Understanding Medicare's Four Parts
Medicare is the federal health insurance program primarily for adults 65 and older. It's divided into parts, each covering different types of care. Knowing what each part does — and what it doesn't cover — is essential to building a healthcare plan that protects your health and your wallet.
Part A: Hospital Insurance
What it covers:
- Inpatient hospital stays
- Skilled nursing facility care (under specific conditions)
- Hospice care
- Some home health services
What it costs: Most people don't pay a monthly premium for Part A if they or their spouse paid Medicare taxes for at least 10 years while working. However, there are deductibles and coinsurance costs for hospital stays beyond a certain number of days.
Key gap: Part A does not cover long-term custodial care, such as help with daily living activities in a nursing home.
Part B: Medical Insurance
What it covers:
- Doctor visits and outpatient care
- Preventive services (flu shots, screenings, wellness visits)
- Durable medical equipment (wheelchairs, walkers, etc.)
- Mental health services
- Some home health services
What it costs: Part B charges a standard monthly premium, which is adjusted based on income (higher earners pay more). There is also an annual deductible and typically a 20% coinsurance after meeting the deductible.
Enrollment tip: Failing to enroll in Part B when first eligible can result in a late enrollment penalty that increases your premium permanently.
Part C: Medicare Advantage
Part C, also known as Medicare Advantage, is an alternative way to receive your Medicare benefits through a private insurance company approved by Medicare.
What it typically includes:
- All Part A and Part B benefits bundled together
- Often includes Part D (prescription drug coverage)
- Many plans include extras like dental, vision, and hearing coverage
Trade-offs: Medicare Advantage plans often have lower premiums than Original Medicare combined with a Medigap supplement, but they use provider networks (HMO or PPO), meaning you may need referrals or be limited to specific doctors and hospitals.
Part D: Prescription Drug Coverage
What it covers: Prescription medications, through a plan offered by a private insurer approved by Medicare.
How it works: Each Part D plan has a formulary — a list of covered drugs organized into tiers. Higher-tier drugs typically cost more. Plans vary in which drugs they cover and at what cost.
The coverage gap ("donut hole"): Historically, Part D had a coverage gap where costs increased significantly after reaching a spending threshold. Legislation in recent years has substantially reduced out-of-pocket costs in this gap, and a cap on annual out-of-pocket drug spending has been introduced, offering meaningful relief to those with high medication costs.
Quick Comparison Table
| Part | Nickname | Primary Coverage | Monthly Premium? |
|---|---|---|---|
| A | Hospital Insurance | Inpatient hospital, skilled nursing, hospice | Usually $0 |
| B | Medical Insurance | Doctor visits, outpatient care, preventive services | Yes |
| C | Medicare Advantage | Combines A + B (often + D + extras) | Varies by plan |
| D | Drug Coverage | Prescription medications | Yes |
What's Not Covered by Medicare?
Original Medicare (Parts A and B) does not cover:
- Routine dental care, dentures
- Routine vision care, eyeglasses
- Hearing aids
- Long-term custodial care
- Most care outside the United States
This is where Medigap (Medicare Supplement Insurance) or a Medicare Advantage plan with extra benefits can help fill the gaps. Always review your options during the Annual Enrollment Period (October 15 – December 7) to ensure you have the coverage that best fits your needs.