Medicare Basics: Parts A, B, C, and D Explained

Who gets Medicare

Most people become eligible for Medicare at age 65. You can also qualify before 65 if you have received Social Security disability benefits for 24 months, or if you have End-Stage Renal Disease (permanent kidney failure) or ALS (Lou Gehrig's disease).

If you are already receiving Social Security or Railroad Retirement benefits at least four months before you turn 65, you are enrolled in Parts A and B automatically and your card arrives in the mail. If you are not, you have to sign up yourself through Social Security.

Part A: hospital insurance

Part A helps pay for inpatient hospital stays, skilled nursing facility care after a qualifying hospital stay, hospice care, and some home health care.

Most people pay no monthly premium for Part A because they or a spouse paid Medicare taxes while working for at least 10 years (40 quarters). Part A still has a deductible for each hospital benefit period and daily coinsurance for longer stays. Those amounts are set by Medicare every year.

Part B: medical insurance

Part B helps pay for doctor visits, outpatient care, preventive services, lab work, durable medical equipment like walkers and oxygen, and many services you receive without being admitted to a hospital.

Part B has a monthly premium that is deducted from your Social Security check if you receive one. People with higher incomes pay more. After an annual deductible, you generally pay 20 percent of the Medicare-approved amount for most covered services, and there is no yearly limit on that 20 percent under Original Medicare alone.

Part C: Medicare Advantage

Medicare Advantage plans are offered by private insurance companies that contract with Medicare. When you join one, you still have Medicare, but the plan delivers your Part A and Part B benefits instead of the government paying claims directly.

Advantage plans must cover everything Original Medicare covers (hospice stays with Original Medicare). Many also include prescription drug coverage and extras such as dental, vision, hearing, or fitness benefits. Every plan has an annual limit on your out-of-pocket costs for covered Part A and B services. In exchange, most plans use provider networks and may require referrals or prior authorization. Premiums, networks, and benefits vary by plan, and you must keep paying your Part B premium.

Part D: prescription drug coverage

Part D helps pay for outpatient prescription drugs. It is sold by private companies either as a standalone plan that pairs with Original Medicare or built into a Medicare Advantage plan.

Each plan has its own list of covered drugs, called a formulary, and its own pharmacy network and pricing. If you go without creditable drug coverage for 63 days or more after you are first eligible, Medicare adds a permanent late enrollment penalty to your premium, so timing matters even if you take no medications today.

What Medicare does not cover

Because Original Medicare has no cap on your share of costs, many people add other coverage to limit their exposure. That can be a Medicare Advantage plan, employer or retiree coverage, a Medigap policy, or Medicaid for those who qualify.

• Most routine dental, vision, and hearing care (some Advantage plans add these)
• Long-term custodial care, such as help with bathing and dressing in a nursing home
• Most care received outside the United States
• Cosmetic surgery and most alternative medicine

Where to find current-year numbers

Premiums, deductibles, and out-of-pocket limits change every January. The official figures for the current year are published at Medicare.gov, or you can call 1-800-MEDICARE. We are happy to walk through them with you in plain English.