Medicare basics
What Original Medicare pays for, and what it leaves you
Figures on this page checked . Medicare and marketplace numbers reset every year — if you are reading this long after that date, call and we will tell you what moved.
Original Medicare is two parts
Part A is hospital insurance — inpatient stays, skilled nursing after a qualifying hospital stay, hospice, and some home health care. Most people pay no premium for it, because they or a spouse paid Medicare taxes for ten years.
Part B is medical insurance — doctor visits, outpatient care, lab work, durable medical equipment, and preventive services. Everyone pays a monthly premium for it.
Together they are called Original Medicare. Part D (drugs), Medigap, and Medicare Advantage are all things you add on top of, or in place of, this foundation.
What it costs
These are the 2026 figures, straight from CMS.
- Part A hospital deductible: $1,736 per benefit period
- Hospital days 61–90: $434 a day
- Lifetime reserve days: $868 a day
- Skilled nursing, days 21–100: $217 a day
- Part B standard premium: $202.90 a month — higher if your income is above the threshold
- Part B annual deductible: $283
In plain terms
“Per benefit period” is not “per year”. A benefit period starts the day you are admitted and ends once you have been out of inpatient care for sixty consecutive days. Two separate hospitalisations in one year can mean paying the $1,736 deductible twice.
The part that decides everything else
After you meet the Part B deductible, Original Medicare pays 80% of covered costs and you pay the other 20%.
The thing to understand
No annual limit applies to that 20%. Original Medicare on its own has no out-of-pocket maximum — not a high one, none at all.
Twenty percent of a knee replacement is manageable. Twenty percent of three years of cancer treatment is not, and nothing in Original Medicare stops it. That single fact is why Medigap and Medicare Advantage exist, and it is the reason the choice between them is the real decision at 65 — not which one has a lower premium. Both roads close the hole. What they ask from you in return is different, and that is the whole of the decision.
When to sign up
Your Initial Enrollment Period is seven months long: the three months before your birthday month, your birthday month, and the three months after. Signing up in the first three gets coverage starting the month you turn 65.
If you are still working at 65 with employer coverage, the answer changes, and that is the question to put on a phone call rather than a web page, because the penalty for getting it wrong lasts for life.
Questions about Parts A and B
Do I have to sign up for Medicare if I’m still working?
Usually not for Part B, if your employer has twenty or more employees and you are still actively working there. Most people take Part A anyway because it costs them nothing, and leave Part B until they retire.
Under twenty employees, Medicare generally becomes your primary insurance at 65 and the group plan pays second — so skipping Part B can leave you with most of the bill. Retiree coverage and COBRA are not active employment and do not protect you either.
If you contribute to a health savings account, enrolling in any part of Medicare stops that, and contributions in the months before you enroll can create a tax problem. Call us with your employer size before you decide.
What if I miss my Initial Enrollment Period?
You can sign up during the General Enrollment Period, but late Part B enrollment carries a penalty of 10% of the standard premium for every full year you could have had it and didn’t — and it is added to your premium permanently, not for a year.
The exception is if you had qualifying employer coverage the whole time, which gives you a Special Enrollment Period and no penalty. That is the whole reason the employer-size question matters so much.
Why doesn’t Original Medicare have a limit on what I pay?
Because it was designed in 1965 alongside employer retiree coverage that was expected to fill the gap, and that coverage largely disappeared. The 20% coinsurance with no cap is what remains.
You close it one of two ways: a Medicare Supplement policy that pays the share Original Medicare doesn’t, or a Medicare Advantage plan that replaces Original Medicare and is required to cap your annual out-of-pocket costs. Those are the two roads, and they lead somewhere different.