Understanding Medicare

The Four Parts, Plainly

Medicare isn't one plan — it's four separate pieces that work together. Knowing what each one actually does is the first step to feeling confident about your coverage.

Hospital Insurance

Part A

Covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people don't pay a monthly premium for this — it's usually earned through work history.

Medical Insurance

Part B

Covers doctor visits, outpatient care, preventive services, and medical equipment. This one does have a monthly premium, and it's the part most people think of as "regular Medicare."

Medicare Advantage

Part C

An alternative way to get your Part A and B benefits, offered through private insurance companies — often bundled with extra benefits like dental, vision, or prescription coverage.

Prescription Drugs

Part D

Covers prescription medications. Original Medicare (Parts A and B) doesn't include drug coverage on its own — Part D fills that specific gap.

Words You'll Hear a Lot

A few basic terms that show up in almost every conversation about coverage — Medicare or otherwise.

Deductible

The amount you pay out of your own pocket before your insurance starts covering costs. A lower deductible usually means a higher monthly premium, and vice versa.

Coinsurance

Once you've met your deductible, coinsurance is the percentage of a cost you're still responsible for — for example, you might pay 20% while your plan covers the other 80%.

Copay

A fixed dollar amount you pay for a specific service, like $25 for a doctor visit — regardless of the total cost of that visit.

Premium

The amount you pay, usually monthly, just to keep a plan active — separate from what you pay when you actually use care.

Two Common Paths

Most people end up choosing between two general approaches. Neither is universally "better" — it depends on your situation.

Original Medicare + Supplement

Parts A and B, plus a separate Medigap supplement policy to help cover the gaps — and often a standalone Part D plan for prescriptions. More flexibility on which doctors you see.

Medicare Advantage (Part C)

One plan that bundles your hospital, medical, and often drug coverage together — frequently with added extras like dental or vision. Usually built around a specific network of doctors.

Medicare Supplement (Medigap) Plans

If you go the Original Medicare + Supplement route, this is the official chart showing exactly what each lettered plan covers. Every insurance company's "Plan G" covers the exact same things — the only difference between carriers is price.

✓ = covers 100% of this benefit — = plan doesn't cover this % = plan covers that percentage, you pay the rest

Benefit	A	B	C	D	F*	G*	K	L	M	N
Part A coinsurance & hospital (365 extra days)	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Part B coinsurance or copay	✓	✓	✓	✓	✓	✓	50%	75%	✓	✓**
Blood (first 3 pints)	✓	✓	✓	✓	✓	✓	50%	75%	✓	✓
Part A hospice coinsurance/copay	✓	✓	✓	✓	✓	✓	50%	75%	✓	✓
Skilled nursing facility coinsurance	—	—	✓	✓	✓	✓	50%	75%	✓	✓
Part A deductible	—	✓	✓	✓	✓	✓	50%	75%	50%	✓
Part B deductible	—	—	✓	—	✓	—	—	—	—	—
Part B excess charge	—	—	—	—	✓	✓	—	—	—	—
Foreign travel emergency	—	—	80%	80%	80%	80%	—	—	80%	80%
Out-of-pocket yearly limit (2026)	N/A	N/A	N/A	N/A	N/A	N/A	$8,000	$4,000	N/A	N/A

*Plans C and F aren't available if you became eligible for Medicare on or after January 1, 2020. Plans F and G also offer a high-deductible version ($2,950 deductible in 2026) with a lower monthly premium.
**Plan N covers Part B coinsurance in full except for a copay on some office visits and ER visits.
Source: medicare.gov official Medigap comparison chart. Benefits are federally standardized — every insurer's version of the same lettered plan covers identical benefits; only price and company differ.

Part D & The Disappearing "Donut Hole"

If you've heard horror stories about the Medicare "donut hole," here's the good news: as of 2025, it's gone in the way most people remember it.

Phase 1

Deductible

You pay full price for prescriptions until you hit your plan's deductible (up to $615 max in 2026 — some plans set it lower or waive it for generics).

Phase 2

Initial Coverage

You pay a copay or coinsurance based on your drug's tier, and your plan covers the rest. Most people stay in this phase all year.

Phase 3

$0 Cap Reached

Once your out-of-pocket spending hits $2,100 (2026), you pay $0 for covered drugs for the rest of the calendar year. No more gap in between.

What Actually Changed

The old system had a middle "coverage gap" phase — the donut hole — where your cost-sharing suddenly jumped, sometimes to 25% or more of your drug costs, until you spent enough to reach a separate catastrophic phase.

The Inflation Reduction Act eliminated that separate gap phase starting in 2025. Now there's a single, hard annual cap — $2,100 for 2026 (up from $2,000 in 2025) — and once you hit it, your covered drugs cost $0 for the rest of the year. There's also a new option to spread your out-of-pocket drug costs into monthly payments instead of paying it all at the pharmacy counter up front.

Tier 1 — Preferred Generic

$0–$5

Tier 2 — Generic

$5–$20

Tier 3 — Preferred Brand

$40–$60

Tier 4 — Non-Preferred Drug

$90–$150

Tier 5 — Specialty

25–33% coinsurance

Most Part D plans sort drugs into 5 cost tiers like this. These price ranges are typical examples, not guarantees — the exact copay or coinsurance for each tier varies significantly by plan, and the same drug can sit on a different tier depending on which plan you choose. Worth checking your specific medications against a plan's formulary before enrolling.

Medicare Advantage (Part C), A Closer Look

More than 33 million Americans are enrolled in Medicare Advantage, making it the most common way people get Medicare today.

HMO Plans

Usually the lower-premium option. You typically need to stay within the plan's network of doctors and hospitals, and often need a referral to see a specialist.

PPO Plans

More flexibility to see out-of-network providers, usually without a referral — but you'll generally pay less by staying in-network, and the premium tends to run higher than an HMO.

Dental care

Vision (exams, glasses)

Hearing aids & exams

Gym / fitness memberships

Over-the-counter allowance

Transportation to appointments

Extra benefits vary widely by plan — not every Medicare Advantage plan offers all of these, and some offer even more.

Star Ratings: Every year, Medicare rates Medicare Advantage plans on a 1-to-5 star scale based on quality measures like customer service, care coordination, and preventive care. The 2026 average is just under 4 stars, and only a small handful of plans nationwide earn the full 5 stars — worth checking a plan's current rating before enrolling, since ratings can shift year to year.

Enrollment figures, star ratings, and average premiums reflect 2026 data and change annually. Confirm current details for any specific plan before enrolling.

Original Medicare + Supplement

Medicare Advantage (Part C)

HMO Plans

PPO Plans

Coverage Clarity Review