Medicare basics: Parts A, B, C, and D explained

Medicare is the federal health insurance program for people 65 and older, and for some younger people with disabilities or certain conditions. The program is organized into “parts,” and understanding what each part does is the foundation for every Medicare decision you will make. This guide walks through the four parts in plain language, explains the two main ways people put their coverage together, and lists the questions worth asking before you enroll in anything.

One note before we start: this is general education, not personalized advice, and it is not a complete description of every rule. For official information about all of your options, contact Medicare.gov, call 1-800-MEDICARE, or get free unbiased counseling from your State Health Insurance Assistance Program (SHIP).

Part A: hospital insurance

Part A helps cover inpatient hospital stays, care in a skilled nursing facility after a qualifying hospital stay, hospice care, and some home health care. Most people do not pay a monthly premium for Part A because they (or a spouse) paid Medicare taxes while working for at least 10 years. That is why you will sometimes hear it called “premium-free Part A.”

Premium-free does not mean cost-free. Part A has a deductible for each benefit period and coinsurance for longer hospital stays. A benefit period starts the day you are admitted and ends when you have been out of the hospital or skilled nursing facility for 60 days in a row — so it is possible to pay the deductible more than once in the same year.

Part B: medical insurance

Part B helps cover doctor visits, outpatient care, preventive services, lab tests, durable medical equipment, and many other services you receive without being admitted to a hospital. Unlike Part A, almost everyone pays a monthly premium for Part B. The standard premium is set each year, and people with higher incomes pay more through an adjustment called IRMAA (Income-Related Monthly Adjustment Amount).

After you meet the annual Part B deductible, you typically pay 20 percent of the Medicare-approved amount for most covered services. Importantly, Original Medicare has no annual cap on that 20 percent — which is one of the main reasons many people add either a Medicare Supplement policy or choose a Medicare Advantage plan, both described below.

Part C: Medicare Advantage

Part C, better known as Medicare Advantage, is not a separate benefit you add on top of Medicare — it is an alternative way to receive your Part A and Part B benefits through a private insurance company that contracts with Medicare. Most Medicare Advantage plans bundle prescription drug coverage, and many include extras such as dental, vision, or hearing allowances.

Medicare Advantage plans usually use provider networks (HMO or PPO style), may require referrals or prior authorization for some services, and have their own copays and an annual out-of-pocket maximum. Premiums vary; some plans have a $0 premium on top of your Part B premium, while others charge more. Plan availability and benefits differ from county to county, which is why two neighbors in different ZIP codes can have very different options.

Part D: prescription drug coverage

Part D helps pay for outpatient prescription drugs. You can get it either as a standalone Part D plan that works alongside Original Medicare, or built into a Medicare Advantage plan. Every Part D plan has a formulary — a list of covered drugs organized into cost tiers — and formularies differ meaningfully between plans.

If you go without creditable drug coverage (coverage at least as good as standard Part D) for 63 or more days after your initial enrollment window, you may owe a late-enrollment penalty that is added to your premium for as long as you have Part D. That is why many people enroll in at least a low-premium drug plan even if they take no medications today.

The two main paths people choose

Most people end up on one of two paths. Path one: Original Medicare (Parts A and B), often with a standalone Part D drug plan and sometimes a Medicare Supplement (Medigap) policy to help with the out-of-pocket costs. Path two: a Medicare Advantage plan (Part C), which combines hospital, medical, and usually drug coverage in a single plan with its own network and cost structure.

Neither path is universally better. The right fit depends on your doctors, your prescriptions, your budget, how much you travel, and how you feel about networks versus broader provider access. A licensed insurance agent can compare the specific plans they represent against your situation — and our directory can help you find one near you.

Questions to ask before enrolling in anything

Are my doctors and hospital in the plan's network, and what happens if I see someone outside it? Are my prescriptions on the formulary, and what tier are they on? What is the most I could spend out of pocket in a bad year? Does the plan travel with me if I spend part of the year in another state? What changes at the plan's next annual renewal?

Write your answers down and compare at least two options before you decide. And remember: you can get free help. Medicare.gov's Plan Finder compares plans side by side, 1-800-MEDICARE is available 24/7, your local SHIP offers unbiased one-on-one counseling, and independent licensed agents listed in our directory can walk you through the plans they represent at no cost to you.

Frequently asked questions