Medicare has four distinct parts, each covering different services

Part A covers hospital stays, skilled nursing care after hospitalization, hospice, and home health services. Part B covers doctor visits, outpatient care, lab work, and medical equipment. Part C (Medicare Advantage) is an alternative to Parts A and B offered by private insurers. Part D covers prescription drugs. Most people on Medicare use Part A and Part B as their foundation, then add Part D for drug coverage. Some people choose Part C instead, which bundles A, B, and usually D into one plan.

Understanding what each part covers matters because gaps in coverage can mean unexpected bills. A person with only Part A, for example, would pay full price for a doctor visit. Someone with Part A and B but no Part D would pay full price for medications. The combination you choose depends on your health needs, your budget, and whether you want to use traditional Medicare or a private plan.

Key Takeaways

  • Part A covers hospital and skilled nursing stays; most people get it automatically at 65 and pay no monthly premium.
  • Part B covers doctor visits and outpatient services; it requires a monthly premium and covers 80 percent of approved costs after you meet your deductible.
  • Part D covers prescription drugs through private plans you choose; costs vary widely by plan and by the drugs you take.
  • Part C (Medicare Advantage) is a private alternative that bundles A, B, and usually D, but limits you to in-network doctors and may have higher out-of-pocket costs.
  • You can use traditional Medicare (A and B) and add a Medigap supplemental plan to cover costs Medicare does not pay, or you can choose Part C instead.

Part A: Hospital and Skilled Nursing Coverage

Part A covers inpatient hospital stays, including room, meals, and standard nursing care. It also covers up to 100 days in a skilled nursing facility after a hospital stay of at least three days, and it covers hospice care and some home health services. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes for at least 10 years while working.

Part A does have costs when you use it. For a hospital stay in 2024, you pay a deductible (the amount changes yearly) for the first 60 days, then nothing for days 61 through 90. Days 91 and beyond cost you a daily amount. For skilled nursing, you pay nothing for the first 20 days, then a daily cost for days 21 through 100. After 100 days, you pay all costs yourself. These numbers shift each year, so check the current amounts on Medicare.gov before a planned hospital stay.

Part B: Doctor Visits and Outpatient Services

Part B covers doctor visits, preventive care (like annual wellness visits and screenings), lab work, X-rays, and medical equipment such as wheelchairs and oxygen. It also covers outpatient surgery, emergency room visits, and mental health services. Part B is optional, but most people enroll because the cost of medical care without it is steep.

You pay a monthly premium for Part B, which increases if you delay enrollment past age 65 (unless you have employer coverage). After you pay your annual deductible, Medicare covers 80 percent of approved costs, and you pay 20 percent. This means Part B does not cover everything — you still owe that 20 percent, which is why many people add a Medigap plan or choose Part C to limit their out-of-pocket costs. The monthly premium amount depends on your income; higher earners pay more.

Part D: Prescription Drug Coverage

Part D covers prescription medications through private plans you choose from a list of Medicare-approved options. Each plan has a different formulary — the list of drugs it covers — and different costs. One plan might cover your blood pressure medication cheaply but charge more for arthritis drugs, while another plan does the opposite. You must compare plans based on the specific medications you take, not just the monthly premium.

Part D has a coverage gap, sometimes called the "donut hole." Once you and your plan spend a certain amount on drugs in a year, you enter the gap and pay a higher percentage of drug costs until you reach a catastrophic coverage threshold, at which point your costs drop again. The gap shrinks each year by law, but it still exists. You can enroll in Part D when you first become may be able to access for Medicare, or during the annual enrollment period in October through December. If you go without Part D coverage when you are first may be able to access, you pay a penalty if you enroll later.

Part C: Medicare Advantage as an Alternative to Parts A and B

Part C, also called Medicare Advantage, is a private insurance plan that covers everything Part A and Part B cover, and usually includes Part D drug coverage as well. Instead of going to any doctor who accepts Medicare, you use doctors and hospitals in the plan's network. Some plans are Health Maintenance Organizations (HMOs), which require you to pick a primary care doctor and get referrals for specialists. Others are Preferred Provider Organizations (PPOs), which give you more flexibility to see out-of-network doctors, though at a higher cost.

Part C plans often have lower monthly premiums than traditional Medicare plus Medigap, and they include an out-of-pocket maximum — once you spend that amount in a year, the plan covers everything else. However, you may pay more per visit or per service than you would with traditional Medicare and Medigap. Part C plans also change their networks and coverage each year, so a doctor you see this year might not be in the plan next year. You can switch plans during the annual enrollment period, but you cannot switch back to traditional Medicare outside of specific windows.

Medigap: Supplemental Coverage to Fill Medicare Gaps

Medigap (also called Supplemental Insurance) is private insurance that works alongside traditional Medicare (Parts A and B). It covers costs that Medicare does not — the deductibles, the 20 percent coinsurance, and copayments. There are ten standardized Medigap plans, labeled A through N, each with a different combination of coverage. Plan G, for example, covers the Part B deductible and the Part B coinsurance, while Plan N covers the same but charges a copayment for some doctor visits.

Medigap is sold by private insurers, so the monthly premium varies by company and by your age and location. You have the best rates if you enroll within six months of turning 65 and enrolling in Part B — after that window, insurers can charge you more based on your health history. Medigap does not cover prescription drugs, so you still need Part D. You can use traditional Medicare, Medigap, and Part D together, or you can choose Part C instead; you cannot use Medigap with Part C.

How the Parts Work Together: Traditional Medicare vs. Medicare Advantage

The two main paths are traditional Medicare (Parts A, B, and D plus optional Medigap) or Medicare Advantage (Part C, which usually includes D). With traditional Medicare, you can see any doctor who accepts Medicare anywhere in the country. You pay a deductible and coinsurance, but Medigap can cover most of those costs. With Medicare Advantage, you are limited to in-network providers, but you may have lower premiums and a clear out-of-pocket maximum.

Neither path is universally better — it depends on your health, your doctors, and your budget. If you have a chronic condition and see the same specialists regularly, traditional Medicare with Medigap gives you stability and choice. If you are generally healthy and want predictable costs, Medicare Advantage may save you money. You can switch between the two during the annual enrollment period each year, so you are not locked in forever.

Frequently Asked Questions

Do I have to take all four parts of Medicare?

No. Part A is automatic at 65 if you are a U.S. citizen or permanent resident. Part B is optional but recommended; if you delay it, you pay a penalty later. Part D is optional, but you pay a penalty if you go without it and enroll later. Part C is an alternative to A and B, not an addition. You choose either traditional Medicare (A and B) or Part C, then add D if you want drug coverage.

What happens if I do not enroll in Part B or Part D when I first become may be able to access?

You pay a permanent penalty on your monthly premium for each month you were not enrolled. The Part B penalty is 10 percent of the standard premium for each year you delayed. The Part D penalty is 1 percent of the national average plan premium for each month you were without coverage. These penalties stay with you for life, so enrolling late is expensive.

Can I use a doctor who does not accept Medicare?

With traditional Medicare, you can see any doctor, but if they do not accept Medicare, you pay the full bill yourself — Medicare will not reimburse you. With Medicare Advantage, you must use in-network doctors; out-of-network care is usually not covered except in emergencies. Check your doctor's Medicare status before scheduling an appointment.

How do I know which Part D plan to choose?

Use the Medicare Plan Finder tool on Medicare.gov. Enter the medications you take, and it shows you which plans cover them and what your costs will be under each plan. Plans change every year, so compare them again during the annual enrollment period even if you were happy with your plan last year.

Can I switch from traditional Medicare to Medicare Advantage or back?

Yes, during the annual enrollment period from October 15 through December 7 each year. You can also switch if you have a may have access to life event, such as moving out of your plan's service area or losing employer coverage. Outside these windows, you are locked into your choice until the next enrollment period.