Medicare Parts A, B, C, D Explained

Medicare uses a lettering system (Parts A, B, C, D) that often confuses people new to the program. Each "part" covers different healthcare services, and understanding them is essential for making informed coverage decisions.

This guide breaks down each Medicare part in plain English so you can understand exactly what you're getting and what you need.

Medicare at a Glance

Part A: Hospital Insurance

Medicare Part A is often called "hospital insurance" because it primarily covers inpatient care. Most people get Part A premium-free because they (or their spouse) paid Medicare taxes while working.

What Part A Covers

• Inpatient hospital stays: Room, meals, nursing care, medications, and other services during a hospital admission
• Skilled nursing facility (SNF) care: Up to 100 days per benefit period following a qualifying hospital stay
• Home health care: Part-time skilled nursing, physical therapy, and other services if you're homebound
• Hospice care: Comfort care for terminally ill patients, including medications for symptom control
• Inpatient care in religious nonmedical health care institutions

Part A Costs (2024)

Cost Type	Amount
Premium (if you qualify)	$0/month
Premium (if you don't qualify)	Up to $505/month
Hospital deductible (per benefit period)	$1,632
Hospital coinsurance (days 61-90)	$408/day
Hospital coinsurance (lifetime reserve days)	$816/day
Skilled nursing coinsurance (days 21-100)	$204/day

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Part A Doesn't Cover Everything in a Hospital

Part A only covers inpatient care. If you're in the hospital under "observation status" (outpatient), Part A doesn't apply - Part B does. This distinction affects your costs and whether skilled nursing care is covered afterward.

Part B: Medical Insurance

Medicare Part B covers medical services you receive outside of a hospital admission, including doctor visits, preventive care, and outpatient procedures. Part B requires a monthly premium, which is deducted from your Social Security check if you receive benefits.

What Part B Covers

• Doctor services: Office visits, consultations, second opinions
• Outpatient care: Surgery, diagnostic tests, emergency room visits
• Preventive services: Annual wellness visits, screenings, vaccinations
• Durable medical equipment: Wheelchairs, walkers, oxygen, hospital beds
• Mental health services: Psychiatric care, therapy, counseling
• Ambulance services: Emergency transportation
• Some home health services
• Lab tests and X-rays

Part B Costs (2024)

Cost Type	Amount
Standard premium	$174.70/month
Higher income premium	Up to $594.00/month
Annual deductible	$240
Coinsurance (after deductible)	20% of Medicare-approved amount

The 20% Coinsurance Can Add Up

Part B pays 80% of approved amounts, leaving you responsible for 20%. There's no out-of-pocket maximum in Original Medicare. A $100,000 surgery means you owe $20,000. This is why many people add Medigap or choose Medicare Advantage.

Part C: Medicare Advantage

Medicare Part C, commonly called Medicare Advantage (MA), is a different way to receive your Medicare benefits. Instead of using Original Medicare (Parts A & B), you enroll in a private health plan that provides all your Medicare coverage.

Important: Part C is not an addition to Original Medicare - it's a replacement. When you enroll in Medicare Advantage, you leave Original Medicare.

What Medicare Advantage Typically Includes

• All Part A benefits (hospital insurance)
• All Part B benefits (medical insurance)
• Usually Part D (prescription drug coverage)
• Often extra benefits: Dental, vision, hearing, fitness programs, over-the-counter allowances, transportation

Types of Medicare Advantage Plans

• HMO: Must use network providers except emergencies; usually need referrals for specialists
• PPO: Can use out-of-network providers at higher cost; no referrals needed
• PFFS: Can use any provider who accepts the plan's terms
• SNP: Special Needs Plans for specific populations

Medicare Advantage Costs

• Part B premium: You still pay this ($174.70/month)
• MA plan premium: $0-$150/month (many plans are $0)
• Copays: Vary by service ($0-$50 for doctor visits, more for hospital)
• Out-of-pocket maximum: Required by law (typically $3,000-$8,000/year)

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Network Restrictions Apply

Most Medicare Advantage plans require you to use their network of doctors and hospitals. Going out of network may mean paying full price or receiving no coverage at all (except for emergencies).

Part D: Prescription Drug Coverage

Medicare Part D provides coverage for prescription medications. Unlike Parts A and B, Part D is only available through private insurance companies approved by Medicare.

You can get Part D coverage in two ways:

1. Standalone Part D plan: Add to Original Medicare + Medigap
2. Medicare Advantage with drug coverage: Part D is bundled into your MA plan

How Part D Works

• Formulary: Each plan has a list of covered drugs in different "tiers"
• Pharmacies: Plans have preferred pharmacies with lower costs
• Coverage phases: Your costs change as you spend more on drugs throughout the year

Part D Coverage Phases (2024)

Phase	How It Works
Deductible	You pay 100% until you reach $545 (some plans have $0 deductible)
Initial Coverage	You pay copays/coinsurance until total drug costs reach $5,030
Coverage Gap (Donut Hole)	You pay 25% of drug costs until your out-of-pocket reaches $8,000
Catastrophic Coverage	You pay $0 for the rest of the year

Part D Late Enrollment Penalty

If you don't enroll in Part D when first eligible and don't have other creditable drug coverage, you'll pay a penalty. The penalty is 1% of the national average premium multiplied by the number of months you went without coverage. This penalty is permanent.

How the Parts Work Together

There are two main ways to structure your Medicare coverage:

Key Points

• Parts A & B are the foundation - you need both to have full Original Medicare
• Part C replaces Parts A & B - you don't have both at the same time
• Part D is separate from Parts A & B, but often bundled into Part C
• Medigap only works with Original Medicare (Parts A & B), not Medicare Advantage

Frequently Asked Questions

Do I need all four parts of Medicare?

No. Parts A and B together form Original Medicare. Part C (Medicare Advantage) is an alternative to Original Medicare, not an addition. Part D (drug coverage) is important but technically optional.

Can I have Part C and Parts A & B at the same time?

Technically, you're still enrolled in Parts A & B when you have Medicare Advantage, but the MA plan provides all your coverage. You can't use Original Medicare while enrolled in an MA plan.

What's the difference between Part B and Part D?

Part B covers medical services (doctor visits, lab tests, outpatient care). Part D covers prescription medications. You need both for complete coverage.

Is Medicare Part A really free?

For most people, yes. If you or your spouse paid Medicare taxes for at least 40 quarters (10 years), you pay no premium for Part A. However, Part A still has deductibles and coinsurance.

Which parts have late enrollment penalties?

Part B and Part D both have permanent late enrollment penalties. Part A does not have a penalty. Medicare Advantage (Part C) follows Part B enrollment rules.

Can I change my coverage after I enroll?

Yes, but only during certain periods. The Annual Election Period (October 15 - December 7) allows you to switch between Original Medicare and Medicare Advantage or change Part D plans. Changes take effect January 1.