Medicare has four separate parts, and each covers different services
Part A covers hospital stays, skilled nursing care after a hospital stay, hospice, and some home health services. Part B covers doctor visits, outpatient care, medical equipment, and preventive services. Part D covers prescription drugs. Part C, also called Medicare Advantage, is an alternative to Parts A and B — it bundles hospital and doctor coverage into one private plan, usually with prescription drug coverage included.
Most people get Part A and Part B automatically when they turn 65, even if they do not start using them right away. Part D and Part C are optional, but there are penalties if you wait to sign up for them later. Understanding what each part covers helps you know what costs you will face and whether you need additional coverage.
Key Takeaways
- Part A covers hospital stays and skilled nursing facilities; Part B covers doctor visits and outpatient services; together they are called Original Medicare.
- Part C (Medicare Advantage) replaces Parts A and B with a single private insurance plan, usually including prescription drug coverage and often costing less out of pocket.
- Part D is prescription drug coverage and must be added separately to Original Medicare; waiting to sign up can result in a permanent penalty.
- Original Medicare (Parts A and B) has no network restrictions, but Part C plans usually require you to use in-network doctors and hospitals.
Part A: Hospital and Skilled Nursing Care
Part A pays for inpatient hospital stays, including room, meals, and basic nursing care. It covers the first 60 days of a hospital stay in full (after you pay a deductible), then requires you to pay a daily amount for days 61 through 90. If you stay longer than 90 days, you can use "lifetime reserve days" — 60 additional days you can use once in your lifetime, with a higher daily cost.
Part A also covers skilled nursing facility care if you are admitted directly from a hospital stay and need daily skilled care (like wound care or physical therapy). It covers the first 20 days in full, then requires a daily payment for days 21 through 100. After 100 days, you pay all costs yourself.
Part A covers hospice care for people with a terminal diagnosis and home health services when ordered by a doctor and provided by a Medicare-approved agency. Most people do not pay a premium for Part A because they or their spouse paid Medicare taxes while working.
Part B: Doctor Visits and Outpatient Services
Part B covers doctor office visits, emergency room care, outpatient surgery, diagnostic tests, and medical equipment like wheelchairs and oxygen. It also covers preventive services with no out-of-pocket cost, including annual wellness visits, cancer screenings, and vaccinations.
Part B requires a monthly premium (the amount changes each year based on your income). After you pay your annual deductible, you typically pay 20 percent of the cost for most services, and the doctor's office or facility bills Medicare for the rest. Some services, like mental health visits, may have different cost-sharing rules.
Part B does not cover routine dental care, vision exams for glasses, hearing aids, or long-term custodial care in a nursing home. It also does not cover services from doctors who do not accept Medicare, though you can see out-of-network doctors and pay out of pocket if you choose.
Part C: Medicare Advantage as an Alternative
Part C, called Medicare Advantage, is a private insurance plan that covers everything Part A and Part B cover, but through a single insurance company instead of the government. Most Part C plans include prescription drug coverage (Part D) automatically, so you do not need to sign up for Part D separately.
Part C plans often have lower monthly premiums and lower out-of-pocket costs than Original Medicare, especially if you use a lot of services. However, they usually require you to use doctors and hospitals in their network. If you see an out-of-network provider, you pay more or the plan may not cover it at all. Some plans require referrals to see specialists.
Part C plans are offered by private insurance companies and change from year to year. You can switch between Part C and Original Medicare during the annual enrollment period (October 15 to December 7), but if you leave a Part C plan, you may have a gap in prescription drug coverage unless you sign up for Part D right away.
Part D: Prescription Drug Coverage
Part D covers prescription medications at pharmacies. It is optional, but if you do not sign up when you first become may be able to access and go without coverage, you will pay a penalty for as long as you have Medicare — even if you sign up years later. The penalty is 1 percent of the national average Part D premium for each month you were not covered.
Part D plans are offered by private insurance companies and vary in which drugs they cover, what pharmacies you can use, and how much you pay. Most plans have a monthly premium, an annual deductible, and then you pay a percentage of the drug cost (called coinsurance) or a fixed amount per prescription (called a copay). Once you reach a certain spending threshold, you enter the "donut hole" — a coverage gap where you pay more out of pocket — though the gap has been shrinking in recent years.
If you have Original Medicare (Parts A and B), you must sign up for Part D separately. If you have Part C, most plans include Part D, but you should check the specific plan's drug formulary (the list of covered drugs) to make sure your medications are covered.
Original Medicare vs. Medicare Advantage at a Glance
| Feature | Original Medicare (Parts A & B) | Medicare Advantage (Part C) |
|---|---|---|
| Who provides coverage | Federal government | Private insurance company |
| Network restrictions | None — see any doctor who accepts Medicare | Usually required — in-network doctors and hospitals only |
| Prescription drug coverage | Must sign up for Part D separately | Usually included |
| Out-of-pocket maximum | No limit | Yes — plan sets a yearly maximum |
| Specialist referrals | Not required | May be required depending on plan |
Supplemental Coverage: Medigap and Other Options
Original Medicare leaves you responsible for deductibles, coinsurance, and copays. Many people buy a Medigap policy (also called supplemental insurance) from a private company to cover these costs. Medigap policies are standardized by the federal government, so Plan G from one company covers the same services as Plan G from another company — the only difference is price.
If you have Part C (Medicare Advantage), you do not need Medigap because the plan already sets an out-of-pocket maximum. Some people with Original Medicare also buy a separate long-term care insurance policy to cover nursing home or home care costs, which Medicare does not cover.
Veterans may have coverage through the VA instead of or in addition to Medicare. People with low income and limited resources may be covered by both Medicare and Medicaid (called "dual may be able to access"), which can reduce their out-of-pocket costs significantly.
Frequently Asked Questions
Do I have to choose between Original Medicare and Medicare Advantage?
You must choose one or the other, not both. Most people are automatically enrolled in Original Medicare at 65, but you can switch to Medicare Advantage during the annual enrollment period. You can switch back to Original Medicare the following year if you change your mind, though you should sign up for Part D right away to avoid a penalty.
What happens if I do not sign up for Part D when I turn 65?
You will owe a permanent penalty on top of your Part D premium for every month you were not covered, even if you sign up later. The penalty is 1 percent of the national average Part D premium per month. If you go without coverage for 24 months, the penalty is 24 percent added to your premium for life.
Can I see any doctor with Original Medicare?
You can see any doctor in the United States who accepts Medicare, with no referral required. However, some doctors do not accept Medicare patients. You can call ahead to confirm a doctor accepts Medicare before making an appointment.
Is Part C cheaper than Original Medicare?
Part C plans often have lower monthly premiums and lower out-of-pocket costs if you use many services, but they restrict you to in-network providers. Original Medicare has no network, so you can see any doctor, but you may pay more if you need a lot of care. The best choice depends on your health, which doctors you see, and your budget.
What if I have both Medicare and employer health insurance?
If you are still working and covered by your employer's plan, you can delay signing up for Part B without penalty as long as the employer plan covers at least 20 employees. However, you should still sign up for Part A at 65 because it has no premium. Once you leave your job, you have a limited time to sign up for Part B without penalty.