The parts of Medicare, and what each one is for

Medicare is usually described in letters, and the letters are the first place the language gets in the way. Part A, Part B, Part C and Part D are not levels, tiers or upgrades. They are separate pieces of coverage, added at different times, each handling a different kind of care, and they can be combined in more than one arrangement. Knowing which letter owns which kind of bill makes almost every other Medicare question easier to follow.

Part A: the care you are admitted for

Part A is generally described as hospital insurance. It typically covers inpatient hospital stays, care in a skilled nursing facility following a qualifying hospital stay, some home health care, and hospice care. The word doing the work in that sentence is inpatient. Being inside a hospital building is not the same thing as being admitted to it, and that distinction often decides whether a stay is billed under Part A or under Part B. If you spend a night in a hospital bed, it is reasonable to ask the staff directly whether you have been admitted as an inpatient or placed under observation.

Most people do not pay a monthly premium for Part A, because eligibility is usually tied to a work history of paying Medicare taxes. That does not make it free. Part A generally carries a deductible that applies per benefit period rather than per calendar year, which means it can apply more than once in the same year if hospital stays are far enough apart.

Part B: the care you walk in and out of

Part B is generally described as medical insurance, and it typically covers outpatient care: office visits, lab work, imaging, durable medical equipment, ambulance services, many preventive screenings, and the drugs that have to be administered in a clinical setting. Part B usually carries a monthly premium, and after an annual deductible it often pays a share of the Medicare-approved amount, leaving the remainder to you as coinsurance.

One detail there matters more than it sounds. Original Medicare, meaning Part A and Part B together, has historically had no annual out-of-pocket maximum of its own. The coinsurance percentage is modest; the missing piece is the ceiling. A great many of the coverage decisions people make later are, in one form or another, about putting a ceiling on that number.

Part D: the prescriptions you fill yourself

Part D covers prescription drugs you collect at a pharmacy. It is delivered by private plans approved by Medicare rather than by Medicare directly, which is why two people in the same town can pay different amounts for the same prescription. Each plan publishes a formulary, usually called a drug list, that sets out which drugs it covers and which cost tier each one sits in. Formularies are not identical between plans, and they do not stay fixed from one year to the next.

Part C: the letter that bundles the others

Part C is the letter people hear least and encounter most. A Part C plan, usually called Medicare Advantage, is a private plan that delivers your Part A and Part B coverage, and very often Part D as well, as a single package. These plans frequently include benefits that Original Medicare does not, and they typically operate a provider network and may require referrals or prior authorisation for certain services. They also generally carry an annual out-of-pocket maximum, which is precisely the ceiling Original Medicare lacks.

Because a Part C plan changes how your Part A and Part B benefits are delivered rather than sitting on top of them, you are generally choosing between two structures rather than stacking one on the other.

A supplement is not a part

Medicare Supplement Insurance, often called Medigap, is also sold by letter — Plan G, Plan N and so on — which is where the confusion tends to peak. A supplement is not a part of Medicare. It is a separate policy that pays some of the costs Original Medicare leaves to you, such as coinsurance and deductibles. Supplements are standardised, so a given letter generally covers the same things whoever sells it, although what you pay for it may differ. A supplement is designed to work alongside Original Medicare, and generally not alongside a Medicare Advantage plan.

Putting the letters in order

• —Part A and Part B together are Original Medicare.
• —Part D may be added to Original Medicare as a separate prescription drug plan.
• —A supplement may be added to Original Medicare to limit what you pay out of pocket.
• —A Part C plan delivers Part A and Part B, often with Part D folded in, through a single private plan.

None of this tells you which structure fits your prescriptions, your doctors or your budget. It does something smaller and more useful. It tells you which letter a question belongs to. When a bill or a mailing arrives, knowing whether you are looking at a Part B coinsurance question or a Part D tier question is usually the difference between a short answer and a lost afternoon.