Understanding Medicare: what's actually covered, what's not, and why the deadlines matter
Medicare is the primary health coverage for roughly 67 million Americans, yet the program is genuinely confusing — four parts, multiple enrollment windows, late-penalty traps, and a prior-authorization system that denies claims even when care is medically necessary.1 This page is a plain-language reference for people turning 65, adult children helping a parent navigate coverage, or anyone trying to figure out what Medicare actually does and doesn't pay for.
Medicare at a glance: the four parts
Medicare is split into four parts, each covering different services with different costs. These are the 2026 figures published by CMS.2
$1,736 deductible per benefit period
Covers inpatient hospital stays, skilled nursing facility (SNF) care, hospice, and some home health services. Most people pay $0 in monthly premiums if they (or a spouse) paid Medicare taxes for 40+ quarters.
$202.90/mo premium
Covers doctor visits, outpatient care, preventive services, durable medical equipment (DME), mental health, and ambulance transport. Annual deductible: $283. After that, you typically pay 20% coinsurance with no out-of-pocket cap.
Private plans that bundle Part A + Part B coverage (and usually Part D). May include extra benefits like dental, vision, and hearing. Premiums vary by plan — some are $0 beyond the Part B premium. Trade-off: network restrictions and prior authorization requirements.
$2,000 annual out-of-pocket cap
Standalone drug plans or built into MA plans. Starting in 2025, the Inflation Reduction Act capped total out-of-pocket drug costs at $2,000/year — a significant change from prior years when costs were essentially unlimited.3
What Original Medicare actually covers (and what it doesn't)
"Original Medicare" means Part A + Part B without a Medicare Advantage plan. Here's what each part pays for — and where the limits catch people off guard.4
Part A: hospital and facility coverage
- Inpatient hospital: Days 1–60 fully covered after the $1,736 deductible. Days 61–90: $434/day coinsurance. Lifetime reserve days (60 total, ever): $868/day.
- Skilled nursing facility: Days 1–20 fully covered (after a qualifying hospital stay). Days 21–100: $217/day coinsurance. After day 100: you pay everything.
- Hospice care: Covered with small copays for drugs and respite care. Requires a terminal diagnosis with life expectancy of six months or less.
- Home health: Covered when medically necessary and ordered by a physician — intermittent skilled nursing, therapy. Not unlimited daily help.
The SNF trap families miss
Medicare's skilled nursing benefit requires a qualifying 3-day inpatient hospital stay first. Observation status — even if you're in a hospital bed for three days — doesn't count. This distinction has caught countless families off guard, leaving them with a five-figure SNF bill they expected Medicare to cover.5
Part B: medical and outpatient coverage
- Doctor and specialist visits
- Outpatient surgery and procedures
- Preventive services (Annual Wellness Visit, screenings, vaccines)
- Durable medical equipment (wheelchairs, walkers, oxygen)
- Mental health services (outpatient therapy, psychiatry)
- Ambulance transport (when medically necessary)
- Some home health services
The 20% problem
After the $283 deductible, Part B pays 80% and you pay 20% — with no annual out-of-pocket cap. A $100,000 cancer treatment means $20,000 out of pocket from Part B alone. This is the primary reason people buy Medigap (supplemental) policies or choose Medicare Advantage plans, which are required to cap out-of-pocket costs.
What Original Medicare does NOT cover
These gaps surprise families more than almost anything else in the program:
Medicare does not pay for ongoing help with daily activities (bathing, dressing, eating) when that's the only care needed. This is the single biggest coverage gap — and the reason long-term care insurance exists.
Original Medicare covers almost no routine dental care, eye exams for glasses, or hearing aids. Some MA plans include these benefits — it's one of the main reasons people choose Advantage.
With narrow exceptions, Medicare doesn't cover health care received abroad. Some Medigap plans offer limited foreign travel emergency coverage.
Medicare Advantage vs. Original Medicare
As of 2024, 54% of all Medicare beneficiaries are enrolled in Medicare Advantage plans — up from 19% in 2007.6 The growth has been dramatic, but choosing between Original Medicare and MA involves real trade-offs that aren't always obvious until you need expensive care.
What MA offers
- Bundles Part A + Part B + usually Part D in one plan
- Required annual out-of-pocket maximum (Original Medicare has none)
- Often includes dental, vision, hearing, and fitness benefits
- Some plans offer $0 premium beyond the standard Part B premium
- May include transportation, meal delivery, or over-the-counter allowances
The trade-offs
- Network restrictions: Most MA plans use HMO or PPO networks — out-of-network care may not be covered or costs significantly more
- Prior authorization: MA plans frequently require pre-approval for procedures, specialist visits, and post-acute care
- Harder to switch back: If you leave MA for Original Medicare after your Medigap guaranteed-issue period, you may face medical underwriting for supplemental coverage
- Geographic lock-in: Plans are tied to service areas — if you move or snowbird, your plan may not cover care in another state
The prior authorization problem, by the numbers
A 2022 HHS Office of Inspector General report found that MA plans denied 13% of prior authorization requests that met Medicare coverage rules — in other words, care that Original Medicare would have covered was blocked.7 Among those denied, 75% of cases were overturned on appeal. But only about 1% of beneficiaries actually file an appeal, meaning the vast majority of inappropriate denials stand.7
A broader OIG audit found that 56% of reviewed MA contracts had cited inappropriate coverage denials.8 CMS has responded with new prior authorization rules taking effect in 2026 that require faster decisions and greater transparency — though the full impact remains to be seen.9
Enrollment periods that actually matter
Medicare's enrollment windows are strict, and missing them can mean penalties that last for life. Here are the ones to know.10
A 7-month window: 3 months before your 65th birthday month, the birthday month itself, and 3 months after. This is when you sign up for Part A and Part B. Miss it without qualifying coverage and you'll face late-enrollment penalties.
Switch between Original Medicare and Medicare Advantage, change MA plans, or add/change Part D coverage. Changes take effect January 1.
If you're in an MA plan, you can switch to a different MA plan or drop back to Original Medicare (and pick up a standalone Part D plan). One change allowed.
If you missed your IEP and don't qualify for a Special Enrollment Period, this is your window for Part A and/or Part B. Coverage starts July 1. Late penalties apply.
Medigap guaranteed issue: the 6-month window you can't get back
You have a 6-month Medigap open enrollment period that starts the month you're both 65+ and enrolled in Part B. During this window, insurers must sell you a Medigap policy at the standard rate regardless of health history. After it closes, most states allow medical underwriting — meaning a pre-existing condition can result in denial or higher premiums. This is one of the most consequential deadlines in the entire Medicare system.
Late-enrollment penalties
Part B: 10% premium surcharge for every full 12-month period you could have had Part B but didn't — and you pay it for as long as you have Part B. A 2-year gap means 20% higher premiums permanently.
Part D: 1% of the national base premium multiplied by the number of months you went without creditable drug coverage. Like Part B, this penalty is ongoing.
Prior authorization: the system within the system
Prior authorization (PA) is the process where a health plan requires advance approval before it will cover a service. In Original Medicare, PA is relatively rare. In Medicare Advantage, it's routine — and it's the source of most beneficiary complaints about MA plans.
Here's how it typically plays out: a doctor orders a procedure, imaging study, specialist referral, or post-acute placement. The MA plan reviews the request against its coverage criteria. If approved, care proceeds. If denied, the patient (or provider) can appeal — but in practice, most don't.7
Why it matters for families
Prior authorization delays don't just slow down paperwork — they can delay treatment, force patients to stay in hospitals longer while waiting for SNF approval, or push families into paying out of pocket for care the plan should have covered. For complex medical situations with multiple providers, PA requirements compound: each referral, each procedure, each piece of equipment may require its own approval cycle.
What's changing in 2026
CMS finalized the Interoperability and Prior Authorization Rule (CMS-0057-F), which takes effect in stages through 2026.9 Key changes: MA plans must decide standard PA requests within 7 days (down from 14), urgent requests within 72 hours, and must provide a specific reason for denials. Plans must also publicly report PA approval/denial rates and average decision times. Whether these rules meaningfully reduce inappropriate denials remains an open question.
Six administrative gotchas that cost families time and money
These aren't obscure edge cases. They're common mistakes that catch people every year.
Medicare covers one free Annual Wellness Visit (AWV) per year — a health risk assessment, not a comprehensive physical. If your doctor performs additional tests or addresses specific complaints during the same appointment, those services can be billed separately under Part B, and you'll owe coinsurance. Many beneficiaries are surprised by a bill after what they thought was a "free checkup."11
If your modified adjusted gross income exceeded $106,000 (individual) or $212,000 (joint) two years ago, you pay Income-Related Monthly Adjustment Amounts (IRMAA) — higher premiums for Part B and Part D. The lag catches people who had a one-time income spike from selling a house, converting a retirement account, or taking a large capital gain.12
Part D and MA plans can change their drug formularies annually. A medication that was Tier 2 (preferred) this year may move to Tier 3 (non-preferred) or drop off entirely on January 1. If you don't review the Annual Notice of Change (ANOC) mailed each September, you may not realize a key drug now costs significantly more — or requires prior authorization.
MA plan provider directories can change during the year. A doctor who was in-network when you enrolled may leave the network mid-year. While CMS requires continuity-of-care protections in some cases, the burden of checking — and catching the change — falls on the beneficiary.
If a hospital places you under "observation status" (outpatient) rather than formally admitting you, the stay doesn't count toward the 3-day inpatient requirement for Medicare-covered SNF care. You could spend four days in a hospital bed, be discharged to a rehab facility, and owe the entire SNF bill because you were technically never "admitted."5
The old "donut hole" is fully closed as of 2025, and the new $2,000 annual cap simplifies things considerably. But many beneficiaries (and even some providers) still operate on outdated assumptions about drug cost phases, creating unnecessary anxiety and confusion about refilling prescriptions.3
Where to get help — most of it free
You don't have to figure out Medicare alone, and you don't have to pay an insurance agent to get good guidance. These resources exist specifically to help beneficiaries:
Free, unbiased Medicare counseling available in every state. SHIP counselors are trained volunteers who help with plan comparisons, enrollment, appeals, and billing problems. They don't sell insurance. Find your local SHIP at shiphelp.org.13
The official Medicare helpline. Available 24/7. Can answer coverage questions, help with enrollment, and assist with appeals. Also available at Medicare.gov with plan comparison tools and coverage lookup.
A nonprofit consumer service organization. Their helpline (1-800-333-4114) provides free counseling on Medicare rights, coverage disputes, and appeals. Also publishes excellent educational resources at medicarerights.org.
Run by the National Council on Aging (NCOA), these centers help low-income beneficiaries apply for programs that lower Medicare costs — Medicare Savings Programs, Extra Help/LIS for Part D, and Medicaid. Find one at ncoa.org.
For families managing Medicare alongside broader care coordination — scheduling across multiple providers, chasing referrals, organizing records, following through after appointments — services like Averyn Care handle the administrative follow-through so coverage questions don't compound with everything else on the family's plate.
Free tool: Medicare Benefits Quick Reference
A printable reference covering what Medicare covers, common coordination scenarios, key deadlines, and when to ask for help — with space to fill in your own plan details.
- Part A & B coverage overview
- 6 common coordination scenarios with gotcha alerts
- Enrollment period timeline
- "When to ask for help" checklist
- Glossary of key Medicare terms
- Print or save as PDF — your entries come with it
Get the reference — free
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Common questions
What's the difference between Medicare and Medicaid?
Medicare is federal health insurance based primarily on age (65+) or disability status, regardless of income. Medicaid is a joint federal-state program for people with limited income and resources. Some people qualify for both ("dual eligibles") and may receive coverage from both programs simultaneously. Medicaid often covers long-term custodial care that Medicare does not.
Can I have both Original Medicare and a Medigap plan?
Yes — that's exactly what Medigap (Medicare Supplement) policies are designed for. They help pay costs that Original Medicare doesn't cover: deductibles, coinsurance, and copayments. You cannot use a Medigap plan with Medicare Advantage; it only works alongside Original Medicare. The best time to buy Medigap is during your 6-month guaranteed-issue period starting when you're 65+ and enrolled in Part B.
What happens if I miss the enrollment deadline?
For Part B, you'll pay a 10% premium penalty for every 12-month period you were eligible but not enrolled — and that penalty lasts as long as you have Part B. You'll also have to wait for the General Enrollment Period (Jan 1 – Mar 31) and coverage won't start until July 1. For Part D, the penalty is 1% of the national base premium per uncovered month. Both penalties are permanent ongoing surcharges, not one-time fees.
Should I choose Original Medicare or Medicare Advantage?
There's no universal right answer. Original Medicare with a Medigap policy gives you the broadest provider access and no prior-authorization hassles, but premiums are higher. Medicare Advantage often has lower premiums and added benefits (dental, vision), but comes with network restrictions and prior authorization. If you travel frequently, see specialists often, or have complex medical needs, Original Medicare's flexibility may be worth the cost. If you're relatively healthy and want lower premiums with extra benefits, MA can work well — just understand the trade-offs before you need expensive care.
Does Medicare cover home health care?
Medicare covers intermittent skilled nursing and therapy at home when ordered by a physician and provided by a Medicare-certified agency. But "home health care" is often confused with "home care." Medicare does not cover ongoing custodial help — someone to assist with bathing, meals, or companionship. That type of care is either paid out of pocket, covered by Medicaid (if eligible), or covered by long-term care insurance.
How do I appeal a Medicare or MA plan denial?
Medicare has a five-level appeals process. The first level is a redetermination (Original Medicare) or reconsideration by the plan (MA). If denied again, the case goes to an independent review entity. The data strongly suggests that appealing is worth the effort — the majority of first-level MA denials that are appealed get overturned. Your doctor's office can often help file the appeal, and SHIP counselors can assist for free. The key is acting within the deadline — typically 60 days for Original Medicare and 60 days for MA plan decisions.
Sources
- CMS, "Medicare Enrollment Dashboard" (2024). data.cms.gov. Total Medicare enrollment: ~67 million beneficiaries.
- CMS, "2026 Medicare Parts A & B Premiums and Deductibles" (Nov 2025). cms.gov. Part A deductible: $1,736. Part B premium: $202.90/mo. Part B deductible: $283.
- CMS, "Part D and the Inflation Reduction Act" (2025). cms.gov. $2,000 annual out-of-pocket cap on Part D drug costs effective 2025.
- Medicare.gov, "What Medicare Covers." medicare.gov. Part A and Part B coverage details, coinsurance, and benefit periods.
- Center for Medicare Advocacy, "Observation Status." medicareadvocacy.org. Impact of observation status on SNF coverage eligibility.
- KFF, "Medicare Advantage in 2024: Enrollment Update and Key Trends." kff.org. 54% of Medicare beneficiaries enrolled in MA plans.
- HHS Office of Inspector General, "Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care" (2022). oig.hhs.gov. 13% of PA denials met Medicare coverage rules; 75% overturned on appeal; ~1% of beneficiaries appeal.
- HHS Office of Inspector General, "Medicare Advantage Compliance Audit Findings." oig.hhs.gov. 56% of audited MA contracts cited for inappropriate denials.
- CMS, "CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F)" (2024). cms.gov. New PA decision timelines, transparency requirements, effective 2026.
- Medicare.gov, "When Can I Join, Switch, or Drop a Medicare Plan?" medicare.gov. Enrollment period dates and eligibility windows.
- AARP, "10 Common Medicare Mistakes and How to Avoid Them." aarp.org. Annual Wellness Visit billing confusion and other common errors.
- CMS, "Medicare Premiums: Rules for Higher-Income Beneficiaries." cms.gov. IRMAA brackets and calculation methodology.
- SHIP National Technical Assistance Center. shiphelp.org. Free Medicare counseling available in every state.
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