sufficient work history under Social Security.⁵

The Four Parts

Parts A and B together are known as Original Medicare and run directly by the federal government. Parts C and D are delivered through private insurance companies operating under federal rules.

Part A covers inpatient care. That includes hospital stays, skilled nursing facility care after a qualifying hospital admission, hospice, and some home health services.⁶ While admitted, your room, meals, nursing care, and medications are covered. You’re responsible for the first three units of blood you receive in a calendar year, though you can arrange to have that blood replaced instead of paying for it.⁷

Part B covers outpatient care: doctor visits, specialists, preventive screenings, annual wellness visits, outpatient mental health, and medically necessary durable medical equipment like wheelchairs and oxygen. It also covers certain drugs administered in a doctor’s office. The dividing line is whether you’re formally admitted to a hospital overnight.

Part C, Medicare Advantage, is an alternative way to receive your benefits. Private insurers contract with the federal government to deliver everything Parts A and B cover, often bundled with vision, hearing, or dental extras that Original Medicare excludes. You must be enrolled in both Part A and Part B and live within the plan’s service area.⁸ Many Advantage plans include drug coverage, so a separate Part D plan isn’t needed. The tradeoff is that most use provider networks, meaning you may pay more, or lose coverage entirely, by going outside them.

Part D covers outpatient prescription drugs through plans run by private insurers.⁹ Each plan has a formulary organizing covered drugs into tiers, with generics costing less and brand-name or specialty drugs costing more. You choose a plan based on whether it covers the specific medications you take. Starting in 2025, the Inflation Reduction Act capped annual out-of-pocket Part D spending at $2,000, rising to $2,150 in 2026.

What Original Medicare Doesn’t Cover

The gaps catch people off guard more than the coverage itself. The biggest is long-term custodial care. Medicare does not pay for help with daily living activities such as bathing, dressing, or eating, whether that care is at home or in a nursing facility.¹⁰ Skilled nursing care after a qualifying hospital stay is covered for up to 100 days, and only when you need rehabilitative services. Once the need shifts from active rehabilitation to ongoing custodial help, Medicare stops paying. A private room in a skilled nursing facility often runs $300 or more per day.

Other exclusions include routine dental care (cleanings, fillings, dentures), routine eye exams and eyeglasses, hearing exams and hearing aids, cosmetic surgery, routine foot care, most chiropractic services, and healthcare received outside the United States.¹⁰ Medicare Advantage plans frequently include some of these, which is one reason people choose them over Original Medicare.

What It Costs in 2026

Medicare isn’t free. Even after decades of payroll taxes, most beneficiaries pay monthly premiums, annual deductibles, and coinsurance.

Part A

If you or your spouse paid Medicare taxes for at least 10 years (40 quarters), Part A has no monthly premium. About 99% of beneficiaries fall into this group. Shorter work histories mean paying either $311 per month (with at least 30 quarters) or the full $565 per month.¹¹

Each hospital admission carries a $1,736 deductible covering the first 60 days, after which daily coinsurance kicks in and eventually leaves you paying all costs past day 150. For skilled nursing facility stays, the first 20 days are fully covered, days 21 through 100 require $217 per day in coinsurance, and Medicare pays nothing after day 100.¹²

Part B

The standard Part B premium in 2026 is $202.90 per month.¹³ After meeting a $283 annual deductible, you pay 20% of the Medicare-approved amount for most covered services.¹² That 20% has no annual cap under Original Medicare, which is why a major surgery or extended treatment can generate substantial out-of-pocket bills. Premiums are typically deducted from your Social Security check, or you can set up bank withdrawals through Medicare Easy Pay.¹⁴

Higher-Income Surcharge (IRMAA)

Higher earners pay more for both Part B and Part D through the Income-Related Monthly Adjustment Amount, based on the tax return from two years earlier. For 2026, Part B premiums by income bracket are:¹¹

$109,000 or less individual / $218,000 or less joint: $202.90
$109,001–$137,000 / $218,001–$274,000: $284.10
$137,001–$171,000 / $274,001–$342,000: $405.80
$171,001–$205,000 / $342,001–$410,000: $527.50
$205,001–$499,999 / $410,001–$749,999: $649.20
$500,000 or more / $750,000 or more: $689.90

If a life-changing event such as retirement, divorce, or the death of a spouse has reduced your income, you can request a reconsideration from the Social Security Administration using a more recent tax return.¹³

When to Sign Up

Enrollment runs on a strict calendar. Miss the right window and you can lose months of coverage or accrue a permanent penalty.

Initial Enrollment Period. A seven-month window centered on the month you turn 65: three months before your birthday month, the birthday month, and three months after.¹⁵ Signing up in the three months before your birthday gives you the earliest possible start date. Signing up in the months after delays when coverage begins.

General Enrollment Period. If you miss the Initial window entirely, you can enroll in Part A and Part B between January 1 and March 31 each year, with coverage starting the month after enrollment.¹⁵ You may face a late enrollment penalty and a coverage gap between the date you were first eligible and the date coverage starts.

Special Enrollment Period. Certain qualifying events let you sign up outside the normal windows without penalty. The most common is leaving employer-sponsored group health coverage: you get an eight-month window after that coverage ends to enroll in Part B penalty-free.¹⁶ Others include moving out of a plan’s service area, losing Medicaid, and being released from incarceration.¹⁷

Open Enrollment Period. Every year from October 15 through December 7, current beneficiaries can change coverage: switch between Original Medicare and Medicare Advantage, change Advantage plans, or join, switch, or drop a Part D plan.¹⁸ Changes take effect January 1.

Late Enrollment Penalties

Miss the right window without qualifying for a Special Enrollment Period, and you pay a penalty added to your monthly premium for as long as you have that coverage. For most people, that means the rest of their life.¹⁹

The Part B penalty raises your premium by 10% for every full 12-month period you were eligible but didn’t sign up. Wait two years, and you pay 20% extra every month, permanently. In 2026 that pushes the monthly cost from $202.90 to roughly $243.50.¹⁹

The Part D penalty works differently. You pay an extra 1% of the national base beneficiary premium ($38.99 in 2026) for every month you went without creditable drug coverage. Fourteen months without it means a 14% penalty, adding roughly $5.50 per month indefinitely.¹⁹ The penalty doesn’t apply if you had creditable coverage from an employer, TRICARE, the VA, or a similar source.

The most common way people trigger these penalties is assuming employer coverage protects them indefinitely after they stop working. COBRA and retiree health plans do not count as “current employment” for a Special Enrollment Period. Leave your job at 66, ride COBRA for 18 months without signing up for Part B, and you face both a coverage gap and a permanent penalty.

How to Sign Up

The Social Security Administration handles Medicare enrollment, not CMS. You can apply online at ssa.gov, by phone, or in person at a local Social Security office. Online, the “Sign up for Medicare” application asks for basic personal information and your current health insurance details.²⁰ If you’re only enrolling in Medicare and not claiming retirement benefits, it takes about 10 minutes.

Have these ready before you start:

Your Social Security number, which links your work history to your eligibility.
A certified copy of your birth certificate to verify your age.
Proof of citizenship or residency, such as a U.S. passport or permanent resident card.

If you’re enrolling during a Special Enrollment Period because you’re leaving employer coverage, you’ll also need Form CMS-40B, the application for Part B enrollment,²¹ and Form CMS-L564, which asks your employer to verify that you had active group health coverage based on current employment.¹⁶ Submit both to your local Social Security office. Getting the employer form completed before you leave the job saves time.

Once approved, your Medicare card arrives in the mail within a few weeks, along with a welcome packet outlining your start dates and benefits. The card displays your Medicare Number, which providers use to bill.

Medicare Supplement Insurance (Medigap)

Because Original Medicare has no annual out-of-pocket maximum and charges uncapped 20% coinsurance on Part B services, many beneficiaries buy a Medigap policy to limit exposure. These standardized supplemental plans, sold by private companies, cover some or all of the cost-sharing Original Medicare leaves behind.²² Medigap only works alongside Original Medicare; you cannot use one with a Medicare Advantage plan.

The best time to buy is during your six-month Medigap Open Enrollment Period, which starts the first day of the month you turn 65 and are enrolled in Part B.²³ During this window, insurers must sell you any Medigap policy they offer at the standard price, regardless of your health. Once it closes, there’s no federal guarantee that any company will sell you a policy, and any company that does can charge significantly more based on your medical history. Missing this window is one of the most consequential and least-discussed mistakes in Medicare planning.

1
Office of the Law Revision Counsel. 42 USC Chapter 7, Subchapter XVIII: Health Insurance for Aged and Disabled
2
Office of the Law Revision Counsel. 42 USC 1395o – Eligible Individuals
3
Medicare. I’m Getting Social Security Benefits Before 65
4
Office of the Law Revision Counsel. 42 USC 1395c – Description of Program
5
Medicare.gov. End-Stage Renal Disease (ESRD)
6
eCFR. 42 CFR Part 406 – Hospital Insurance Eligibility and Entitlement
7
eCFR. 42 CFR 409.87 – Blood Deductible
8
Medicare. Joining a Plan
9
Office of the Law Revision Counsel. 42 USC 1395w-101 – Eligibility, Enrollment, and Information
10
Centers for Medicare & Medicaid Services. Items and Services Not Covered Under Medicare
11
Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles
12
Centers for Medicare & Medicaid Services (CMS). Medicare Deductible, Coinsurance and Premium Rates: CY 2026 Update
13
Social Security Administration. Medicare Premiums: Rules for Higher-Income Beneficiaries
14
Medicare. Medicare Easy Pay
15
Medicare.gov. When Does Medicare Coverage Start?
16
Centers for Medicare & Medicaid Services. CMS-L564 – Request for Employment Information
17
Medicare.gov. Special Enrollment Periods
18
Medicare. Open Enrollment
19
Medicare.gov. Avoid Late Enrollment Penalties
20
Social Security Administration. How to Apply Online for Medicare Only
21
Social Security Administration. Sign Up for Part B Only
22
Medicare.gov. What’s Medicare Supplement Insurance (Medigap)?
23
Medicare.gov. When Can I Buy a Medigap Policy?