What It Is: The amount you must pay out of pocket for healthcare services or prescription drugs before Medicare or your Medicare plan starts to pay. Part A has a deductible per benefit period, while Part B and C have an annual deductible.

Why It Matters: Understanding your deductible helps you anticipate the upfront costs you'll need to cover before insurance kicks in.

Example: In 2026, the Part B annual deductible is $283. You must pay this amount for Part B services before Medicare begins to pay its share.

What It Is: A fixed amount you pay for a healthcare service or prescription after you've met your deductible. Copays vary based on the service or medication.

Why It Matters: Copayments can affect your out-of-pocket costs, so knowing them helps in budgeting for routine healthcare expenses.

Example: You might pay a $20 copay for a primary care visit and a $50 copay for a specialist under your Medicare Advantage Plan.

*actual copay amounts may vary

What It Is: Coinsurance is the percentage of the cost you pay for medical services after you’ve met your deductible. Under Original Medicare Part B, you generally pay 20% of the Medicare-approved amount for most services after meeting the annual deductible. However, under Medicare Advantage (Part C) plans, coinsurance amounts vary and, in many cases, Medicare Advantage plans use copayments instead of coinsurance for services like doctor visits and specialist appointments.

Why It Matters: Coinsurance costs can add up, especially for expensive services like surgeries or treatments. While Medicare Advantage plans often have fixed copayments that may reduce out-of-pocket costs, it's important to check your plan to understand what you're responsible for paying.

Example: Under Original Medicare, if a medical procedure costs $1,000 and you’ve already met your Part B deductible, you would pay 20% of the approved amount, or $200, while Medicare covers the remaining 80%. With a Medicare Advantage plan, however, you might instead pay a fixed copayment for the same service, such as $50, depending on your specific plan's structure.

What It Is: A list of prescription drugs covered by a Medicare Part D plan or a Medicare Advantage plan that includes drug coverage. Medications are typically divided into tiers, with lower tiers costing less.

Why It Matters: Knowing which medications are on your plan's formulary and their tiers can help you estimate your prescription costs and determine if your medications are covered.

Example: A generic medication might be a Tier 1 drug with a $0 copay, while a brand-name drug might be Tier 3 with a higher copay.

What It Is: The way Medicare Part A measures your use of hospital and skilled nursing facility services. A benefit period begins the day you're admitted as an inpatient and ends when you haven't received inpatient care for 60 consecutive days.

Why It Matters: You may pay the Part A deductible for each benefit period, so understanding this concept helps you anticipate costs for hospital stays.

Example: If you're hospitalized in March and again in August (after 60 days since your last inpatient stay), you'll start a new benefit period and be responsible for another Part A deductible.

What It Is: Enrollment periods are specific times during which you can sign up for Medicare or make changes to your coverage. These periods include your Initial Enrollment Period (IEP) when you first become eligible, the Annual Enrollment Period (AEP) each fall for making changes to Medicare Advantage and Part D plans, and Special Enrollment Periods (SEPs) that allow you to make changes under certain circumstances, such as moving, losing other health coverage, or several others.

Why It Matters: Enrolling during the correct period ensures you have the coverage you need and helps you avoid penalties, such as higher premiums for late enrollment in Part B or Part D.

Example: If you miss your Initial Enrollment Period when turning 65 and don't qualify for a Special Enrollment Period, you may have to wait until the General Enrollment Period (January 1 to March 31), and you could face a late enrollment penalty for Part B or Part D.

More Information: For a detailed breakdown of each type of enrollment period and how it applies to your situation, check out our Guide to Medicare Enrollment Periods.

What It Is: Catastrophic coverage is a phase in Medicare Part D that begins after you've spent a certain amount out of pocket on prescription drugs. As of 2026, once you reach the $2,100 out-of-pocket spending limit, Medicare Part D will cover the full cost of your medications for the rest of the year.

Why It Matters: This phase offers financial protection for those who have high prescription drug costs by capping out-of-pocket expenses and eliminating any further medication costs for the rest of the year once the threshold is met.

Example: Once you have spent $2,100 in covered drug costs in 2026, you will no longer pay anything for your medications for the remainder of the year, regardless of the drug's cost or tier.

What It Is: Hospital Insurance, which covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.

Why It Matters: Understanding Medicare Part A helps beneficiaries know what inpatient and hospital-related services are covered.

Example: Medicare Part A covers a hospital stay after surgery, but you may still owe coinsurance if the stay exceeds a certain number of days.

What It Is: Medicare Part B covers outpatient care, including doctor visits, preventive services (such as screenings and vaccines), durable medical equipment, and medically necessary services.

Why It Matters: Medicare Part B is essential for covering routine outpatient services that help beneficiaries maintain their health, including preventive care and treatment for chronic conditions.

Example: After you meet the Part B deductible, Medicare covers 80% of the cost of a medically necessary outpatient surgery, leaving you responsible for the remaining 20%.

What It Is: An alternative to Original Medicare offered by private insurance companies approved by Medicare. These plans provide all Part A and Part B benefits and often include additional benefits like prescription drug coverage, dental, and vision care.

Why It Matters: Understanding Medicare Advantage helps you compare all your Medicare options to choose the plan that best fits your needs.

Example: A Medicare Advantage plan may offer gym memberships and routine dental exams, benefits not typically covered by Original Medicare.

What It Is: Prescription Drug Coverage, which helps pay for the cost of prescription medications.

Why It Matters: It provides drug coverage for those who need prescription medications as part of their healthcare.

Example: Medicare Part D helps cover the cost of your daily medication for high blood pressure, which is classified in your plan’s formulary.

What It Is: Medigap is private insurance that helps pay for some of the healthcare costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles. However, Medigap plans come with a monthly premium in addition to your Part B premium.

Why It Matters: Medigap can significantly reduce your out-of-pocket expenses, making your healthcare costs more predictable. While you'll pay a monthly premium for your Medigap plan, it can provide peace of mind by covering many of the costs that would otherwise add up over time.

Example: If Original Medicare covers 80% of a doctor’s visit, a Medigap Plan G policy might cover the remaining 20%, leaving you with no out-of-pocket costs for that service. However, you would still need to pay the monthly premium for the Medigap plan.

What It Is: An extra amount added to your Medicare Part B or Part D premium if you don't sign up when you're first eligible and don't have other creditable coverage.

Why It Matters: Being aware of potential penalties encourages timely enrollment, saving you money in the long run.

Example: If you delay enrolling in Part D and go without creditable prescription drug coverage for 15 months, your premium could increase by 15% as a penalty.

What It Is: The maximum amount you have to pay for covered services in a plan year under Medicare Advantage plans. After you reach this limit, the plan pays 100% for covered services.

Why It Matters: This cap provides financial protection by limiting how much you spend in a year.

Example: If your Medicare Advantage plan has an out-of-pocket maximum of $5,000, once you've paid $5,000 in covered costs, you won't have to pay additional copays or coinsurance for the rest of the year.

What It Is: A group of doctors, hospitals, and other healthcare providers that have agreed to provide services at negotiated rates for Medicare Advantage plans.

Why It Matters: Staying within the network can reduce costs and is often required for coverage under certain plans like Health Maintenance Organizations (HMOs).

Example: Visiting an in-network cardiologist might cost you a $40 copay, while an out-of-network visit could cost significantly more or not be covered at all.

What It Is: Approval from your Medicare plan that may be required before you receive certain services, medications, or equipment to ensure they're covered.

Why It Matters: Obtaining prior authorization helps avoid unexpected costs or denial of services.

Example: Your doctor prescribes an MRI. Before scheduling, you check with your plan to get prior authorization to ensure the MRI will be covered.

What It Is: A Medicare program that helps people with limited income and resources pay for prescription drug program costs like premiums, deductibles, and coinsurance.

Why It Matters: If you qualify, Extra Help can significantly reduce your prescription drug costs.

Example: With Extra Help, you might pay no more than $5.10 for generic drugs and $11.65 for brand-name drugs in 2026.

What It Is: Programs that help low-income beneficiaries cover Medicare premiums, deductibles, and other costs.

Why It Matters: These programs are vital for those with limited income who need help affording Medicare costs.

Example: The Qualified Medicare Beneficiary (QMB) program helps pay for Medicare Part B premiums, deductibles, and coinsurance for those who qualify.

What It Is: An additional amount some people pay for Medicare Part B and Part D premiums based on their income.

Why It Matters: Beneficiaries with higher incomes need to be aware of this extra charge that is applied to their premiums.

Example: If your income exceeds a certain threshold, you’ll pay more for Part B and Part D premiums due to IRMAA.

What It Is: Prescription drug coverage that is expected to pay, on average, as much as Medicare’s standard prescription drug coverage (Part D).

Why It Matters: If you have creditable drug coverage from another source (like an employer plan), you can delay enrolling in Medicare Part D without facing a late enrollment penalty.

Example: If your employer’s drug coverage is deemed creditable, you won’t face penalties for delaying Part D enrollment.