The most important fact about Medicare is one that most explainers leave out: Original Medicare has no out-of-pocket maximum. Part B pays 80% of approved costs and you pay the other 20%, with no annual ceiling at all — as Medicare’s own 2026 costs fact sheet sets out. A serious illness can run that up without limit.
Almost every decision in Medicare — Medigap or Advantage, which plan, when to enrol — traces back to that single gap. This guide covers the United States Medicare programme and uses 2026 figures throughout. If you are under 65 and looking at marketplace coverage instead, start with how the ACA metal tiers work.
The Four Parts
| Part | Covers | 2026 cost |
|---|---|---|
| A — Hospital | Inpatient hospital, skilled nursing, hospice, some home health | No premium for around 99% of enrollees. Inpatient deductible $1,736 per benefit period |
| B — Medical | Doctor visits, outpatient care, lab tests, preventive screening, durable equipment | $202.90/month standard premium, $283 annual deductible, then 20% coinsurance with no cap |
| C — Medicare Advantage | A private plan bundling A and B, usually with D and extras | You still pay the Part B premium, plus any plan premium. Average plan premium projected around $14/month |
| D — Prescription drugs | Outpatient prescriptions, through private plans | Premium varies by plan; average around $34.50/month. Deductible up to $615. Out-of-pocket cap $2,100 |
Part A is premium-free if you or a spouse paid Medicare taxes for at least 40 quarters. Otherwise it costs $311 a month with 30–39 quarters, or $565 with fewer than 30. All of these figures come from the CMS premiums and deductibles announcement for 2026, published in November 2025.
The Part A deductible is per benefit period, not per year. A benefit period ends after 60 consecutive days without inpatient or skilled nursing care, so two separate hospital stays in one year can mean paying $1,736 twice. Beyond 60 days you also pay $434 per day for days 61–90, and $868 per day for lifetime reserve days. Skilled nursing costs $217 per day for days 21–100, and everything after day 100.
The Gap, and the Two Ways to Close It
Because Original Medicare has no spending ceiling, nearly everyone adds something. There are two routes and they are mutually exclusive. You can compare the specific plans available in your area using the official plan finder at Medicare.gov, which is the only tool that shows every plan rather than one broker’s selection.
| Original Medicare + Medigap + Part D | Medicare Advantage | |
|---|---|---|
| Provider access | Any provider who accepts Medicare. No network | Network-based, with referrals on some plan types |
| Spending cap | Effectively capped by the Medigap plan you choose | Capped by law — $9,250 in-network in 2026, $13,900 including out-of-network |
| Monthly cost | Higher and predictable | Lower, often $0 plan premium, but variable when you use care |
| Drug coverage | Bought separately as Part D | Usually included |
| Extras | None | Often dental, vision, hearing |
The honest summary: Advantage tends to cost less in a healthy year and more in a bad one, while Medigap costs more every month and removes the uncertainty. Neither is universally better. It is the same premium-versus-exposure trade that runs through every insurance decision on this site, from catastrophic marketplace plans to life cover after 60.
⭐ The Deadline Almost Nobody Warns You About
The famous Medicare date is 15 October to 7 December. It is not the one that matters most.
Your Medigap open enrollment period is a single six-month window that starts when you are 65 and enrolled in Part B. During it you have a guaranteed right to buy any Medigap policy sold in your state, at the standard price, regardless of your health — a protection Medicare describes as the best time to buy.
Once it closes, in most states insurers can medically underwrite you. They can charge more, exclude pre-existing conditions, or decline you outright. There is no annual do-over — Medigap has no yearly open enrollment the way Advantage and Part D do.
This creates an asymmetry that catches people years later:
- Moving from Medigap to Medicare Advantage is straightforward.
- Moving from Advantage back to Medigap usually means underwriting — and if your health has changed, you may not get back in.
So the choice you make at 65 is far less reversible than it looks. A few states have more generous rules; check yours rather than assuming.
One more detail: Medigap Plans C and F are closed to anyone newly eligible since 2020. Plan G is the most comprehensive option available to new enrollees, which is why it dominates the market.
Enrollment Windows
| Window | When | What it does |
|---|---|---|
| Initial Enrollment Period | Seven months: the three months before your 65th birthday month, that month, and the three after | Your first chance to enrol. Missing it is what triggers penalties |
| Medigap open enrollment | Six months from Part B start at 65 | Guaranteed right to any Medigap policy. One time only |
| Medicare Open Enrollment | 15 October – 7 December | Change Advantage or Part D plans for the following year |
| Medicare Advantage Open Enrollment | 1 January – 31 March | If already in Advantage, switch plans once or return to Original Medicare |
| General Enrollment Period | 1 January – 31 March | The fallback if you missed your Initial Enrollment Period |
| Special Enrollment Period | When employer coverage ends | Enrol without penalty. This is the exception that makes delaying safe |
If you are still working at 65 with genuine employer coverage, you can usually delay Part B without penalty and use the Special Enrollment Period when that coverage ends. Confirm with your benefits administrator that your plan counts — the rules differ for small employers, and getting this wrong is expensive.
The Penalties Are Permanent
Both late enrollment penalties last as long as you have the coverage. They are not one-off fines.
- Part B: 10% of the standard premium for every full 12-month period you could have had it and did not. Delay two years and you pay 20% more, for life. On the 2026 premium that is roughly $243 a month instead of $202.90 — and it rises with the premium every year.
- Part D: triggered after 63 or more consecutive days without creditable drug coverage. It adds 1% of the national base beneficiary premium — $38.99 in 2026 — for each month you went without, permanently.
The Part D penalty is why it is generally worth enrolling in a cheap drug plan at 65 even if you take no medication. A low-premium plan now costs far less than a permanent surcharge later.
The Part D Cap Is a Genuine Change
For most of Medicare’s history there was no limit on prescription spending. That is over.
In 2026, once your out-of-pocket spending on covered drugs reaches $2,100, you pay nothing more for covered prescriptions for the rest of the year. The cap was introduced at $2,000 in 2025 and is indexed annually. For anyone on expensive medication this is the single biggest improvement to Medicare in years.
Two caveats. It applies to covered drugs, so the plan’s formulary still decides what counts. And plan premiums vary enormously — some below $10 a month, some above $100 — so comparing formularies against your actual prescriptions matters more than comparing premiums.
If Your Income Is High — or Low
Higher earners pay IRMAA, a surcharge on both Part B and Part D. In 2026 it applies where 2024 income exceeded $109,000 single or $218,000 jointly. Total Part B premiums range from $284.10 to $689.90 a month at the higher brackets, with a Part D surcharge of $14.50 to $91.00 on top.
Two things worth knowing about IRMAA. It uses income from two years earlier, so your first Medicare year often reflects your final working year. And if your income has since dropped because of a life-changing event — retirement, the death of a spouse, divorce — you can request a reduction by filing Social Security form SSA-44. Many people who qualify never file it.
Lower incomes have help available. Medicare Savings Programs (QMB, SLMB and QI) can pay some or all of your Part B premium, and enrolment in most of them automatically qualifies you for Extra Help with Part D costs. These run through your state Medicaid agency, so it is worth reading how Medicaid eligibility works alongside this — people who qualify for both programmes are described as dual eligible, and Medicaid can then cover Medicare premiums and cost-sharing. Take-up sits well below the number of people who qualify.
Free, unbiased local help is available through your State Health Insurance Assistance Program, which is federally funded and does not sell plans.
Frequently Asked Questions
Original Medicare does not. After the Part B deductible you pay 20% coinsurance on approved services with no annual ceiling, which means a serious illness can generate unlimited cost. Medicare Advantage plans must cap in-network spending — $9,250 in 2026 — and a Medigap policy effectively caps it for people who stay with Original Medicare. This gap is the reason most people add one or the other.
Part A is premium-free for about 99% of enrollees, with an inpatient deductible of $1,736 per benefit period. Part B costs $202.90 a month with a $283 annual deductible, then 20% coinsurance. Part D premiums vary by plan, averaging around $34.50, with a deductible up to $615 and an out-of-pocket cap of $2,100. Higher earners pay IRMAA surcharges on top of Part B and Part D.
A one-time six-month period beginning when you are 65 and enrolled in Part B, during which you can buy any Medigap policy sold in your state at the standard price regardless of your health. After it closes, most states allow insurers to medically underwrite you — meaning they can charge more, exclude conditions or decline you. Medigap has no annual open enrollment, so there is no second chance.
Often not easily. Moving from Medigap to Advantage is straightforward, but moving back usually requires medical underwriting once your one-time Medigap window has passed, and you can be declined if your health has changed. This asymmetry makes the choice you make at 65 much less reversible than it appears. A few states have more generous rules, so check your own.
There are two, and both are permanent. Part B adds 10% of the standard premium for every full 12-month period you were eligible and did not enrol — delay two years and you pay 20% more for life. Part D adds 1% of the national base beneficiary premium, $38.99 in 2026, for each month you went without creditable drug coverage after a gap of 63 days or more.
Usually yes, if you have genuine employer coverage. You then get a Special Enrollment Period when that coverage ends and avoid the late enrollment penalty. Confirm with your benefits administrator that your specific plan qualifies, because the rules differ for small employers and getting it wrong means a permanent surcharge.
IRMAA is an income-related surcharge added to Part B and Part D premiums, applying in 2026 where 2024 income exceeded $109,000 single or $218,000 jointly. It is based on income from two years earlier, so it often reflects your final working year. If your income has since fallen because of retirement, the death of a spouse or another life-changing event, you can request a reduction using Social Security form SSA-44.
Sources
- CMS — 2026 Medicare Parts A & B premiums and deductibles, and 2026 Part D IRMAA
- Medicare.gov — official plan comparison, enrollment windows and Medigap rules
- Medicare.gov — 2026 Medicare costs fact sheet
- Social Security Administration — IRMAA determinations and form SSA-44
Related reading: Health and life insurance guide | ACA metal tiers explained | Medicaid eligibility explained | Life insurance for seniors over 60
Written and fact-checked by the HealthCoachJP editorial team. This article describes the United States Medicare programme and is general information, not insurance, financial or tax advice, and not a recommendation of any plan or insurer. We are not licensed insurance agents and have no commercial relationship with any plan. We are not connected with or endorsed by the federal Medicare programme. Medicare costs and rules change annually, and Medigap rights vary by state — confirm the current position at Medicare.gov, by calling 1-800-MEDICARE, or with your State Health Insurance Assistance Program before making a decision. Last updated: August 2026. See our sourcing policy.
