The Four Parts of Medicare Explained

Medicare has four parts, and each one covers different types of care. Part A covers hospital stays, skilled nursing, hospice, and some home health care. Part B covers doctor visits, outpatient care, and medical equipment. Part C, also called Medicare Advantage, is an alternative way to get Parts A and B through a private insurance company. Part D covers prescription drugs. Most people who have Original Medicare (Parts A and B) also need Part D. If you choose Part C instead, that plan usually includes drug coverage.

You do not have to take all four parts. The combination you need depends on what kind of coverage you want and whether you are willing to pay extra premiums. Some people use Original Medicare (A and B) plus Part D. Others choose Part C, which bundles A, B, and usually D into one plan. Understanding what each part does will help you decide which combination makes sense for your situation.

Key Takeaways

  • Part A covers hospital care, skilled nursing facilities, and some home health services after a hospital stay.
  • Part B covers doctor visits, preventive care, outpatient procedures, and medical equipment like wheelchairs and oxygen.
  • Part C is a private insurance alternative that combines Parts A and B (and usually D) into one plan with different costs and networks.
  • Part D covers prescription medications and is separate from Parts A and B unless you choose a Part C plan that includes it.
  • You can use Original Medicare (A and B) with Part D, or switch to Part C, but you cannot use both at the same time.

Part A: Hospital and Facility Care

Part A pays for inpatient hospital stays, including room, meals, and nursing care. It also covers skilled nursing facility care after you have spent at least three days in the hospital — but only if you go to a facility that Medicare approves and only for the first 100 days. After that, you pay the full cost. Part A also covers hospice care and some home health services, though home health is only covered if you are homebound and a doctor orders it.

Most people do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes while working. However, you do pay a deductible when you are admitted to the hospital — the amount changes each year. If your hospital stay is longer than 60 days, you also pay a daily coinsurance amount for days 61 through 90, and a higher amount for days 91 through 150.

Part B: Doctor Visits and Outpatient Care

Part B covers visits to your doctor, preventive care like annual wellness exams and cancer screenings, emergency room visits, and outpatient surgery. It also pays for medical equipment and supplies — wheelchairs, walkers, oxygen, diabetic testing supplies — and for some therapy services like physical therapy and occupational therapy when ordered by a doctor.

Part B requires a monthly premium, which is deducted from your Social Security check if you receive benefits. You also pay a yearly deductible, and then you pay 20 percent of the cost for most services after that. Some preventive services, like flu shots and colonoscopies, are covered at no cost to you.

Part C: Medicare Advantage as an Alternative

Part C, called Medicare Advantage, is a way to get your Part A and Part B coverage through a private insurance company instead of through Original Medicare. These plans are offered by insurers like UnitedHealthcare, Humana, and Anthem, and they must cover everything that Original Medicare covers — but they can do it differently. Most Part C plans include Part D drug coverage, and many also include dental, vision, or hearing benefits that Original Medicare does not cover.

The trade-off is that Part C plans usually have a network of doctors and hospitals you must use, and you may need prior approval from the plan before certain procedures. Costs vary widely by plan and by where you live. Some plans have low or zero monthly premiums but higher deductibles and copays. Others cost more per month but have lower out-of-pocket costs. You can only be enrolled in one Part C plan at a time, and if you choose Part C, you cannot also use Original Medicare.

Part D: Prescription Drug Coverage

Part D covers the cost of prescription medications. If you have Original Medicare (Parts A and B), you need to choose a separate Part D plan from a private insurance company. If you have Part C, drug coverage is usually included, though you should check your specific plan. Part D plans vary in which drugs they cover and how much you pay, so comparing plans before you enroll can save you money.

Part D has a yearly deductible, and then you pay a copay or coinsurance for each prescription. Once you and your plan have spent a certain amount on drugs in a year, you enter the "donut hole" — a coverage gap where you pay a higher percentage of the cost. After you spend enough out of pocket, catastrophic coverage kicks in and the plan pays most of the cost for the rest of the year.

How the Parts Work Together

If you choose Original Medicare, you use Part A for hospital care, Part B for doctor visits, and Part D for drugs. These three parts work independently — you pay different deductibles and copays for each one. If you choose Part C instead, one plan handles hospital care, doctor visits, and usually drugs all together, with one deductible and one set of copays.

Some people also buy a Medigap policy (supplemental insurance) to help pay the costs that Original Medicare does not cover — like deductibles and coinsurance. Medigap is only available if you have Original Medicare, not if you have Part C. If you have Part C, you cannot use Medigap.

Costs and Premiums Across All Parts

Part A has no monthly premium for most people, but you pay a deductible and coinsurance for hospital stays. Part B has a monthly premium that varies based on your income, plus a yearly deductible and 20 percent coinsurance. Part D has a monthly premium that varies by plan, plus a deductible and copays. Part C has a monthly premium (sometimes zero) set by the insurance company, plus copays and deductibles that vary by plan.

Your total out-of-pocket costs depend on which parts you choose and how much health care you use. Original Medicare plus Part D gives you more flexibility in choosing doctors but may cost more if you need a lot of care. Part C may have lower overall costs if you use doctors within the network, but it limits your choices. The best choice depends on your health, your budget, and which doctors you want to see.

Frequently Asked Questions

Do I have to take all four parts of Medicare?

No. You must have Part A and Part B (or Part C as an alternative), but Part D is optional. However, if you do not sign up for Part D when you first become may be able to access and you go without drug coverage, you may pay a penalty if you enroll later. Part C is an alternative to Parts A and B, not an addition to them.

Can I switch between Original Medicare and Part C?

Yes, during the Annual Enrollment Period (October 15 to December 7 each year), you can switch from Original Medicare to Part C or from Part C to Original Medicare. If you switch to Original Medicare, you can also enroll in a Part D plan at the same time. Changes take effect January 1 of the following year.

What happens if I do not sign up for Part D when I am first may be able to access?

If you go without Part D coverage for more than 63 days after you first become may be able to access, you may have to pay a late enrollment penalty when you do sign up. The penalty is a percentage of the national average Part D premium and stays with you for as long as you have Part D. Some people are exempt from this penalty if they have other creditable drug coverage.

Is Part C cheaper than Original Medicare?

It depends on your situation. Some Part C plans have low or zero premiums but higher copays, while others cost more per month but less per visit. Original Medicare has no network restrictions but may cost more overall if you need a lot of care. Comparing plans side by side for your doctors and medications will show you which costs less for your specific needs.

Can I have both Original Medicare and Part C at the same time?

No. You must choose one or the other. If you have Part C, your Original Medicare coverage ends. If you switch back to Original Medicare, your Part C coverage ends. You can only be enrolled in one at a time.