Medicare Explained Simply: Parts A, B, C, and D
Understanding what each part covers - and how they fit together - is the foundation for making good Medicare decisions.
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The Four Parts of Medicare
Medicare is divided into parts - each covering different types of care. Most people use a combination of them.
Part A: Hospital
Part A is often called hospital insurance. It generally covers inpatient hospital stays, care in skilled nursing facilities (following a qualifying hospital stay), hospice care, and some home health care. Most people do not pay a premium for Part A if they or a spouse have sufficient work history paying Medicare taxes.
- ✓Inpatient hospital care
- ✓Skilled nursing facility care (following qualifying hospital stay)
- ✓Hospice care
- ✓Some home health care
Part B: Medical
Part B is medical insurance. It generally covers doctor visits, outpatient services, preventive care, lab work, and medical equipment. Most people pay a monthly premium for Part B. The standard premium and income-related adjustments can change each year.
- ✓Doctor visits and specialist care
- ✓Outpatient procedures and hospital outpatient services
- ✓Preventive services (certain screenings, vaccines)
- ✓Durable medical equipment (when medically necessary)
Part C: Medicare Advantage
Medicare Advantage is an alternative to Original Medicare offered by private insurers approved by Medicare. These plans must cover everything Parts A and B cover, and many also include Part D (prescription drug coverage). Medicare Advantage plans may have additional benefits like dental, vision, or hearing, but coverage and availability vary by plan and county.
- ✓All Part A and Part B coverage
- ✓Often includes Part D prescription coverage
- ✓May include dental, vision, and hearing (varies by plan)
- ✓Annual maximum out-of-pocket for covered services
Part D: Prescription Drugs
Part D helps cover the cost of outpatient prescription drugs through private plans approved by Medicare. Plans have a formulary (a list of covered drugs) organized into tiers that affect what you pay. Part D plans can be standalone (used with Original Medicare or Medigap) or included in a Medicare Advantage plan.
- ✓Coverage for outpatient prescription medications
- ✓Formulary-based - coverage depends on plan's drug list
- ✓Tiered cost structure (generic, preferred, brand, specialty)
- ✓Preferred pharmacy networks may lower costs
Original Medicare vs Medicare Advantage
These are the two main paths for receiving Medicare benefits. Neither is universally better - it depends on your doctors, prescriptions, and budget.
Original Medicare
- •Administered directly by the federal government
- •Parts A and B cover most services - you choose your doctors freely
- •No annual out-of-pocket maximum (gaps in coverage can be large)
- •Many people add a Medigap plan to cover cost-sharing gaps
- •Must add a standalone Part D plan for prescription coverage
- •Generally accepted by most providers nationwide
Medicare Advantage (Part C)
- •Offered by private insurers approved by Medicare
- •Includes Part A and Part B, often with Part D bundled in
- •May offer additional benefits (dental, vision, hearing) - varies by plan
- •Typically requires using a plan network (HMO or PPO rules apply)
- •Most plans include an annual out-of-pocket maximum for covered services
- •Availability and plan designs vary by county and ZIP code
Benefits vary by plan, county, and eligibility. There is no universally correct choice between these two paths. The right answer depends on your specific doctors, prescriptions, budget, and the plans available where you live.
Do I Need a Medicare Supplement (Medigap)?
If you choose Original Medicare, you take on more cost-sharing exposure. A Medigap policy is private insurance that helps pay certain costs Original Medicare doesn’t fully cover - such as coinsurance, copays, and deductibles.
What Medigap Covers
Medigap policies are standardized by plan letter (e.g., Plan G, Plan N). Each plan letter offers a defined set of benefits. Premiums vary by carrier, location, and age. Medigap policies generally do not include prescription drug coverage - you would need a separate Part D plan.
When to Apply
The ideal time to apply for Medigap is during your 6-month Medigap Open Enrollment Period, which begins the month you are both 65 or older and enrolled in Part B. During this window, insurers generally cannot deny coverage or charge more due to health conditions. Outside this window, medical underwriting may apply.