4 Things Every Retiree Needs to Know About Medicare in 2026

Most people would probably agree that Medicare is a key program for millions of retirees today. But whether you're planning to enroll in 2026 or are simply trying to plan for the future, it's important to understand Medicare's ins and outs. Here are four key things to know about Medicare this year.

1. Costs are going up

One big Medicare myth is that it's a source of free healthcare for seniors. While Part A, which covers hospital care, generally does not charge enrollees a premium, there's a monthly premium associated with Part B, which covers outpatient care. Medicare Advantage and Part D plans also charge their own premiums (though there are $0 premium plans available).

In addition to Medicare premiums, there can be out-of-pocket costs like deductibles, coinsurance, and copays. And in 2026, many of those costs are rising.

The standard monthly Part B premium, for example, will be $202.90 in 2026, up from $185 last year. That increase is apt to eat into Social Security recipients' upcoming cost-of-living adjustment. That's because seniors enrolled in Social Security and Medicare at the same time pay their Part B premiums out of their monthly benefits directly.

Medicare Part B's annual deductible is also rising from $257 to $283. And the Part A inpatient deductible for a hospital stay is going up from $1,676 to $1,736. Daily coinsurance rates under Part A are also rising, so it's important to budget accordingly.

2. Medicare won't cover everything

Although Medicare covers a wide range of treatments and healthcare services, there are certain things it won't cover. Some big ones include dental care, vision exams, and hearing aids.

Now if you sign up for a Medicare Advantage plan, you may have coverage for these services. Otherwise, you'll need to factor them into your retirement budget. If you have access to a health savings account, you may want to reserve some of those funds for your senior years so you can use that money to pay for things Medicare won't.

3. Signing up on time is key

Your initial Medicare enrollment period is seven months long. It begins three months before the month of your 65th birthday and ends three months after that month.

It's important to sign up for Medicare on time to avoid a gap in coverage. But you should also know that a late enrollment could cost you.

For each 12-month period you're eligible for Part B but fail to sign up, you face a lifelong surcharge on your monthly premiums. Those could add up over time, creating a financial strain throughout your entire retirement.

4. You may want to get supplemental insurance right away

Because Medicare coverage can some with many large out-of-pocket costs, and because original Medicare doesn't put a cap on annual spending, it's important to have a backup plan in case you go through a period of hefty medical bills. That's where Medigap comes in.

Medigap is supplement insurance. It won't cover services Medicare won't. But it could pick up the tab for coinsurance, deductibles, and other costs you might incur for Medicare-covered services.

The best time to get a Medigap plan is during the six-month period that begins the first day of the month you're 65 or older and have Medicare Part B. You can sign up later, but during that initial window, Medigap issuers must sell you a policy at the best available rate, regardless of the state of your health. Once that window passes, you can be charged more.

Knowing how Medicare works is a key part of retirement planning and budgeting. Keep these points in mind so you have a good handle on Medicare this year.

The Motley Fool has a disclosure policy.