Medicare covers more than 65 million Americans, yet its alphabet-soup structure — Parts A, B, C, and D — confuses even the people it serves. Each part covers different services, carries different costs, and involves different enrollment decisions. Whether you are approaching 65 or helping a parent navigate the system, here is a clear explanation of Medicare Parts A, B, C, and D.
Table of Contents
- Medicare at a Glance
- Part A: Hospital Insurance
- Part B: Medical Insurance
- Part C: Medicare Advantage
- Part D: Prescription Drug Coverage
- Medigap: Filling the Gaps
- Key Takeaways
Medicare at a Glance
Medicare is the federal health insurance program for people 65 and older, as well as younger people with certain disabilities and those with end-stage renal disease. It is not free, and it is not one plan — it is a framework of parts that beneficiaries combine in different ways. The two main paths are Original Medicare (Parts A and B, plus optional D and Medigap) and Medicare Advantage (Part C), which bundles everything through a private plan.
Enrollment timing matters enormously. Your Initial Enrollment Period spans seven months — the three months before, the month of, and the three months after your 65th birthday month. Missing it can trigger lifetime late-enrollment penalties for Parts B and D, so mark the calendar early. Official enrollment guidance is published by cms.gov and the Social Security Administration.
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. For most beneficiaries, Part A is premium-free: if you or your spouse paid Medicare payroll taxes for at least ten years (40 quarters), you owe no monthly premium. Those without enough work history can buy in, but the premium is steep — several hundred dollars a month.
“Premium-free” does not mean cost-free. Part A has a substantial per-benefit-period deductible for hospital stays — well over a thousand dollars — plus daily coinsurance for extended stays. Skilled nursing carries daily copays after the first 20 days. These cost-sharing amounts are adjusted annually, so check the current year’s figures when planning.
Most people are automatically enrolled in premium-free Part A when they turn 65 if they are already receiving Social Security benefits. If you are still working and covered by employer insurance, you may be able to delay other parts — but Part A itself is usually worth taking since it costs nothing for most people.
Part B: Medical Insurance
Part B covers outpatient care: doctor visits, preventive services, lab tests, mental health services, durable medical equipment, and most care you receive without being admitted to a hospital. Unlike Part A, Part B always charges a monthly premium — a standard amount for most beneficiaries, with higher-income enrollees paying surcharges (IRMAA) based on their tax returns from two years prior.
Part B also has an annual deductible (a few hundred dollars) and then typically covers 80 percent of approved services, leaving you with 20 percent coinsurance and no annual out-of-pocket cap under Original Medicare. That uncapped 20 percent is why many beneficiaries buy supplemental coverage. Preventive services — annual wellness visits, many screenings and vaccines — are covered with no cost-sharing, a benefit worth using fully.
The Part B late-enrollment penalty is the one to fear: for each year you delay without creditable coverage, your premium rises by 10 percent — permanently. If you have qualifying employer coverage past 65, you get a Special Enrollment Period to sign up later without penalty. Our guide to deductibles, copays, and coinsurance explains these cost-sharing terms in plain language, and our Medicare enrollment timeline maps every key deadline.
Part C: Medicare Advantage
Part C, better known as Medicare Advantage, is the private-plan alternative to Original Medicare. Private insurers contract with Medicare to provide all your Part A and Part B benefits — and usually Part D drug coverage too — often with extras like dental, vision, hearing, and gym memberships. You still pay the Part B premium, plus any premium the Advantage plan charges (many charge no additional premium).
Advantage plans manage care through networks — most are HMOs or PPOs — and they cap your annual out-of-pocket spending, which Original Medicare does not. The trade-offs: narrower networks, prior-authorization requirements that can delay or deny care, and the possibility that your plan’s network or benefits change each year. Roughly half of Medicare beneficiaries now choose Advantage, making it the dominant form of Medicare for new enrollees.
Choosing between Original Medicare and Advantage is the single biggest Medicare decision. Original Medicare offers nationwide provider access and predictable supplemental options; Advantage offers simplicity, extras, and an out-of-pocket cap at the cost of managed-care restrictions. You can switch between them during the annual open enrollment period each fall.
Part D: Prescription Drug Coverage
Part D covers outpatient prescription drugs through private plans — either standalone drug plans paired with Original Medicare or built into Medicare Advantage. Plans use tiered formularies: generics on low tiers with small copays, preferred brands in the middle, and specialty drugs on high tiers with steep coinsurance. Our explainer on prescription drug tiers and formularies goes deeper on how these lists work.
Part D premiums, deductibles, and cost-sharing vary by plan, and the standard benefit design includes a deductible phase, an initial coverage phase, and catastrophic coverage that now caps annual out-of-pocket drug spending — a major recent reform that protects beneficiaries from unlimited drug costs. Like Part B, Part D carries a lifetime late-enrollment penalty for going without creditable drug coverage.
Because formularies and pharmacy networks differ, comparing Part D plans annually is essential: the plan that was cheapest last year may not cover your new prescription affordably this year. Medicare’s Plan Finder tool lets you enter your drugs and pharmacies to compare total costs.
Medigap: Filling the Gaps
Medigap — Medicare Supplement insurance — is private coverage that pays Original Medicare’s cost-sharing: deductibles, copays, and coinsurance. It is available only to Original Medicare beneficiaries, not those in Advantage plans. Medigap plans are standardized into lettered plans (G, N, and others), so a Plan G from one insurer covers the same benefits as a Plan G from another — shop on price and company reputation.
The best time to buy Medigap is during your six-month open enrollment window starting when you turn 65 and enroll in Part B: insurers cannot deny you or charge more for pre-existing conditions. After that window, medical underwriting usually applies in most states, and getting affordable coverage can be difficult. Plan G is the most comprehensive option for new enrollees and the most popular choice.
The classic combination — Original Medicare plus Part D plus Medigap — offers the broadest provider access with the most predictable costs, at the price of higher total premiums. For personalized, unbiased counseling, every state offers a free SHIP (State Health Insurance Assistance Program) service; find yours through usa.gov.
