How Does Medicare Work?

How Medicare's parts work together, explained simply. Call 1-800-MEDIGAP.

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Quick answer

Medicare works by combining parts: Part A (hospital) and Part B (medical) form Original Medicare, which pays about 80% of Part B costs. You then add a Part D drug plan and optionally a MEDIGAP supplement, or choose an all-in-one Medicare Advantage (Part C) plan instead.

Medicare is a set of building blocks, not one plan. Here is how the pieces fit together and what you actually pay.

How do the parts of Medicare fit together?

Start with Original Medicare: Part A covers hospital care and Part B covers medical care. Together they pay a large share of your bills, but Part B leaves you 20% with no cap, and neither covers most prescriptions. From there you have two paths. Path one keeps Original Medicare and adds a Part D drug plan plus a Medicare Supplement (MEDIGAP) policy to cover the gaps. Path two replaces it with a private Medicare Advantage (Part C) plan that bundles everything. Call 1-800-MEDIGAP to find which path fits you.

How do I pay for Medicare?

Most people pay no Part A premium thanks to their work history. You do pay a monthly Part B premium, $202.90 standard in 2026, usually deducted from Social Security, plus deductibles and coinsurance (CMS). If you choose a MEDIGAP plan and a Part D plan, you pay their separate premiums too. Medicare Advantage often has low or zero added premiums but uses copays and networks. Understanding the full picture helps you budget. A licensed agent at 1-800-MEDIGAP can total up your expected monthly costs for free.

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Frequently asked questions

How does Medicare work in simple terms?+

Medicare gives you hospital coverage (Part A) and medical coverage (Part B), then lets you add drug coverage (Part D) and supplemental coverage (MEDIGAP), or replace it all with a private Medicare Advantage plan. You combine parts to fit your needs and budget.

How much does Medicare pay?+

After deductibles, Part A covers most inpatient hospital costs for a benefit period, and Part B pays about 80% of approved medical costs, leaving you 20% with no cap. Supplemental MEDIGAP coverage can pay most of that remaining 20%. Call 1-800-MEDIGAP for details.

Do I choose doctors with Medicare?+

With Original Medicare, you can see any doctor or hospital nationwide that accepts Medicare, with no networks or referrals. Medicare Advantage plans typically limit you to a network and may require referrals. A licensed agent at 1-800-MEDIGAP can compare the trade-offs.

How does Medicare work with other insurance?+

When you have other coverage, like an employer plan, one acts as primary payer and the other as secondary. For active large-employer coverage, the employer plan often pays first. Coordination rules can be complex, so call 1-800-MEDIGAP to understand your situation.

Why do people add a MEDIGAP plan?+

Because Original Medicare has no out-of-pocket maximum, a serious illness can leave you owing unlimited 20% coinsurance. A Medicare Supplement (MEDIGAP) plan covers most of that, turning unpredictable bills into a steady premium. Call 1-800-MEDIGAP to compare plans.

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