The Four Parts of Medicare

Senior man preparing a healthy smoothie in his kitchen, enjoying active retirement and staying healthy with the support of Medicare Parts like Medicare Part C and Medicare Part D Plans.

Medicare Part A:
Hospital Insurance

What it covers:

Your "big ticket" medical events

Hospital stays (inpatient care)
Skilled nursing facility care (after a hospital stay)
Hospice care
Some home health services

What you need to know:

Most people get this FREE if they or their spouse worked and paid Medicare taxes for 10+ years, but the deductible for 2025 is $1,676, with a 20% coinsurance for most services
Automatic enrollment at age 65 if you're already getting Social Security
No monthly premium for most people, but you do pay deductibles and coinsurance when you use services
This alone isn't enough healthcare coverage - it doesn't cover doctor visits, prescriptions, or preventive care

Medicare Part B:
Medical Insurance

What it covers:

Your everyday healthcare needs

Doctor visits and outpatient care
Preventive services (mammograms, colonoscopies, annual wellness visits)
Medical equipment (wheelchairs, oxygen, etc.)
Ambulance services
Some outpatient prescription drugs from a doctor's office

Joyful senior woman dancing at home, embracing active aging and wellness with the help of Medicare Part C and Medicare Part D coverage for her healthcare needs.

What you need to know:

You pay a monthly premium, averaging around $175 in 2024 and $185 in 2025 (and possibly higher based on your income). The 2025 premium increased by $10.30 from the 2024 premium. By 2033, the standard monthly premium is projected to reach nearly $300, according to CMS data.
The income-related monthly adjustment (IRMAA) surcharge amounts, which are a fee you pay for Part B and Part D premiums if you make above a certain income threshold, will also be added to the basic premium. You can find the IRMAA Sliding Scale Tables of costs on the Social Security Administration’s website.
You choose to enroll, and it's not automatic unless you're already getting Social Security.
Sign up during your Initial Enrollment Period (7 months around your 65th birthday) to avoid late penalties.
Annual deductible and 20% coinsurance on most services
No coverage limit - meaning if you have expensive medical needs, you could pay 20% of some very large bills

Important note about Medicare Part B and automatic enrollment: your Social Security benefits status determines whether you are automatically enrolled in Medicare Part B.

What happens automatically:

About 3 months before you turn 65, Social Security will mail you a Medicare card
This card will show you're enrolled in both Part A and Part B
Part B premiums will automatically be deducted from your Social Security check

But you have a choice to make:

If you want Part B, you don’t need to do anything - you're all set.
If you don't want Part B (perhaps because you already have employer-sponsored insurance), you must actively decline it by returning the form or contacting Social Security.

Confident senior woman in sunglasses and a hat enjoying coffee outdoors, living independently with the support of Medicare Parts including Medicare Part D Plans and Medicare Part C.

Medicare Part C:
Medicare Advantage (The All-in-One Alternative)

What it is:

Private insurance that replaces Medicare Parts A & B, plus additional benefits

Medicare Advantage plans are private health insurance plans paid by the federal government to provide Medicare-covered benefits as an alternative to "traditional" or "original" Medicare
Medicare Advantage plans include everything Medicare Parts A & B cover, often with extras
The extras vary by plan, so it's important to check the plan specifics in your area for coverage details

What you need to know:

You must have or be eligible for Medicare Parts A & B first to be eligible to enroll in Medicare Advantage
Often includes prescription drug coverage (Part D) built in
May also include extras like dental, vision, hearing aids, fitness memberships
Network restrictions - you typically must use their doctors and hospitals
Lower out-of-pocket costs than Original Medicare, with annual spending caps
Monthly premiums vary - many plans have $0 premiums beyond your Part B premium
You can switch back to Original Medicare during certain times of the year

Read more about some of the best Medicare Advantage plans recommended for 2025: Best Medicare Advantage Plans in 2025 from NerdWallet.

Key Distinctions:
Medicare Advantage vs Medicare

You don't need to be separately enrolled in traditional Medicare once you choose a Medicare Advantage plan.

Medicare Advantage (Part C) is an alternative way to get Medicare benefits. When you enroll in a Medicare Advantage plan, you're still in the Medicare program, but you get your Medicare Part A (hospital) and Part B (medical) benefits through a private insurance company rather than directly from the federal government.

You must be eligible for Medicare to enroll in Medicare Advantage. This means you must first be enrolled in or eligible for Medicare Part A and Part B. Most people become eligible at age 65, though some qualify earlier due to disability or certain medical conditions.

Senior couple shopping online using a credit card, exploring Medicare Part D Plans and learning about What is Medicare Part D and other Medicare Parts for their healthcare coverage.

The enrollment process typically involves:

Being enrolled in Medicare Part A and Part B (or being eligible for both)
Choosing a Medicare Advantage plan during an enrollment period
Your Medicare Advantage plan then becomes your primary coverage, replacing Original Medicare

‍Once enrolled in Medicare Advantage, you still have Medicare, but your benefits come through the private plan. You keep your Medicare card, but you'll primarily use your Medicare Advantage plan's member ID card for medical services.

You can switch back to Original Medicare during specific enrollment periods if you decide Medicare Advantage isn't right for you.

What happens to your original Medicare if you enroll in Medicare Advantage?

Happy older woman in a leopard print dress sipping coffee, enjoying her lifestyle with peace of mind from Medicare Parts, including Medicare Part D Plans and Medicare Part C benefits.

Medicare Part D:
Prescription Drug Coverage

What it is:

Starting in 2025, the Medicare Prescription Payment Plan allows beneficiaries to spread out-of-pocket prescription drug costs across the calendar year instead of paying all at once at the pharmacy. This option is available across all Medicare Part D plans and Medicare Advantage plans with drug coverage. Participation is voluntary, and monthly bills are calculated based on incurred costs divided by the remaining months of the year.

Once enrolled, the plan automatically informs the pharmacy that you're participating in this option. This means you won't pay for prescriptions at the pharmacy upfront; instead, you'll receive monthly bills from your plan detailing the costs.

What it covers:

Outpatient prescription medications

What you need to know:

Separate monthly premium (averages around $55/month but varies by plan)
Only available through private insurance companies - no government-run option
Voluntary but recommended - there is a late enrollment penalty if you wait, and the fee is added to your premium permanently if you do enroll in coverage.
The Medicare Part D late enrollment penalty is a surcharge added to your monthly premium for prescription drug coverage if you do not enroll in Part D during your Initial Enrollment Period (IEP) and go without creditable prescription drug coverage for 63 consecutive days or more. This penalty is not a one-time fee; it is typically permanent and will be added to your monthly premium for as long as you have Part D coverage.
New for 2025: There's a new $2,000 cap on out-of-pocket costs for prescription drugs and other True Out-Of-Pocket costs (including deductibles, copays, and coinsurance).
‍More on the Medicare Part D Redesign: Starting in 2025, once a beneficiary's True Out-of-Pocket (TrOOP) costs—like deductibles, copays, and coinsurance—reach $2,000 under Medicare Part D, the insurance plan will cover all additional costs for covered drugs. This change, part of the Inflation Reduction Act, aims to make prescription medications more affordable and alleviate financial strain on Medicare enrollees. 1) This replaces the 'catastrophic phase' (which will need to be assessed once the 2026 data is available). 2) The True Out-of-Pocket (TrOOP) cap introduced in 2025 will continue into 2026, but it will be adjusted slightly for inflation. The Manufacturer Discount Program will replace the Coverage Gap Discount Program: manufacturers will provide discounts on certain drugs during the initial coverage phase.
Formulary Exemptions enable Medicare beneficiaries to request coverage for a drug not included in their plan's formulary or to bypass restrictions, such as step therapy or prior authorization, for covered drugs.
Formulary exemptions vary by Medicare plan, and each plan has a drug list and rules. While Medicare Part D requires a process for exceptions, the criteria and flexibility differ by plan. All plans must adhere to Medicare guidelines, ensuring exemptions are considered when a drug is medically necessary.
"Donut hole" - a coverage gap where you pay more until you reach catastrophic coverage. Thankfully, this ended in 2025.

The Four Parts of Medicare

Medicare Part A: Hospital Insurance

What it covers:

What you need to know:

Medicare Part B: Medical Insurance

What it covers:

What you need to know:

What happens automatically:

Medicare Part C: Medicare Advantage (The All-in-One Alternative)

What it is:

What you need to know:

Key Distinctions:Medicare Advantage vs Medicare

The enrollment process typically involves:

What happens to your original Medicare if you enroll in Medicare Advantage?

Medicare Part D: Prescription Drug Coverage

What it is:

What it covers:

What you need to know:

Have more questions?

Medicare Part A:
Hospital Insurance

Medicare Part B:
Medical Insurance

Medicare Part C:
Medicare Advantage (The All-in-One Alternative)

Key Distinctions:
Medicare Advantage vs Medicare

Medicare Part D:
Prescription Drug Coverage