Medicare is the federal health insurance program for Americans 65 and older, as well as certain younger people with disabilities or end-stage renal disease. It consists of Part A (hospital insurance, premium-free for most people), Part B (medical insurance, approximately $185/month in 2026), Part C (Medicare Advantage plans offered by private insurers), and Part D (prescription drug coverage). Original Medicare covers about 80% of approved costs, leaving significant gaps that supplemental coverage can fill.
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Who needs medicare?
If you are approaching 65 or already enrolled, Medicare is your primary health insurance. The Initial Enrollment Period starts three months before your 65th birthday month and ends three months after. Many retirees transition from employer coverage or marketplace plans to Medicare, and making the right choice between Original Medicare with a Medigap supplement versus a Medicare Advantage plan can save thousands of dollars annually. Chronic conditions like diabetes and heart disease make comprehensive Medicare coverage especially important. The Way Agency helps clients compare all available plans during Annual Enrollment (October 15 through December 7) and advises on Special Enrollment Periods for qualifying life events.
What does medicare cover?
- Part A: Inpatient hospital stays, skilled nursing facility care (up to 100 days), hospice care, some home health services
- Part B: Doctor visits, outpatient surgery, preventive screenings, durable medical equipment, mental health services
- Part C (Medicare Advantage): Everything in Parts A and B, often including drug coverage, dental, vision, hearing, and fitness benefits
- Part D: Prescription drug coverage through standalone plans or bundled within Medicare Advantage
- Preventive care: Annual wellness visits, flu shots, mammograms, colonoscopies, and other screenings at no cost
What medicare does NOT cover
- Long-term custodial care (assisted living, most nursing home stays)
- Routine dental, vision, and hearing under Original Medicare (available through Advantage plans)
- Cosmetic surgery
- Care received outside the U.S. (with limited exceptions)
- Concierge or private-duty nursing
- Most prescription drugs under Original Medicare alone (requires Part D or Advantage plan)
What does medicare cost?
Medicare Part A is premium-free for most people who paid Medicare taxes for at least 10 years. Part B costs approximately $185 per month in 2026, with higher earners paying more through Income-Related Monthly Adjustment Amounts (IRMAA). Beyond premiums, Original Medicare has a Part A hospital deductible of around $1,632 per benefit period and a Part B deductible of approximately $257 annually. After the deductible, you typically pay 20% of approved costs with no out-of-pocket maximum, which is why most Medicare enrollees add a Medigap supplement or choose a Medicare Advantage plan. The Way Agency can walk you through the actual cost comparison based on your medications and doctors.
Frequently asked questions
Your Initial Enrollment Period is a 7-month window around your 65th birthday: 3 months before, your birthday month, and 3 months after. If you miss it and do not have creditable employer coverage, you will face a late enrollment penalty of 10% added to your Part B premium for each full 12-month period you were eligible but did not enroll. Enroll on time even if you are still working, unless your employer has 20 or more employees and provides creditable group coverage.
Medigap policies fill the gaps in Original Medicare (Parts A and B), covering copays, coinsurance, and deductibles. You keep full freedom to see any Medicare-accepting provider nationwide. Medicare Advantage replaces Original Medicare with a private plan that often includes drug, dental, and vision benefits with lower premiums but uses provider networks. In rural areas, network size matters because specialist access can be more limited.
Yes. During the Annual Enrollment Period (October 15 through December 7 each year), you can switch between Original Medicare and Medicare Advantage, change Advantage plans, or add or drop Part D coverage. There is also an Open Enrollment Period from January 1 through March 31 for Medicare Advantage enrollees to switch plans or return to Original Medicare. However, Medigap plan changes outside your initial enrollment or guaranteed-issue rights may require medical underwriting.
Original Medicare (Parts A and B) does not cover most outpatient prescriptions. You need a standalone Part D plan or a Medicare Advantage plan with drug coverage. In 2026, the Inflation Reduction Act caps annual out-of-pocket drug spending at $2,000 for Medicare Part D enrollees, which is a significant benefit for anyone managing chronic conditions with expensive medications.
If your employer has 20 or more employees and offers creditable group health coverage, you can delay Medicare Parts B and D without penalty. You should still enroll in Part A (it is free and does not affect employer coverage). When you leave your job or lose employer coverage, you get an 8-month Special Enrollment Period to sign up for Part B. If your employer has fewer than 20 employees, Medicare becomes primary and you should enroll at 65.
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Related coverage to consider
- Supplemental Health - Pays cash benefits directly to you when a covered health event occurs - accident, critical illness, or hospital stay.
- Individual Health - Individual health plans purchased through your state's health insurance marketplace or directly from carriers.
- Dental, Vision & Hearing - Most health insurance plans do not include dental, vision, or hearing coverage for adults.
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Reviewed by
Sheilia Royal, Agency Principal / Licensed Agent
Licensed in KY, IN & TN | 20 years experience | Last reviewed: March 2026