Key Takeaways
✔ Medicare is divided into four parts: A, B, C, and D, each covering different healthcare needs.
✔ Understanding the differences can help you make informed decisions about your healthcare coverage.
Understanding Medicare: Part A, Part B, Part C & Part D
Medicare is a federal health insurance program designed for people aged 65 and older, as well as some younger individuals with disabilities or certain medical conditions. But with different parts labeled A, B, C, and D, it can get confusing. Let’s break it down so you can understand what each part covers and how they work together.
Medicare Part A: Hospital Insurance
Medicare Part A covers hospital-related services. This is often referred to as “hospital insurance,” and it primarily helps pay for:
- Inpatient hospital stays – If you’re admitted to a hospital for treatment, Part A helps cover the costs of your stay, including semi-private rooms, meals, and necessary services.
- Skilled nursing facility (SNF) care – After a hospital stay of at least three days, Part A may cover short-term stays in a skilled nursing facility for rehabilitation or recovery.
- Hospice care – If you have a terminal illness, Part A covers hospice care services to ensure comfort and pain management.
- Home health care – Certain medically necessary home health services, such as physical therapy, speech therapy, and nursing care, may be covered.
What You Need to Know About Part A
- Most people don’t pay a premium for Part A if they (or their spouse) paid Medicare taxes while working for at least 10 years.
- However, there are deductibles and copayments for hospital stays and skilled nursing care.
Medicare Part B: Medical Insurance
Medicare Part B covers outpatient medical services. It is often called “medical insurance” and helps pay for:
- Doctor visits – Whether it’s a routine check-up or specialist appointment, Part B covers medically necessary doctor visits.
- Preventive care – Screenings, vaccines, and wellness visits are included to help prevent illnesses.
- Outpatient services – X-rays, lab tests, and physical therapy fall under Part B coverage.
- Medical equipment – Durable medical equipment (DME) such as wheelchairs, walkers, and oxygen supplies are covered.
- Ambulance services – Emergency transportation to hospitals is also included in Part B coverage.
What You Need to Know About Part B
- Part B requires a monthly premium, which is based on your income.
- There is also an annual deductible and typically a 20% coinsurance for services after meeting the deductible.
Medicare Part C: Medicare Advantage Plans
Medicare Part C, also known as Medicare Advantage, is an alternative to Original Medicare (Parts A and B). These are plans offered by private insurance companies approved by Medicare and provide:
- All benefits of Part A and Part B – Medicare Advantage must cover everything that Original Medicare does.
- Additional benefits – Many Medicare Advantage plans include vision, hearing, dental, and wellness programs.
- Prescription drug coverage – Most Medicare Advantage plans include Medicare Part D, which helps with medication costs.
What You Need to Know About Part C
- You must first enroll in Parts A and B to be eligible for Medicare Advantage.
- Plan costs and coverage vary by provider and location, so you should compare plans carefully.
- Medicare Advantage plans have provider networks, meaning you may need to use certain doctors or hospitals to receive full benefits.
Medicare Part D: Prescription Drug Coverage
Medicare Part D helps cover the cost of prescription medications. Since Original Medicare (Parts A and B) does not cover most prescription drugs, Part D was created as a standalone plan that you can add to your Medicare coverage.
How Part D Works
- Formularies – Each plan has a list of covered drugs, known as a formulary, which is divided into tiers based on cost.
- Cost-sharing – You typically pay a copayment or coinsurance for your medications, with lower-tier drugs costing less than higher-tier ones.
- Coverage gap (“Donut Hole”) – After reaching a certain spending limit, you may enter the coverage gap, where your out-of-pocket costs temporarily increase.
What You Need to Know About Part D
- Part D is not automatic – You must enroll in a plan separately if you need prescription drug coverage.
- There is a monthly premium, and costs vary depending on the plan.
- If you delay enrollment, you may face a late enrollment penalty unless you have other credible prescription drug coverage.
How Do These Medicare Parts Work Together?
Here’s how Medicare Parts A, B, C, and D can be combined to fit your healthcare needs:
- Original Medicare (Part A + Part B) – Covers hospital and medical services but does not include prescription drugs. You can add Part D for drug coverage.
- Medicare Advantage (Part C) – Combines Part A, Part B, and often Part D, along with extra benefits like vision and dental.
- Medicare Supplement (Medigap) + Original Medicare – If you stick with Original Medicare, you can purchase Medigap to help cover out-of-pocket costs like copays and deductibles.
Choosing the Right Medicare Coverage
Deciding between Original Medicare and Medicare Advantage depends on your healthcare needs and preferences. Consider these factors:
- Do you need prescription drug coverage? If so, add Part D or choose a Medicare Advantage plan with drug benefits.
- Do you want extra benefits? Medicare Advantage plans may offer vision, dental, and hearing coverage.
- Are you okay with provider networks? Medicare Advantage plans have network restrictions, while Original Medicare allows you to see any doctor that accepts Medicare.
- What is your budget? Compare premiums, deductibles, and out-of-pocket costs before making a decision.
Making the Most of Your Medicare Benefits
Now that you understand the differences between Medicare Parts A, B, C, and D, you can make informed choices about your healthcare coverage. Whether you choose Original Medicare with a Medigap policy or a Medicare Advantage plan, be sure to review your options every year during the Medicare Open Enrollment Period (October 15 – December 7) to ensure you have the coverage that best fits your needs.
