Medicare 101 · Free resource from Price Services Group, L.L.C.

What is Medicare? Parts A, B, C & D: 2027 guide

Medicare has four parts that cover different services. This guide explains how they fit together, how enrollment timing works, and which 2026 and 2027 cost figures are currently available.

Kayla Price

Published June 27, 2026 · Updated October 21, 2026 · 9 min read

Medicare is not a single insurance card — it's a system of four coverage types that work together. Understanding what each part does (and doesn't) cover is the difference between a plan that fits your life and one that leaves expensive gaps. This guide breaks it down in plain language, with no jargon and no upsell.

The Part A and Part B amounts shown below are 2026 figures. CMS had not announced the 2027 Part A and Part B premiums and deductibles as of October 21, 2026. The 2027 Part D figures are finalized. Sources are linked throughout.

The four parts of Medicare at a glance

Source: Medicare.gov — 2026 Medicare Costs.

Part A — Hospital insurance

Most people receive Part A for free if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters). It covers:

• Inpatient hospital care — semi-private room, meals, general nursing, drugs administered during your stay
• Skilled nursing facility (SNF) care — up to 100 days per benefit period after a qualifying 3-day hospital stay
• Hospice care — comfort care for terminal illness (prognosis of 6 months or less)
• Some home health care — physical therapy, skilled nursing visits, when medically necessary

Part A does not cover long-term custodial care (help with bathing, dressing, etc.), dental, vision, or hearing. The Part A deductible applies per benefit period — not per year — which can catch people off guard during a second hospitalization.

Part B — Medical insurance

Part B covers the outpatient side of your care. You pay a monthly premium (deducted from your Social Security benefit if you're collecting), and after your annual deductible, Medicare generally pays 80% of approved costs.

• Doctor and specialist visits
• Outpatient surgery and procedures
• Preventive care — annual wellness visits, screenings, vaccines
• Lab tests, X-rays, MRIs
• Durable medical equipment — wheelchairs, walkers, CPAP machines
• Mental health services
• Some home health care

Part B does not cover most prescription drugs, dental, routine vision, or hearing aids. The 20% cost-sharing under Part B has no annual out-of-pocket maximum in Original Medicare alone — a serious gap if you have a major illness. This is one reason many people add a Medigap supplement or switch to Medicare Advantage.

Part C — Medicare Advantage

Medicare Advantage (MA) is a private insurance alternative to Original Medicare. CMS approves and pays these plans to cover your Medicare benefits. When you enroll in an MA plan:

• You keep your Medicare eligibility and receive Part A and Part B benefits under the plan's terms; provider networks and out-of-network coverage depend on the plan
• The plan covers everything Parts A and B cover
• Most plans include Part D prescription drug coverage (MA-PD)
• Many include extras: dental, vision, hearing, fitness memberships, and transportation
• Plans have an annual out-of-pocket maximum — something Original Medicare lacks

Plan rules differ. Some plans use networks, may require referrals, or charge more for out-of-network care. Confirm providers, hospitals, referrals, and out-of-network coverage with the specific plan before enrolling.

Part D — Prescription drug coverage

Part D adds outpatient prescription drug coverage to Original Medicare. If you're in Medicare Advantage, your plan likely already includes Part D. If you're in Original Medicare, you need to purchase a standalone Part D plan during your enrollment window to avoid a permanent late-enrollment penalty.

For 2027, the defined-standard Part D benefit has a $700 deductible and a $2,400 annual out-of-pocket threshold. The amount that counts toward the threshold is based on qualifying out-of-pocket costs for covered Part D drugs, not premiums or every medication and health expense. After you reach the threshold, you pay no cost-sharing for covered Part D drugs for the rest of the year. Individual plans may use different deductible and cost-sharing designs; check the plan's current documents.

Part D plans vary by formulary (which drugs are covered and at what tier), pharmacy network, deductible, and monthly premium. The lowest-premium option isn't always the lowest total cost — what matters is how your specific medications are tiered and what you actually spend on your drugs.

When do you enroll in Medicare?

Your Initial Enrollment Period (IEP) is a 7-month window centered on your 65th birthday month:

• 3 months before your birthday month
• Your birthday month
• 3 months after your birthday month

If you enroll before the month you turn 65, Part B generally starts the month you turn 65 (the prior month if your birthday is on the first day of a month). If you enroll during your birthday month or later in your Initial Enrollment Period, coverage generally starts the month after you sign up. Confirm the date for your circumstances with Social Security.

Some people with group health coverage based on current employment (their own, a spouse's, or in certain cases a family member's) can delay Part B and later use a Special Enrollment Period. COBRA, retiree coverage, and Marketplace coverage generally do not provide this Part B enrollment protection. Rules depend on the employer and situation, so verify with Social Security or Medicare before delaying Part B.

What most people get wrong

• Thinking Medicare is free. Part A is usually free. Part B, Part D, and most MA plans have premiums. Medigap supplements add another premium.
• Assuming Medicare covers everything. Original Medicare has no cap on your 20% cost-sharing. Dental, vision, and hearing are largely excluded from Original Medicare.
• Assuming the same enrollment rule applies to everyone. Employer coverage, creditable drug coverage, eligibility, and enrollment history can affect deadlines and penalties.
• Not reviewing coverage annually. Medicare plan networks, formularies, and premiums change every year. A plan that was right at 65 may not be right at 70.

Sources: Medicare.gov — Parts of Medicare · Medicare.gov — 2026 Medicare Costs · Medicare.gov — Part D costs. Price Services Group, L.L.C. is an independent licensed agency — we do not offer every plan available in your area.