Medicare is the federal health insurance program for people 65 and older and for some younger people with disabilities. It is divided into four parts, and the letters confuse almost everyone at first. Here is what each part covers and how they fit together.
Part A: hospital insurance
Part A covers inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice, and some home health care. Most people pay no monthly premium for Part A because they or a spouse paid Medicare taxes while working. You still pay a deductible for each benefit period and coinsurance for longer stays.
Part B: medical insurance
Part B covers doctor visits, outpatient care, preventive services, durable medical equipment and many other services outside the hospital. Everyone pays a monthly Part B premium, which is higher for people with higher incomes, plus an annual deductible and usually 20% of the approved cost of services. Together, Parts A and B are called Original Medicare.
Part C: Medicare Advantage
Part C is not extra coverage; it is an alternative way to receive Parts A and B through a private insurer approved by Medicare. Medicare Advantage plans usually bundle drug coverage and may add dental, vision or hearing benefits, but they typically use provider networks and require referrals or prior authorization. Our guide to Medicare Advantage plans weighs the trade-offs.
Part D: prescription drug coverage
Part D is optional drug coverage sold by private insurers, either as a stand-alone plan alongside Original Medicare or built into a Medicare Advantage plan. Every plan has its own list of covered drugs and its own pharmacy network, so compare plans against the medications you actually take.
Medigap: filling the gaps
Original Medicare has no limit on out-of-pocket costs. Medigap, or Medicare Supplement, policies sold by private insurers cover some or all of the deductibles and coinsurance. You cannot combine Medigap with a Medicare Advantage plan.
When to enroll
Your Initial Enrollment Period runs for seven months around your 65th birthday. Missing it can mean lifelong late-enrollment penalties for Parts B and D unless you have other qualifying coverage, such as an employer plan. Each year the Open Enrollment Period in the autumn lets you change Advantage and drug plans. Use the plan-comparison tool at medicare.gov or call your State Health Insurance Assistance Program (SHIP) for free, unbiased counselling.
