Brief Guide to Medicare Parts A, B, C, and D

Medicare is a federal health insurance program in the United States. It mainly helps people who are 65 or older, but some younger people with disabilities or certain serious health conditions also qualify.

At first, Medicare can feel confusing. The good news? It is divided into four main parts:

• Part A – Hospital insurance

• Part B – Medical insurance

• Part C – Medicare Advantage (private plans)

• Part D – Prescription drug coverage

Understanding what each part does makes it much easier to choose the coverage that fits your health needs and budget.

Medicare in a Nutshell

Medicare began in 1965 to help older Americans afford medical care. Today, it covers tens of millions of people and helps pay for hospital stays, doctor visits, and prescription drugs.

In simple terms, Medicare:

• Helps pay for hospital care, doctor visits, and medications

• Gives you a choice between Original Medicare (Parts A & B) and Medicare Advantage (Part C)

• Lets you add drug coverage (Part D) and optional supplemental coverage (Medigap)

Understanding these options helps you make better decisions about your healthcare in retirement.

Quick Overview of the Four Parts

Medicare Part A – Hospital Insurance

What Part A Covers

Medicare Part A helps pay for:

• Inpatient hospital stays (room, meals, nursing care)

• Skilled nursing facility (SNF) care after a qualifying hospital stay

• Hospice care for people with terminal illness

• Some home health care when medically necessary

What Part A Costs in 2025

• Most people pay no monthly premium for Part A because they worked and paid Medicare taxes long enough (usually 10 years or 40 quarters). Medicare

• If you don’t have enough work credits, you may have to pay a monthly premium of $285 or $518 in 2025, depending on how long you or your spouse worked. Medicare

• The Part A hospital deductible is $1,676 per benefit period in 2025. Medicare Rights Center+1

After the deductible:

• Days 1–60 in the hospital: $0 coinsurance

• Days 61–90: $419 per day in 2025 Medicare Rights Center

• Skilled nursing facility care (days 21–100): $209.50 per day in 2025 Medicare Rights Center

Who Qualifies for Part A

You qualify for premium-free Part A at 65 if:

• You or your spouse worked and paid Medicare taxes for at least 40 quarters, or

• You already receive Social Security or Railroad Retirement benefits

Some people under 65 may qualify because of disability or End-Stage Renal Disease (ESRD).

Medicare Part B – Medical Insurance

What Part B Covers

Part B helps pay for:

• Doctor visits (primary care and specialists)

• Outpatient services (clinic visits, same-day surgery)

• Lab tests, X-rays, imaging

• Preventive services (annual wellness visit, cancer screenings, vaccines)

• Durable medical equipment (wheelchairs, walkers, oxygen)

• Mental health services, including outpatient therapy

You usually pay 20% of the Medicare-approved amount for most services after meeting the deductible.

Part B Costs in 2025

• Standard monthly premium: $185.00 in 2025 Centers for Medicare & Medicaid Services+2Medicare+2

• Annual Part B deductible: $257 in 2025 Centers for Medicare & Medicaid Services+2Humana+2

If your income is higher, you may pay an extra amount called IRMAA (Income-Related Monthly Adjustment Amount) for Part B and Part D. Kiplinger

Enrolling in Part B

• Most people are first eligible at age 65.

• Your Initial Enrollment Period is a 7-month window:

  • 3 months before your birthday month

  • Your birthday month

  • 3 months after

If you delay Part B without having qualifying employer coverage, you may pay a permanent late enrollment penalty.

Medicare Part C – Medicare Advantage

Medicare Part C, or Medicare Advantage, is offered by private insurance companies approved by Medicare.

These plans:

• Must cover everything Part A and Part B cover

• Often include Part D drug coverage

• May add extras like dental, vision, hearing, and fitness benefits

• Have network rules (you may need to use plan doctors and hospitals)

Common Types of Medicare Advantage Plans

• HMO (Health Maintenance Organization)

  • You choose a primary care doctor

  • Usually need referrals for specialists

  • Must use in-network providers for routine care

• PPO (Preferred Provider Organization)

  • More freedom to see doctors, including out-of-network

  • Out-of-network care usually costs more

• Special Needs Plans (SNPs)

  • Designed for people with certain chronic conditions, Medicaid + Medicare, or those in nursing homes

  • Benefits and networks tailored to specific needs

Costs and Protection in Medicare Advantage

• You still pay your Part B premium plus any plan premium.

• Plans use copays and coinsurance instead of the standard 20% for many services.

• Each plan must have a yearly out-of-pocket maximum for Part A and B services, which Original Medicare does not have.

Medicare Part D – Prescription Drug Coverage

Medicare Part D helps pay for prescription medications. Plans are run by private insurers and can be:

• Stand-alone Part D plans (used with Original Medicare), or

• Built into many Medicare Advantage (Part C) plans

How Part D Works

Each plan has:

• A formulary – a list of covered drugs

• Tiers – groups of drugs with different costs (usually:

  • Tier 1: low-cost generics

  • Higher tiers: brand-name and specialty drugs

• Rules like prior authorization or step therapy for some drugs

Part D Costs in 2025

• Monthly premiums vary by plan and region. Medicare

• Plans may charge an annual deductible, but no Part D plan can have a deductible higher than $590 in 2025. Healthline+3Medicare+3National Council on Aging+3

A major change starting in 2025:

• Your out-of-pocket spending on Part D drugs is capped at $2,000 per year. Once you hit that cap, you will not pay more for covered Part D drugs for the rest of the year. PAN Foundation+1

If you have a higher income, you may pay an extra Part D IRMAA in addition to your plan premium. 

Who Is Eligible for Medicare?

You’re generally eligible if:

• You’re 65 or older, and

• You’re a U.S. citizen or lawful permanent resident who has lived in the U.S. for at least 5 continuous years

You may also qualify if:

• You’re under 65 and have received Social Security Disability Insurance (SSDI) for 24 months, or

• You have End-Stage Renal Disease (ESRD) or ALS (Lou Gehrig’s disease) under special rules

Key Enrollment Periods to Remember

• Initial Enrollment Period (IEP)

  • 7-month window around your 65th birthday

  • Best time to enroll in Part A, Part B, Part D, or Medicare Advantage without penalties

• General Enrollment Period (GEP)

  • Every year from January 1 – March 31

  • For people who missed Part A or B earlier (may face penalties)

• Annual Election Period (AEP)

  • October 15 – December 7 each year

  • You can switch between Original Medicare and Medicare Advantage

  • You can change or enroll in a Part D plan

• Special Enrollment Periods (SEPs)

  • Triggered by certain life events, like:

    • Losing employer coverage

    • Moving out of your plan’s service area

    • Losing Medicaid

Medigap (Medicare Supplement) vs Medicare Advantage

If you choose Original Medicare (Parts A & B), you can add:

• A Medigap (supplement) plan to help pay deductibles, coinsurance, and copays

• A separate Part D plan for prescription drugs

If you choose Medicare Advantage (Part C):

• You cannot use Medigap

• You get all A and B services through the private plan

• Drug coverage is often included

• You must follow network rules and plan guidelines

In general:

• Original Medicare + Medigap + Part D = more freedom to choose providers, usually higher premiums, more predictable costs

• Medicare Advantage = lower or $0 premiums in some areas, extra benefits, but network limits and varying out-of-pocket costs

Common Medicare Mistakes to Avoid

• Missing your Initial Enrollment Period, leading to permanent penalties for Part B and Part D

• Assuming Medicare is “free” at 65 (only Part A is usually premium-free; Parts B, C, and D have costs)

• Forgetting that Original Medicare has no out-of-pocket maximum

• Skipping Part D because you don’t take many drugs now (this can cause a penalty later)

• Not reviewing coverage each year during open enrollment when plans and costs change

Next Steps

If you’re approaching Medicare age or helping someone who is:

1. List your doctors, hospitals, and medications.

2. Decide whether you prefer:

   • Original Medicare + Medigap + Part D, or

   • An all-in-one Medicare Advantage plan

3. Use the Medicare Plan Finder on Medicare.gov to compare plans in your area. Medicare

4. Mark your calendar for important dates (your 65th birthday window and the October 15–December 7 Annual Election Period).

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