The whole picture
How does Medicare work?
Medicare pays 80% of most covered care. You pay the other 20%, and there's no yearly limit on your 20%. That's why many people add a second plan.
Medicare is simpler than it looks. This is the whole picture, in plain English.
Don't know a word? Press any purple word to see what it means. They're all listed at the bottom of the page.
Meet Mary
A short story. It stops before the ending.
Read the script
The one picture to remember
Everything else in Medicare builds on this.
Your 20% has a name: coinsurance.
Part A and Part B
Medicare itself is two parts, both listed on your Medicare card. Together they're called Original Medicare. It's the government program for people 65 and over, and for people under 65 who qualify through a disability or end-stage renal disease.
- Hospital staysWhen you're admitted as an inpatient.
- Skilled nursing facilitiesWhere people often go after the hospital, to recover before going home.
- Home health careNurses treating you at home after an illness or surgery.
- Doctor visitsYour regular doctor and any specialists.
- Tests and outpatient careLab work, X-rays, and procedures you go home from the same day.
- Medical equipmentWheelchairs, oxygen, CPAP machines and similar equipment.
Going deeper: "observation" isn't the same as admitted
You can spend nights in a hospital bed and still count as an outpatient if you're there under observation. That changes which part pays. It can also decide whether a rehab stay afterwards is covered, because Original Medicare usually pays for one only after 3 days admitted as an inpatient. If a stay runs long, ask: "Am I admitted as an inpatient, or under observation?"
What it costs
Each part has two kinds of cost. A premium is paid every month. A deductible is what you pay yourself before that part starts paying.
These are the 2026 amounts. Medicare announces the 2027 amounts in the fall.
Your 20% has no limit
Original Medicare has no out-of-pocket maximum. There's no point in the year where Medicare picks up the rest. On a fixed income, that's a real risk.
Medicare by itself leaves some things out entirely:
- Most prescriptions
- Routine dental
- Routine vision
- Hearing aids
- Long-term care
Prescriptions come from a separate Part D plan.
What to do about the 20%
Many people add a second plan from a private insurance company. There are two ways to do it, and both protect you from that 20%.
- A Medicare Supplement sits alongside Medicare and helps pay your share.
- A Medicare Advantage plan gives you your Medicare through one private plan, with a yearly limit on what you pay.
Many people also add a prescription plan (Part D). Choosing between these comes in step 5 of this guide.
Try it
Two quick tools. Nothing you pick is saved.
Slide the bill and watch the 20% grow
Made-up round amounts to show the math, not real prices. Deductibles are left out to keep it simple. However high the bill goes, your share goes with it.
Which part pays?
Tap a situation to see which part of Medicare covers it.
How Mary's story ends
The same surgery, with and without a second plan.
Read the script
Mary owes $20,000
And nothing stops a bill like that from happening again next year. There's no limit on her 20%.
- A Supplement: depending on the plan, it can pay most or all of her 20%.
- An Advantage plan: what she pays in a year is capped by the plan's yearly limit, which varies by plan.
A licensed support agent can walk through both in a few minutes, using your own doctors and budget.
No obligation. You can request help from one of our licensed support agents at any time.Words on this page
- Coinsurance
- A percentage instead of a flat amount. Medicare pays 80% of a doctor's bill and leaves you the other 20%.
- Deductible
- What you pay yourself first, before the plan starts paying its share.
- Medicare Advantage
- A private plan you can choose instead. It bundles coverage and has a yearly out-of-pocket limit.
- Medicare Supplement
- An add-on plan that pays some or all of what Original Medicare leaves you to pay. Also called Medigap.
- Observation status
- Staying in a hospital bed as an outpatient. Those nights do not count toward the 3-day rule.
- Out-of-pocket maximum
- The most a plan can make you pay for covered medical care in a year. Original Medicare does not have one, which is why most people add a second plan.
- Part D
- Medicare's coverage for prescription drugs. It's its own plan, or built into some Medicare Advantage plans.