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Explaining the different parts of Medicare

Here's what you need to know

Medicare, the government-sponsored health insurance program for people age 65 and older (and those with certain disabilities), can be a bit confusing to navigate.

There’s Medicare Part A and B, also known as Original Medicare that covers hospital stays and doctor visits. Part C, also known as Medicare Advantage, which combines your Original Medicare coverage with a plan that also provides coverage for additional benefits. Part D is prescription drug coverage that can sometimes be included in Part C. And finally, there are Medicare supplement plans, also known as Medigap, which can help with copays, coinsurance, and deductibles and cover emergency medical care outside the United States.

Whew — that’s a lot! Let’s break it down so you can easily figure out the combination of coverage that’s right for you.

parts of Medicare covers

Original Medicare: Part A and B

When you first enroll in Medicare at age 65, you’ll enroll in Part A and possibly Part B, depending on whether you’re still employed.

What does Original Medicare cover?

Medicare Part A covers costs associated with hospital care, like inpatient stays, hospice, and skilled nursing. Medicare Part B covers costs for doctor visits, durable medical equipment (like oxygen equipment, a walker or wheelchair, and testing strips for people with diabetes), outpatient procedures, lab services, and other testing.

How much does Original Medicare cost?

Costs vary for each part of Original Medicare. You or your spouse likely paid for Medicare Part A already through payroll taxes if you worked for 40 quarters or more. This means that you likely won’t have to pay a premium for Medicare Part A, but you will have to pay a set amount for each hospital admission.

Medicare Part B, however, charges a monthly premium that is set by the federal government External Site each year. You’ll also have an annual deductible. Once you've met your deductible, you'll only be responsible for 20 percent of Medicare-approved costs for most doctor visits.

Medicare Advantage: Part C

Once you enroll in Original Medicare, you may decide to combine that coverage with additional benefits through a private insurance company. Medicare Part C plans, or Medicare Advantage, are approved by Medicare and cover everything that Original Medicare covers plus additional benefits.

How do Medicare Advantage plans work?

Medicare Advantage combines many Medicare benefits into a single plan, which can make things easier for you. Because they are offered by private insurance companies, they can typically cover more — like dental, vision or hearing services and prescription drug coverage — through their network of health care providers and hospitals.

What will I pay for Medicare Advantage?

You’ll still have costs associated with Medicare Part B and you may have an additional premium for your Medicare Advantage plan, which varies based on the insurance company you choose. But, unlike Original Medicare, Medicare Advantage plans come with an out-of-pocket maximum — meaning there’s a limit on your annual Medicare expenses.

Prescription Drug Coverage: Part D

If you choose to enroll just in Original Medicare, or your plan does not offer prescription drug coverage, you’ll likely want to consider Part D. This component of Medicare is provided by a private insurance company and covers prescription drugs.

How does Part D work?

Private insurance companies may offer different Part D plans, each of which have a different list of drugs (known as a formulary) that will be covered. You’ll usually pay a monthly premium for this coverage but may also be responsible for a deductible and some out-of-pocket costs.

Medicare supplement plans

Finally, with all the costs associated with the different parts of Original Medicare, you might want some assistance with out-of-pocket costs. That’s where Medicare supplement plans come in (if you haven't chosen to enroll in a Medicare Advantage plan, that is).

What do Medicare supplement plans cover?

Medicare supplement plans are designed to cover what's leftover after Original Medicare pays your claim, including any copays or deductibles. Medicare supplement plans are standardized, meaning a supplement plan offered by two different insurers will have the same coverage details. You’ll pay a monthly premium for Medicare supplement benefits, which changes based on the level of coverage you select.

Learn more about your Medicare options

No matter when or how you decide to enroll in Medicare, it’s important to understand all the options available to you. Check out our Medicare Matters video series, where we talk with real people planning to enroll in Medicare and answer their questions. Or, explore your different Medicare options Opens New Window.