The Four Parts of Medicare Explained
Medicare has four separate parts, and each one covers different types of medical care. Part A covers hospital stays, Part B covers doctor visits and outpatient care, Part C is an alternative way to get Parts A and B through a private insurance company, and Part D covers prescription drugs. Most people who turn 65 are automatically enrolled in Parts A and B, but you have to make a choice about Part C and actively sign up for Part D.
Understanding what each part does — and what it does not cover — helps you know what out-of-pocket costs to expect and whether you need additional coverage. The choices you make at 65 can affect your costs and coverage for years to come, so it is worth spending time on this now.
Key Takeaways
- Part A covers hospital stays, skilled nursing care, and hospice; Part B covers doctor visits, lab tests, and outpatient procedures.
- Part C (Medicare Advantage) is offered by private insurers and bundles Parts A and B together, often with Part D included, but usually limits you to a specific network of doctors.
- Part D is prescription drug coverage you must sign up for separately, and delaying enrollment can result in a permanent penalty on your premiums.
- Original Medicare (Parts A and B) allows you to see any doctor who accepts Medicare, but you pay a deductible and coinsurance for each service.
- You can switch between Original Medicare and Medicare Advantage only during the annual open enrollment period from October 15 to December 7.
Medicare Part A: Hospital and Skilled Nursing Coverage
Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. If you are admitted to a hospital as an inpatient (not just for observation), Part A pays for your room, meals, nursing care, and most hospital services. You pay a deductible for each hospital stay — the amount changes each year — and then Part A covers the full cost for days 1 through 60. From day 61 to day 90, you pay a daily coinsurance amount. Beyond 90 days, you enter what Medicare calls "lifetime reserve days," which have a higher daily cost and are limited to 60 total days in your lifetime.
Part A also covers up to 100 days in a skilled nursing facility if you are admitted within 30 days of a hospital stay of at least three days. You pay nothing for days 1 through 20, and a daily coinsurance amount for days 21 through 100. Part A covers hospice care for people with a terminal illness, and it covers some home health services if you are homebound and a doctor orders them. Part A does not cover custodial care (help with bathing or dressing), private-duty nursing, or assisted living.
Medicare Part B: Doctor Visits and Outpatient Care
Part B covers doctor visits, preventive care, lab tests, X-rays, outpatient surgery, and durable medical equipment like wheelchairs or oxygen. It pays for annual wellness visits, cancer screenings, diabetes management, and vaccinations. Part B also covers mental health services, physical therapy, and occupational therapy when ordered by a doctor. You pay a monthly premium for Part B — the amount depends on your income — plus an annual deductible. After you meet the deductible, you typically pay 20 percent of the cost for most services, and Medicare pays 80 percent.
Part B does not cover routine dental care, vision exams for glasses or contacts, hearing aids, or most prescription drugs (those are covered under Part D). It also does not cover cosmetic surgery or most treatments outside the United States. If you delay signing up for Part B when you first turn 65 and do not have other may have access to coverage, you will pay a permanent penalty on your premiums for as long as you have Medicare.
Medicare Part C: Medicare Advantage as an Alternative
Part C, also called Medicare Advantage, is a way to get your Part A and Part B coverage through a private insurance company instead of the federal government. These plans are offered by insurers like UnitedHealthcare, Humana, Aetna, and Cigna. Most Medicare Advantage plans include Part D prescription drug coverage, and many also include dental, vision, or hearing coverage that Original Medicare does not offer. The monthly premium is often lower than Original Medicare, and the out-of-pocket maximum is capped by law.
The trade-off is that Medicare Advantage plans usually require you to use doctors and hospitals within their network. If you see an out-of-network provider, you may pay more or the plan may not cover the visit at all. Some plans require referrals to see specialists. Medicare Advantage plans can change their networks, benefits, and premiums each year, so you need to review your plan annually during open enrollment. If you want to switch back to Original Medicare, you can do so only during the annual open enrollment period (October 15 to December 7) or if you may have access to for a special enrollment period.
Medicare Part D: Prescription Drug Coverage
Part D covers prescription drugs at pharmacies. You must sign up for a Part D plan when you first turn 65, or you will pay a permanent penalty on your premiums if you enroll later. The penalty is 1 percent of the national average Part D premium for each month you delayed, and it stays with you for life. If you have Original Medicare (Parts A and B), you choose a Part D plan from private insurers. If you have Medicare Advantage, most plans include Part D automatically, though some do not.
Part D plans vary in which drugs they cover and how much you pay. Each plan has a formulary — a list of covered drugs — and drugs are placed in tiers with different costs. You typically pay a monthly premium, a deductible (which varies by plan), and then a copay or coinsurance for each prescription. Once your out-of-pocket costs reach a certain amount in a year, you enter the "donut hole," where you pay a higher percentage of drug costs until you reach catastrophic coverage, at which point Medicare pays most of the cost. You can change Part D plans once per year during open enrollment.
Original Medicare Versus Medicare Advantage: Key Differences
Choosing between Original Medicare and Medicare Advantage means understanding how each one works and what trade-offs matter to you. Original Medicare gives you the freedom to see any doctor who accepts Medicare, but it has no cap on your out-of-pocket costs — you could spend thousands in a year if you have major medical needs. Medicare Advantage limits your out-of-pocket costs by law, but it restricts you to a network of doctors and may require referrals for specialists.
The table below shows the main differences side by side. Original Medicare requires you to buy Part D separately and may require a Medigap policy to cover gaps in coverage. Medicare Advantage usually bundles prescription drugs and extra benefits like dental or vision into one plan, which can lower your total monthly cost but may limit your choices about where to receive care.
| Feature | Original Medicare (Parts A & B) | Medicare Advantage (Part C) |
|---|---|---|
| Who provides coverage | Federal government | Private insurance company |
| Doctor choice | Any doctor who accepts Medicare | Usually limited to network doctors |
| Referrals required | No | Often yes, for specialists |
| Out-of-pocket maximum | No cap (unlimited) | Capped by law |
| Prescription drug coverage | Part D purchased separately | Usually included |
| Dental, vision, hearing | Not covered | Often included |
| Coverage outside the U.S. | Limited | Usually not covered |
When to Enroll and What Happens If You Miss the important date
You become may be able to access for Medicare at age 65. Your initial enrollment period runs for seven months: three months before the month you turn 65, the month you turn 65, and three months after. If you enroll during this window, your coverage starts on the first day of the month you turn 65 (or the first day of the following month if you enroll after your birthday month). If you miss this window and do not have other may have access to coverage, you will pay a permanent penalty on your Part B and Part D premiums.
After your initial enrollment period ends, you can make changes to your coverage only during the annual open enrollment period from October 15 to December 7. During this time, you can switch from Original Medicare to Medicare Advantage, from Medicare Advantage to Original Medicare, or change your Part D plan. Changes made during open enrollment take effect on January 1 of the following year. If you experience a may have access to life event — such as losing employer coverage, moving out of your plan's service area, or losing Medicaid — you may be able to make changes outside the annual window.
Supplemental Coverage: Medigap and Medicaid
If you choose Original Medicare, you may want to buy a Medigap (Medicare Supplement) policy from a private insurer. Medigap covers some of the costs that Original Medicare does not, such as coinsurance, copays, and the Part B deductible. There are ten standardized Medigap plans, labeled A through N, and each one covers a different combination of costs. Medigap does not cover prescription drugs, so you still need Part D. You can buy Medigap at any time, but premiums are usually lowest if you enroll within six months of turning 65.
If your income and assets are low enough, you may also may have access to for Medicaid, which is a joint federal and state program. Medicaid can pay your Medicare premiums and cover costs that Medicare does not, including long-term care. Medicaid rules vary by state, so contact your state Medicaid office or call 211 to learn whether you may have access to. If you have Medicare Advantage, you do not need Medigap because the plan already limits your out-of-pocket costs.
Frequently Asked Questions
Do I have to choose between Original Medicare and Medicare Advantage?
Yes. You must choose one or the other. Most people are automatically enrolled in Original Medicare (Parts A and B) at 65, but you can switch to Medicare Advantage during open enrollment or your initial enrollment period. Once you choose, you can change your mind only during the annual open enrollment period from October 15 to December 7.
What happens if I do not sign up for Part D when I turn 65?
If you do not have other drug coverage and you delay enrolling in Part D, you will pay a permanent penalty on your premiums for as long as you have Medicare. The penalty is 1 percent of the national average Part D premium for each month you were without coverage. Even if you enroll later, the penalty stays with you.
Can I use my Medicare outside the United States?
Original Medicare covers some emergency care in Canada and Mexico if you are traveling from the U.S. Most Medicare Advantage plans do not cover care outside the U.S. If you travel internationally regularly, ask your plan what coverage is available and consider a travel insurance policy.
What is the difference between a copay and coinsurance?
A copay is a fixed dollar amount you pay for a service — for example, $25 for a doctor visit. Coinsurance is a percentage of the cost — for example, 20 percent of the cost of an X-ray. Original Medicare typically uses coinsurance; Medicare Advantage plans may use either copays or coinsurance depending on the plan.
Can I switch from Medicare Advantage back to Original Medicare?
Yes, but only during the annual open enrollment period from October 15 to December 7, or if you may have access to for a special enrollment period. If you move out of your plan's service area or lose your plan for other reasons, you may be able to switch outside the annual window. Contact Medicare at 1-800-MEDICARE to ask about your situation.