Medicare Basics: Parts A, B, C, and D, and How They Fit Together
Medicare is a set of separate parts with different jobs, costs, and enrollment rules. Here is what each part covers, the two main paths people choose, and what Medicare doesn't cover at all.
Medicare is the federal health insurance program for people 65 and older, and for some younger people with certain disabilities or conditions. People talk about "being on Medicare" as if it's one plan. It's actually several parts that each do a different job, and the choices you make about combining them affect your costs, your access to doctors, and your options for years.
This guide explains each part and the two main ways people put them together.
The short version
- Part A is hospital insurance: inpatient hospital stays, skilled nursing facility care after a qualifying stay, hospice, and some home health care.
- Part B is medical insurance: doctor visits, outpatient care, preventive services, durable medical equipment, and more.
- Part C, called Medicare Advantage, is an alternative way to get Part A and B benefits through a private plan approved by Medicare.
- Part D is prescription drug coverage, offered through private plans.
- Most people choose between Original Medicare (Parts A and B, often plus a Medigap policy and a Part D plan) and Medicare Advantage (an all-in-one private plan).
- Medicare doesn't cover everything. Long-term custodial care, most dental, vision, and hearing care are common gaps under Original Medicare.
The four parts
| Part | What it covers | Who provides it | Typical costs |
|---|---|---|---|
| A — Hospital insurance | Inpatient hospital, skilled nursing after a qualifying stay, hospice, some home health | Federal government | Usually premium-free with enough work history; deductible per benefit period; coinsurance for longer stays |
| B — Medical insurance | Doctors, outpatient care, preventive services, lab tests, equipment | Federal government | Monthly premium (higher for higher incomes), annual deductible, generally 20% coinsurance |
| C — Medicare Advantage | Everything A and B cover, usually plus Part D and some extras | Private insurers approved by Medicare | Plan premium (often low) plus Part B premium; copays and coinsurance; annual out-of-pocket maximum for A/B services |
| D — Drug coverage | Outpatient prescription drugs | Private insurers approved by Medicare | Plan premium, deductible, copays or coinsurance, annual out-of-pocket cap |
Exact premiums, deductibles, and limits change every year. Medicare.gov publishes the current figures.
Part A
Most people don't pay a premium for Part A because they or a spouse paid Medicare taxes long enough while working. Part A uses benefit periods rather than calendar-year deductibles: a benefit period starts when you're admitted as an inpatient and ends after you've been out of the hospital or skilled nursing care for a set number of days. You can pay the Part A deductible more than once in a year.
Skilled nursing facility coverage requires a qualifying inpatient stay and is limited in duration. It isn't long-term care.
Part B
Part B has a monthly premium that most people pay, with higher amounts for people with higher incomes. After the annual deductible, you typically pay 20% coinsurance for most services, and Original Medicare has no annual out-of-pocket maximum. That open-ended 20% is the main reason many people add a Medigap policy or choose Medicare Advantage.
Part C: Medicare Advantage
Medicare Advantage plans are offered by private insurers and replace Original Medicare as the way you receive A and B benefits. Most include Part D drug coverage. Many use networks (HMO or PPO structures), may require referrals or prior authorization for some services, and have an annual out-of-pocket maximum for covered A and B services. Plans often include extras such as some dental, vision, or hearing benefits.
You still pay your Part B premium when you're in a Medicare Advantage plan.
Part D
Part D plans cover outpatient prescription drugs. Each plan has its own list of covered drugs (the formulary), pharmacy network, and cost tiers. Part D has an annual out-of-pocket cap on covered drug costs. See how Part D coverage phases work.
The two main paths
- Start with Parts A and B. Most people enroll in both when first eligible, unless they have qualifying employer coverage.
- Path 1: Original Medicare. Keep A and B, add a Part D drug plan, and often a Medigap policy for the 20% coinsurance and deductibles.
- Path 2: Medicare Advantage. Join a private plan that bundles A, B, and usually D, with networks and an out-of-pocket maximum.
- Review every year. Plans change benefits, networks, and costs annually.
Our guide on Medigap vs. Medicare Advantage compares the two paths in detail.
What Medicare doesn't cover
- Long-term custodial care, such as help with bathing and dressing in a nursing home or at home, when that's the only care needed.
- Most dental care, including routine cleanings and dentures, under Original Medicare.
- Routine eye exams and glasses, with some exceptions.
- Hearing aids and routine hearing exams.
- Care outside the U.S., with very limited exceptions under Original Medicare. Some Medigap plans include limited foreign travel emergency coverage.
Some Medicare Advantage plans offer limited extra benefits in some of these areas.
Eligibility and enrollment
Most people become eligible at 65. Some people are automatically enrolled in Parts A and B if they're already receiving Social Security benefits; others must sign up. Enrollment windows and late penalties matter a great deal; see Medicare enrollment periods and late penalties. If you have employer coverage at 65, see Medicare and employer coverage.
Free, unbiased help
Every state has a State Health Insurance Assistance Program (SHIP) offering free, unbiased Medicare counseling. Medicare.gov and 1-800-MEDICARE are the official sources for current costs and plan comparisons.
The takeaway
Medicare is a set of parts: A for hospitals, B for medical care, D for drugs, and C as a private-plan alternative to A and B. Most people choose between Original Medicare with supplemental coverage and Medicare Advantage. Understanding what each part covers, and what none of them cover, is the foundation for every other Medicare decision.
Sources
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