Medicare 101
New to Medicare? This guide walks you through the fundamentals — the four parts, enrollment windows, coverage options, and what it all costs — so you can make confident decisions about your health coverage.
Download the 2026 Medicare 101 Presentation (PDF)What Is Medicare?
Medicare is the federal health insurance program primarily for people age 65 and older, as well as certain younger individuals with disabilities or End-Stage Renal Disease (ESRD). It is administered by the Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services.
Medicare is divided into four distinct parts, each covering a different category of health care services. Understanding how these parts work together is the foundation of making smart Medicare decisions.
The Four Parts of Medicare
Part A
Hospital Insurance
- Inpatient hospital stays
- Skilled Nursing Facility (SNF) care
- Hospice care
- Some home health care
- Most people pay $0 premium if they worked 40+ quarters
Part B
Medical Insurance
- Doctor visits and outpatient care
- Preventive services (many at $0)
- Durable Medical Equipment (DME)
- Mental health services
- 2026 premium: $202.90/month (standard)
Part C
Medicare Advantage
- Combines Part A + Part B coverage
- Often includes Part D drug coverage
- May include dental, vision, hearing
- Offered by private insurers approved by CMS
- Network-based (HMO, PPO, PFFS, SNP)
Part D
Prescription Drug Coverage
- Covers outpatient prescription drugs
- Offered through standalone PDPs or MA-PDs
- 2026 out-of-pocket cap: $2,100 (TrOOP)
- $35/month insulin cap
- $0 cost-sharing for ACIP-recommended vaccines
Key Enrollment Periods
Enrolling at the right time is critical. Missing your window can result in permanent late enrollment penalties added to your monthly premiums.
Initial Enrollment Period (IEP)
A 7-month window: 3 months before your 65th birthday month, your birthday month, and 3 months after. This is your first opportunity to sign up for Medicare.
Annual Enrollment Period (AEP)
October 15 – December 7 each year. Switch between Original Medicare and Medicare Advantage or change your Part D drug plan. Changes take effect January 1. You may contact Kimo beginning October 1 to review available plan changes and benefits; however, enrollment cannot begin until October 15, with January 1 effective date of the following year.
Special Enrollment Period (SEP)
Available if you or your spouse are still working and covered by an employer group health plan. You can delay Medicare without penalty and enroll when that coverage ends.
General Enrollment Period (GEP)
January 1 – March 31 each year. For those who missed their IEP. Coverage begins July 1. Late enrollment penalties may apply.
⚠ Late Enrollment Penalties
Part B: 10% added to your premium for each 12-month period you were eligible but did not enroll (penalty is permanent). Part D: 1% of the national base beneficiary premium multiplied by the number of months without creditable drug coverage (also permanent).
Choosing Your Coverage Path
Once enrolled in Parts A and B, you have two main paths for your overall coverage. The right choice depends on your health needs, budget, preferred doctors, and travel habits.
Original Medicare + Medicare Supplement/Medigap + Part D
Advantages
- Freedom to see any Medicare-accepting provider nationwide
- No referrals needed for specialists
- Medicare Supplement/Medigap covers most or all out-of-pocket costs
- Predictable, stable costs year to year
Considerations
- Higher combined monthly premiums
- Separate Part D plan required for drugs
- Medicare Supplement/Medigap plans have medical underwriting outside open enrollment
Medicare Advantage (Part C)
Advantages
- Often $0 or low monthly premium
- Bundles medical, hospital, and often drug coverage
- May include extra benefits (dental, vision, hearing)
- Annual out-of-pocket maximum protects against catastrophic costs
Considerations
- Network restrictions (must use plan doctors/hospitals)
- Prior authorizations often required
- Benefits and networks can change each year
- May not cover care outside the service area
What Medicare Does Not Cover
Original Medicare (Parts A & B) does not cover everything. Understanding these gaps is why many beneficiaries add a Medicare Supplement/Medigap or Medicare Advantage plan.
Ready to Talk Through Your Options?
With over 31 years of experience, Kimo can help you understand exactly which Medicare path makes sense for your health needs and budget — no cost or obligation to enroll in any Medicare plan.
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