Medicare Basics Guide
What each part of Medicare actually covers, how the coverage choices differ, and when you need to act.
Medicare is not a single plan. It is a set of parts that each cover something different, and the choices you make when you first enroll shape what you pay and which doctors you can see for years afterward.
This guide walks through each piece in plain language. It is written for people approaching sixty-five, for people already on Medicare who want to understand what they signed up for, and for adult children helping a parent sort through the mail. Nothing here is a recommendation for any specific plan, because the right answer depends on your doctors, your prescriptions, your budget, and where you live.
Parts A and B: Original Medicare
Parts A and B together are what most people mean when they say Original Medicare. It is the coverage administered directly by the federal government, and it is the foundation everything else is built on top of.
Part A covers hospital care. That includes inpatient stays, care in a skilled nursing facility after a qualifying hospital stay, hospice care, and some home health services. Most people pay no monthly premium for Part A, because they or a spouse paid Medicare taxes over enough working quarters to earn it. Part A still has a deductible for each benefit period and coinsurance on longer stays, so premium-free does not mean cost-free.
Part B covers medical care outside the hospital. That includes doctor visits, outpatient procedures, lab work, preventive screenings, and durable medical equipment such as walkers and oxygen. Part B charges a monthly premium that most people have deducted from their Social Security payment, and higher earners pay an income-related surcharge on top of it. After you meet the annual deductible, Original Medicare generally pays eighty percent of the approved amount for covered services and leaves the remaining twenty percent to you.
The detail people miss most often is that Original Medicare has no annual limit on what that twenty percent can add up to. A serious illness in a bad year has no ceiling on your share unless you add something that supplies one. That single fact is what drives most of the decisions in the rest of this guide.
Original Medicare also does not include routine dental, vision, or hearing care, and it does not include prescription drugs you pick up at the pharmacy. Those are covered, if at all, through the other parts described below.
Part C: Medicare Advantage
Part C, better known as Medicare Advantage, is an alternative way to receive your Medicare benefits. You stay enrolled in Parts A and B and keep paying your Part B premium, but a private insurance company approved by Medicare takes over administering your coverage. The plan is required to cover everything Original Medicare covers, and most plans add benefits Original Medicare does not include, commonly prescription drugs, dental, vision, hearing, and a fitness benefit.
Two features distinguish Medicare Advantage from Original Medicare. The first is that every Medicare Advantage plan has an annual out-of-pocket maximum, which is the ceiling Original Medicare lacks. Once you reach it, the plan covers your in-network Part A and Part B services for the rest of the year. The second is that these plans generally operate through a network, structured as an HMO or a PPO, and they often require you to use participating providers and to get prior authorization or a referral for certain services.
Plans are sold county by county, and the benefits, networks, drug formularies, and copays differ substantially between them. A plan that is excellent for your neighbor may not include your cardiologist or your medication. Two questions settle most of it before anything else: is every doctor you intend to keep in the plan's network, and is every prescription you take on the plan's formulary at a tier you can afford.
Part D: Prescription drug coverage
Part D is how Medicare covers outpatient prescription drugs. You can get it two ways. If you stay with Original Medicare, you add a standalone Part D plan from a private insurer. If you choose Medicare Advantage, drug coverage is usually built into the plan already, and enrolling in a separate Part D plan alongside a Medicare Advantage plan can actually disenroll you from the Advantage plan, so it is not something to do casually.
Every Part D plan publishes a formulary, which is the list of drugs it covers, organized into tiers that determine your copay. Plans differ in which drugs they include, which pharmacies they treat as preferred, and what they charge at each tier. Formularies can change from one year to the next, which is the main reason a plan that fit you last year deserves a fresh look this year.
Part D is optional in the sense that nobody forces you to buy it. It is worth understanding, though, that declining it when you are first eligible has a lasting cost if you go without other creditable drug coverage, which is described in the enrollment section below.
Medigap, also called Medicare Supplement
A Medigap policy is private insurance that pays some or all of the costs Original Medicare leaves to you, such as the coinsurance, copayments, and deductibles. It is the other way to solve the problem of Original Medicare having no out-of-pocket ceiling. You keep Original Medicare as your primary coverage, Medicare pays its share first, and the Medigap policy pays its share of what remains.
Medigap policies are standardized by the federal government and identified by letter. A Plan G from one insurance company covers the same core benefits as a Plan G from another, so the meaningful differences between carriers are the premium, the company's service, and how that company's rates have historically changed over time. Plan F is no longer available to people who became newly eligible for Medicare on or after January 1, 2020, which is a large part of why Plan G, a very similar design, became the common choice.
Two rules about Medigap matter more than any comparison of letters. First, a Medigap policy works only alongside Original Medicare. You cannot use one together with a Medicare Advantage plan, so this is genuinely an either-or decision. Second, Medigap does not include prescription drug coverage, so people who choose this route almost always add a standalone Part D plan.
Timing deserves particular attention here. There is a one-time Medigap open enrollment period that begins when you are sixty-five or older and enrolled in Part B, during which an insurer must sell you a policy regardless of your health history. Outside that window, and outside certain guaranteed-issue situations set by federal and state rules, an insurer in most states may review your health and decline you. People sometimes choose Medicare Advantage first intending to switch to Medigap later, and later can turn out to be harder than they expected.
Special Needs Plans, including Medi-Medi
A Special Needs Plan is a type of Medicare Advantage plan built for a specific group of people, with a network, a drug formulary, and extra benefits shaped around that group's needs. There are three kinds. A chronic condition plan serves people with a qualifying long-term condition such as diabetes, heart failure, or end-stage renal disease. An institutional plan serves people who live in a nursing home or who need that level of care at home. A dual eligible plan serves people who have both Medicare and Medicaid.
That last category is the one people in California often hear called Medi-Medi, meaning Medicare plus Medi-Cal, which is the state's Medicaid program. If you qualify for both, Medicare generally pays first and Medicaid helps with costs Medicare leaves behind, which can include Part A and Part B cost sharing and, depending on your eligibility category, your Part B premium. Dual eligible plans are designed to coordinate the two programs so you are not managing them separately, and they frequently carry a very low or zero plan premium along with additional benefits.
Qualifying for a dual eligible plan depends on your income and assets under your state's Medicaid rules, and those rules are specific enough that it is worth having someone check rather than assuming either way. People who qualify for Medicaid or for the Extra Help program that assists with drug costs also generally get a special enrollment period, which means they are not locked into the once-a-year calendar that governs everyone else.
Enrollment windows and late penalties
Medicare runs on deadlines, and the consequences of missing one are not always reversible in the year you notice. These are the windows that matter most.
Initial Enrollment Period
Your Initial Enrollment Period is a seven-month window built around your sixty-fifth birthday. It opens three months before the month you turn sixty-five, includes your birthday month, and closes three months after. This is when most people first sign up for Parts A and B, and it is also when your one-time Medigap open enrollment right and your first opportunity to pick a Part D or Medicare Advantage plan come into play. Signing up early in the window rather than late generally means your coverage starts sooner.
Annual Enrollment Period
Every year from October 15 through December 7, anyone already on Medicare can change course. You can switch from Original Medicare to a Medicare Advantage plan or back, change from one Medicare Advantage plan to another, and join, switch, or drop a Part D plan. Changes made during this window take effect on January 1. There is also a Medicare Advantage open enrollment period from January 1 through March 31 for people already enrolled in an Advantage plan, which allows one change during that stretch.
Special Enrollment Periods
Certain life events open a Special Enrollment Period outside the normal calendar. The most common is having group health coverage through your own or your spouse's active employment when you turn sixty-five, which generally lets you delay Part B without penalty and gives you a window to enroll once that employment or coverage ends. Note the word active. COBRA and retiree coverage do not count for this purpose, and people who assume otherwise are one of the more common penalty cases. Other events that can open a window include moving out of your plan's service area, losing other creditable coverage, and qualifying for Medicaid or Extra Help.
About late penalties. Enrolling late in Part B without qualifying for a Special Enrollment Period generally results in a late enrollment penalty added to your monthly premium, and in most cases that penalty lasts for as long as you have Part B. Going without Part D or other creditable prescription drug coverage after your Initial Enrollment Period generally results in a separate late enrollment penalty added to your Part D premium, which likewise lasts as long as you have Part D coverage. Late enrollment can also leave you waiting for a general enrollment window before coverage begins, which means a gap with no coverage at all. If you are approaching sixty-five and are unsure whether your current coverage counts as creditable, that is a question worth answering before the deadline rather than after it.
How a broker review helps
Most counties offer dozens of Medicare Advantage and Part D plans, and the differences between them live in the network directory and the drug formulary rather than on the front page of the brochure. A licensed broker who represents multiple carriers can check your doctors against each plan's network, run your actual medication list through each plan's formulary, and show you the total picture of premium, deductible, and copays rather than the premium alone.
It is also worth reviewing what you already have. Plans change their networks, formularies, and cost sharing from year to year, and the plan that fit your situation when you enrolled may not be the one that fits it now. That is what the Annual Enrollment Period exists for.
If you want to walk through your options with someone who will explain the tradeoffs and tell you plainly when your current coverage is already the better fit, we are glad to have that conversation. You can reach us at (760) 642-1892, email info@
Important disclosures
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
This page is educational only. It is not medical, legal, tax, or financial advice, and it is not an offer of coverage or a recommendation of any particular plan.
My Legacy Management is not affiliated with or endorsed by the U.S. government or the federal Medicare program.
Plan availability, benefits, premiums, networks, formularies, cost sharing, and eligibility rules vary by carrier, by plan, by county, and by year, and they are subject to change. Medigap availability and underwriting rules outside a guaranteed-issue window vary by state. Confirm the details of any plan in its official plan documents before enrolling.