When you turn 65, understanding Medicare’s four parts becomes crucial—but most people don’t realize that missing a single enrollment window could cost them thousands in penalties and higher premiums for life.
Key Takeaways:
- Medicare consists of four distinct parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage)
- Most people receive Part A premium-free if they or their spouse paid Medicare taxes for 40 quarters, while Part B requires monthly premiums
- Medicare Advantage (Part C) combines Parts A and B through private insurers and often includes additional benefits like dental and vision care
- Medigap supplemental insurance helps cover out-of-pocket costs that Original Medicare doesn’t pay, with the best enrollment window starting when you turn 65
Understanding Medicare’s structure becomes vital as you approach age 65 or become eligible through disability. The program divides healthcare coverage into specific parts, each addressing different medical needs and costs. Knowing how these parts work together helps ensure complete coverage without unexpected gaps.
Medicare Has Four Core Parts: A, B, C, and D
Medicare operates through four distinct parts, each covering specific healthcare services. Parts A and B form “Original Medicare,” the government-run foundation of the program. Part C offers an alternative through private insurance companies, while Part D adds prescription drug coverage. Medicare.org provides detailed comparisons to help evaluate which combination works best for individual healthcare needs.
The structure allows flexibility in choosing coverage levels. Some people stick with Original Medicare and add supplemental plans, while others prefer the bundled approach of Medicare Advantage. Understanding each part’s role prevents coverage gaps and helps control healthcare costs throughout retirement.
Part A: Hospital Coverage You Likely Already Have
Part A covers hospital-related care and typically comes premium-free for most beneficiaries. The coverage extends beyond basic hospital stays to include several related services that support recovery and long-term care needs.
1. Inpatient hospital stays and emergency care
Part A handles costs for overnight hospital admissions, including room charges, nursing care, and medical supplies used during the stay. Emergency room visits that result in hospital admission also fall under Part A coverage. The 2025 deductible of $1,676 applies per benefit period, resetting each time you’re discharged and readmitted after 60 days.
2. Skilled nursing facility care after hospitalization
Following a qualifying hospital stay of at least three days, Part A covers skilled nursing facility care for up to 100 days per benefit period. The first 20 days receive full coverage, while days 21-100 require coinsurance payments. This coverage specifically applies to skilled medical care, not custodial or long-term care.
3. Hospice and some home health services
Part A provides hospice care for terminally ill patients with a prognosis of six months or less. Coverage includes medical equipment, medications related to the terminal diagnosis, and support services. Limited home health services also qualify when medically necessary and ordered by a doctor, though most home health care falls under Part B.
Part B: Medical Services and Outpatient Care
Part B requires monthly premiums but covers medical services received outside hospital settings. The 2025 deductible of $240 applies before coverage begins, with most services requiring 20% coinsurance after the deductible is met.
1. Doctor visits and specialist appointments
Part B covers visits to primary care physicians, specialists, and other healthcare providers. This includes consultations, examinations, and treatments performed in medical offices, clinics, or outpatient hospital departments. Mental health services and therapy sessions also receive coverage under Part B guidelines.
2. Preventive screenings, including yearly wellness visits
Annual wellness visits receive full coverage with no deductible or coinsurance when provided by participating Medicare providers. Part B also covers various preventive screenings like mammograms, colonoscopies, and diabetes screenings. Vaccinations recommended by the Advisory Committee on Immunization Practices receive coverage as preventive services.
3. Durable medical equipment and lab services
Medical equipment like wheelchairs, walkers, oxygen equipment, and hospital beds qualify for Part B coverage when deemed medically necessary. Laboratory tests, X-rays, and diagnostic imaging also fall under Part B. The equipment must meet Medicare’s criteria and come from approved suppliers to receive coverage.
Part C (Medicare Advantage): Private Alternative to Original Medicare
Medicare Advantage plans combine Parts A and B through private insurance companies approved by Medicare. These plans must cover everything Original Medicare covers but often add extra benefits and different cost structures.
Combines Parts A and B with often additional benefits, requiring prior enrollment in both parts
Before enrolling in Medicare Advantage, beneficiaries must first sign up for both Part A and Part B. The private plan then replaces Original Medicare coverage while maintaining the same basic benefits. Many Medicare Advantage plans include prescription drug coverage (Part D) and additional services like dental, vision, hearing aids, and fitness programs that Original Medicare doesn’t cover.
Network restrictions but potential cost savings
Most Medicare Advantage plans operate through provider networks, requiring members to use specific doctors and hospitals for covered services. Out-of-network care typically costs more or may not receive coverage except in emergencies. However, these plans often feature lower monthly premiums, reduced coinsurance rates, and annual out-of-pocket maximums that Original Medicare lacks. The network structure allows plans to negotiate better rates and coordinate care more effectively.
Part D: Prescription Drug Coverage Through Private Plans
Part D operates through private insurance companies that follow Medicare guidelines for prescription drug coverage. Beneficiaries can obtain Part D either as standalone coverage with Original Medicare or included within Medicare Advantage plans.
Formulary determines which drugs are covered, excluding certain categories like weight loss and cosmetic drugs
Each Part D plan maintains a formulary—a list of covered prescription drugs organized into pricing tiers. Plans must cover at least two drugs in each therapeutic category but can exclude certain types entirely, including weight loss medications, cosmetic drugs, and fertility treatments. Before enrolling, review the plan’s formulary to verify coverage for current medications, as formularies can change annually.
Available standalone or within Medicare Advantage plans
Standalone Part D plans work alongside Original Medicare, requiring separate enrollment and premium payments. Medicare Advantage plans typically include Part D coverage in their bundled benefits, eliminating the need for separate drug plan enrollment. Plans vary significantly in premiums, deductibles, copayments, and covered pharmacies, making comparison shopping necessary for finding optimal coverage.
Medigap: Supplemental Insurance for Original Medicare Gap Coverage
Medigap policies, sold by private insurance companies, help pay costs that Original Medicare doesn’t cover. These standardized plans work only with Original Medicare, not Medicare Advantage plans.
Covers copayments, deductibles, and coinsurance
Medigap plans help pay Original Medicare’s deductibles, coinsurance, and copayments that can add up to significant out-of-pocket expenses. Different lettered plans (A, B, C, D, F, G, K, L, M, N) offer varying levels of coverage, with Plan G being one of the most popular options available to Medicare beneficiaries. The standardized nature means Plan G benefits remain identical regardless of which insurance company sells the policy.
The best time to enroll is during the Medigap Open Enrollment Period, starting the first month you have Medicare Part B and you’re 65 or older
The six-month Medigap Open Enrollment Period provides guaranteed acceptance regardless of health conditions. During this window, insurance companies cannot deny coverage or charge higher premiums based on medical history. Missing this enrollment period may result in medical underwriting, higher premiums, or coverage denial for pre-existing conditions. Some states offer additional enrollment opportunities, but federal protections remain strongest during the initial enrollment window.
Choose Your Medicare Path Based on Your Healthcare Priorities
Medicare decisions depend on individual healthcare needs, budget considerations, and personal preferences. Original Medicare with Medigap provides maximum provider flexibility and predictable costs, while Medicare Advantage often offers lower premiums and additional benefits with network limitations.
Consider factors like current doctors’ Medicare acceptance, prescription drug needs, travel patterns, and desired additional benefits when comparing options. Healthcare priorities may change over time, making it important to review coverage choices during annual Open Enrollment periods.
The complexity of Medicare options requires careful evaluation of personal circumstances against available plans. Some beneficiaries prioritize provider choice flexibility, while others value additional benefits and cost predictability. Understanding each part’s role helps create a coverage strategy that aligns with both current needs and future healthcare planning.