Understanding Medicare Parts A, B, C, and D

Part A: hospital and inpatient coverage

Part A covers inpatient hospital care, skilled nursing facility stays following a qualifying hospital admission, hospice care, and some home health services. Most people who have worked and paid Medicare taxes for at least 40 calendar quarters (roughly 10 years) pay no Part A premium. Those with fewer work credits pay a monthly premium set annually by CMS.

Part A does carry cost-sharing. Each benefit period begins when you are admitted to a hospital and ends after you have been out of a hospital or skilled nursing facility for 60 consecutive days. A deductible applies at the start of each benefit period, and daily coinsurance kicks in after 60 days in the hospital. There is no out-of-pocket maximum under Original Medicare, which is one reason many enrollees seek supplemental coverage.

Part B: medical and outpatient coverage

Part B covers medically necessary services provided outside a hospital: doctor visits, outpatient surgery, preventive screenings, lab tests, durable medical equipment, and mental health services. It also covers some home health care not tied to a hospital stay.

Unlike Part A, Part B always requires a monthly premium. The standard amount changes annually; higher-income enrollees pay an additional surcharge called the Income-Related Monthly Adjustment Amount (IRMAA). Part B also has an annual deductible, and enrollees pay 20% coinsurance on most services after meeting that deductible.

Declining Part B when first eligible is possible but carries risk. If you do not have creditable employer-sponsored coverage, delaying enrollment triggers a permanent late-enrollment penalty of 10% added to your premium for each full 12-month period you were eligible but not enrolled.

Part C: Medicare Advantage

Part C, commonly called Medicare Advantage, lets private insurers approved by CMS deliver your Part A and Part B benefits in a single plan. Most Medicare Advantage plans also bundle Part D drug coverage. Some include added benefits such as dental or vision, though the scope and cost of those benefits vary widely by plan and location.

Medicare Advantage plans typically use networks of doctors and hospitals. Many plans charge little or no additional monthly premium beyond the Part B premium you continue to pay, but they impose their own deductibles, copayments, and coinsurance structures. These plans must cap out-of-pocket costs each year, which Original Medicare does not do on its own.

Choosing between Original Medicare and Medicare Advantage involves trade-offs that depend on your health needs, preferred doctors, and location. This article provides general education; consult a licensed insurance counselor or the State Health Insurance Assistance Program (SHIP) in your state for guidance on your own situation.

Part D: prescription drug coverage

Part D adds prescription drug coverage through private insurers. Anyone enrolled in Original Medicare can add a standalone Part D plan. Those in a Medicare Advantage plan that already includes drug coverage generally cannot also enroll in a standalone Part D plan.

Each Part D plan has a formulary, a list of covered drugs organized into pricing tiers. Premiums, deductibles, and copayments differ across plans. Like Part B, Part D carries a late-enrollment penalty for those who go without creditable drug coverage for 63 or more consecutive days after becoming eligible.

Social Security retirement timing can affect when you become eligible for Medicare and, in turn, when your enrollment windows open. Planning both decisions together may help you avoid coverage gaps.

This article is for general informational purposes only and does not constitute personalized insurance, financial, or legal advice. Coverage rules, costs, and eligibility requirements can change. Consult a licensed insurance professional or visit Medicare.gov for information specific to your situation.