What Are the Parts of Medicare? Parts A, B, C and D Explained
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Medicare is the federal health insurance program for people age 65 and up and people with certain disabilities. There are four parts of Medicare: Parts A, B, C and D. Medicare beneficiaries choose between the parts of Medicare to decide how to receive their benefits.
Here’s what you need to know about each part’s coverage, costs and compatibility.
Medicare Part A: Hospital insurance
Medicare Part A is part of original Medicare, along with Medicare Part B. Most people become eligible when they turn 65 years old. People younger than 65 can also qualify for Medicare based on disability status.
Medicare Part A coverage
Medicare Part A covers stays at hospitals and skilled nursing facilities, hospice care and certain related health care services. However, it doesn’t cover long-term care services or custodial care in assisted living facilities or nursing homes.
Medicare Part A cost
Most people get Medicare Part A for free. However, people who don’t qualify for premium-free Part A can sometimes buy in at a cost of $506 per month in 2023.
Medicare Part A has a deductible of $1,600 in 2023. Most inpatient services don’t have copays to start, but they apply after a certain period. For example, after the 60th day of an inpatient hospital stay, copays start at $400 per day in 2023 and go up after day 90.
There’s no annual limit on Medicare Part A's out-of-pocket costs, but you can limit these costs by buying a separate Medicare Supplement Insurance plan, or Medigap.
Medicare Part B: Outpatient medical insurance
Medicare Part B is part of original Medicare, along with Medicare Part A. People eligible for premium-free Medicare Part A are also eligible for Medicare Part B. U.S. citizens and certain legal residents age 65 and older can also qualify for Part B, even if they’re not eligible for premium-free Part A.
Medicare Part B coverage
Medicare Part B covers two kinds of services: outpatient health care and preventive services.
Here are a few examples of outpatient health care covered by Medicare Part B:
Visits to a health care provider at an office or clinic.
Certain inpatient services like stitches or X-rays.
Medically necessary ambulance services.
Durable medical equipment like CPAP machines, lift chair mechanisms and wheelchairs.
Preventive services covered by Medicare Part B include things such as screenings, tests, vaccines, and counseling.
Medicare Part B cost
Medicare Part B has a premium, a deductible, and coinsurance requirements:
Premiums: Most people pay the standard premium: $164.90 per month in 2023. Beneficiaries with very high incomes pay a higher adjusted amount.
Deductible: The deductible is $226 in 2023.
Cost sharing: Outpatient services have a 20% coinsurance, but there’s no coinsurance or copay for most preventive care.
There’s no annual cap on your out-of-pocket costs. (You can limit these costs by buying Medigap separately.)
Medicare Part C: Medicare Advantage
Medicare Part C is also known as Medicare Advantage. Medicare Advantage plans are a bundled alternative to original Medicare (Medicare Part A and Part B) sold by private insurance companies.
Medicare Part C (Medicare Advantage) coverage
While benefits vary from plan to plan, all Medicare Advantage plans must cover at least the same benefits as Medicare Part A and Medicare Part B, but most cover more. Medicare Advantage plans usually include prescription drug coverage and many offer additional dental, hearing and vision care benefits.
Medicare Part C (Medicare Advantage) cost
If you buy a Medicare Advantage plan, you’re still responsible for the Medicare Part B premium: $164.90 per month in 2023.
Premiums: The average Medicare Advantage premium is projected to be about $18 per month in 2023, according to the Centers for Medicare & Medicaid Services. Premiums range from $0 to well over $100 per month.
Deductible: Deductibles vary by plan.
Cost sharing: Copays and coinsurance vary by plan.
Medicare Advantage plans have a maximum out-of-pocket amount, after which you don’t pay any more out-of-pocket costs for the year. For in-network services, the out-of-pocket limit can’t be higher than $8,300 in 2023 (there’s a higher limit for in- and out-of-network services combined). The out-of-pocket limit doesn’t apply to prescription drugs.
Medicare Part C (Medicare Advantage) and other parts of Medicare
Medicare Advantage is an all-in-one bundle; members get all their Medicare benefits from their Medicare Advantage plan. With a Medicare Advantage plan, you generally can’t buy other coverage like a stand-alone Medicare Part D plan or a Medigap policy.
Medicare Part D: Prescription drug coverage
Medicare Part D plans are sold by private insurance companies to cover prescription drugs. There are two different ways to get Medicare prescription drug coverage depending on whether you have original Medicare (Part A and Part B) or a Medicare Advantage plan.
If you have Medicare Part A and/or Part B, you can buy a stand-alone Part D plan to get prescription drug coverage.
If you have a Medicare Advantage plan, it probably includes prescription drug coverage. In most cases, Medicare Advantage members can’t join a separate Medicare Part D plan.
Medicare Part D coverage
Every Medicare Part D plan and Medicare Advantage plan with prescription drug coverage has a formulary, or its list of covered drugs. You need to check the formulary to see whether and how a plan covers your medications.
Most formularies are organized into tiers, and each tier has different cost-sharing requirements. Drugs on lower tiers have low or even zero cost-sharing requirements, while drugs on higher tiers can cost much more out of pocket.
Medicare Part D cost
Medicare Part D plans can have premiums, deductibles, copays and/or coinsurance.
Premiums: The average premium for basic stand-alone Medicare Part D coverage is $31.50 per month in 2023. Medicare Advantage plans don’t charge separately for prescription drug coverage — you pay one premium for the whole plan.
Deductible: Most plans have a deductible for some or all of their covered drugs. By law, the deductible can’t be higher than $505 in 2023.
Cost sharing: Each plan’s formulary describes the copays and/or coinsurance for drugs on each tier.
There’s no out-of-pocket limit for prescription drug coverage, but that’s changing soon. The Inflation Reduction Act implements caps on out-of-pocket costs starting in 2024.
» If you have concerns about affording Medicare Part D, look into Medicare Extra Help.
Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, or Medigap, covers out-of-pocket costs for beneficiaries with Medicare Part A and Part B. Medigap isn’t a letter-named “Part” of Medicare. Still, it’s an important consideration for original Medicare beneficiaries.
Medigap policies only cover costs associated with Medicare Part A and/or Part B — they don’t work with Medicare Advantage plans.
Medigap policies are sold by private insurance companies to cover certain coinsurance, copays and deductibles left over after Medicare Part A or Part B has paid its share of the bill. There are 10 standardized Medigap plans with different levels of coverage.
All Medigap policies have monthly premiums, which can be as low as $30 but can also get up to hundreds of dollars per month. Premiums for Medigap policies vary according to the plan type, health insurance company, and factors that can include your age, sex, location, tobacco use and health information.
A few plan types have copays, coinsurance or deductibles, but most Medigap plan types don’t.