Key takeaways:
Medicare has four parts: Parts A (inpatient coverage), Part B (outpatient coverage), Part C (Medicare Advantage), and Part D (prescription medication coverage).
Medigap is the nickname for Medicare supplement insurance, which covers out-of-pocket costs for Medicare Parts A and B.
Each of Medicare’s parts comes with different costs to consider. Be aware of what each part covers — and what Medicare doesn’t cover — so you can manage your out-of-pocket expenses.
Medicare is a government-sponsored health insurance program that provides coverage for eligible individuals 65 or older, as well as certain younger individuals with disabilities or specific medical conditions. Medicare has four major parts that address specific coverage needs. Understanding the basics of what each part covers can help you make informed choices about your healthcare.
What are the different parts of Medicare?
Medicare has four parts:
Part A (hospital insurance) covers inpatient care like hospice and hospital stays. Part A is one of the components of original Medicare.
Part B (medical insurance) covers outpatient care like ambulance services and visits with healthcare professionals. Medicare Part B is the other component of original Medicare.
Part C (Medicare Advantage) is offered by private insurance companies as an alternative to original Medicare. It combines Part A, Part B, and usually Part D into one plan.
Part D (prescription medication coverage) helps cover the cost of prescription medications and is run by private insurance companies.
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The table below shows what each part of Medicare covers.
Part of Medicare | What’s covered |
Part A | • Inpatient hospital stays |
Part B | • Visits with healthcare professionals |
Part C |
|
Part D | • Prescription medications |
What does Medicare Part A cover?
Medicare Part A helps pay for inpatient hospital stays, including stays in psychiatric hospitals. If you are hospitalized, Part A will generally cover the following:
A semiprivate room
General nursing care
Medications given at the hospital
Other services provided during your hospital stay
In addition to inpatient hospital care, Part A covers skilled nursing facility care. However, to be covered, nursing home stays must be medically necessary and ordered by a healthcare professional.
Part A also pays for hospice care for people who have a terminal illness and 6 months or less to live.
Finally, Part A covers some home healthcare services — such as in-home intermittent nursing care, physical therapy, and medical social services — after a hospital stay.
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Cost of Medicare Part A
Once you turn 65, you may qualify to receive Medicare Part A without paying any premiums. This depends on how many years you or your spouse worked and paid taxes for Medicare. Here’s how it works:
Premium-free Medicare Part A: If you or your spouse worked and paid Medicare taxes for 40 quarters (10 years), you won't have to pay Part A premiums.
Part A with premiums: If you don’t qualify for premium-free Part A, you will have to pay regular monthly premiums based on how long you did work and pay Medicare taxes.
Besides monthly premiums, Part A also has a deductible for each benefit period. A benefit period starts when you’re admitted to a hospital or skilled nursing facility. Medicare Part A does not have an out-of-pocket limit.
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What does Medicare Part B cover?
Medicare Part B helps pay for outpatient care. Covered services include:
Visits with healthcare professionals
Preventive services like cancer screenings, flu shots, and other immunizations
Durable medical equipment used at home, such as wheelchairs, oxygen equipment, and continuous positive airway pressure (CPAP) machines
Certain prescription medications that are given in an outpatient setting, such as iron infusions
Cost of Medicare Part B
For most people, Medicare Part B is not free. Here are the costs you should consider:
Premiums: Most people pay a standard monthly premium amount for Part B. For 2025, the standard monthly premium is $185. But if your income is above a certain limit, you may pay a higher premium amount.
Cost-sharing: You might also pay a Medicare Part B deductible of $257 in 2025 before your coverage kicks in. After you meet the deductible, you will likely pay 20% of the Medicare-approved costs for covered services.
What does Medicare Part C cover?
Medicare Part C, or Medicare Advantage, covers all of the items and services that Part A and Part B cover. However, these plans often offer extra benefits that original Medicare doesn't, such as coverage for:
The private insurance companies that offer Part C set their own rules, coverage details, and costs. So the Part C insurance provider and the type of plan you choose determines your coverage details. For example, Part C health maintenance organization (HMO) and preferred provider organization (PPO) plans usually include coverage for prescription medications, while private fee-for-service plans may not.
With Medicare Part C, you will generally need to receive care from healthcare professionals and facilities in your plan's network to get full coverage. So receiving care outside of your plan’s network may mean higher out-of-pocket costs.
Cost of Medicare Part C
Before enrolling in Medicare Part C, here are the costs you should consider:
Premiums: How much you’ll pay for Medicare Part C premiums will depend on the plan you choose. You must continue paying your Part B premiums to qualify for Part C, though some plans may help cover part or all of your Part B premium costs.
Cost-sharing: Your out-of-pocket costs, like deductibles, coinsurance, and copayments, will also depend on the plan you choose. All Part C plans have a yearly out-of-pocket limit. Once you reach that limit, your plan will pay 100% of the costs for covered health services for the rest of the year.
What does Medicare Part D cover?
Medicare Part D primarily provides coverage for prescription medications. But in addition to a variety of common brand-name and generic medications, Part D plans also cover some vaccines not covered by Part B, like the shingles and Tdap (tetanus, diphtheria, and pertussis) vaccines, as well as certain medical supplies.
Cost of Medicare Part D
When signing up for Medicare Part D, it’s important to understand the costs involved:
Premiums: The average monthly premium for Medicare Part D plans in 2025 is estimated at $46.50. This is lower than the average monthly premium for 2024, which was $53.95. The exact amount you’ll pay will depend on factors like your specific plan and location.
Cost-sharing: You may also have to pay a yearly deductible, as well as copayments and coinsurance, for Part D.
If you take insulin that’s covered by your Part D plan, you'll pay no more than $35 for a 1-month supply. You also won’t have to pay a deductible, and if you get a 60- or 90-day supply, the cost won’t exceed $35 per month.
Starting in 2025, all Part D plans will have an annual out-of-pocket limit of $2,000 for covered prescription medications. If you spend this amount, you’ll automatically get catastrophic coverage and won't pay anything for covered medications for the rest of the year.
What isn’t covered by Medicare?
Medicare doesn’t cover services and supplies that are categorized as “medically unreasonable and unnecessary.” Medicare also doesn’t cover items or services that are free or paid for by another organization.
Below are some items original Medicare typically does not cover:
Long-term custodial care
Routine dental care
Routine eye care
Hearing aids and exams
Certain types of foot care
Cosmetic surgery
Care outside the U.S.
Defective equipment still under warranty
What is a Medicare supplement plan?
Medicare supplement insurance (Medigap) is sold by private companies and is designed to help pay some out-of-pocket costs not covered by original Medicare. These plans help pay for deductibles and coinsurance for Medicare Parts A and B. Some Medigap policies also cover services original Medicare does not, such as emergency care when traveling overseas.
Medigap plans charge separate monthly premiums that are paid in addition to Part B premiums. To sign up for a Medigap plan, you must be enrolled in Medicare Parts A and B.
There are different Medigap plan types — labeled Plan A through Plan N — and the benefits are the same between insurance companies for each plan type.
Medicare resources
Below are some resources where you can find more information about Medicare coverage:
Medicare.gov: Learn more about plans, costs, benefits, and coverage options on the Medicare website.
Medicare helpline: Call the Medicare helpline at 1-800-633-4227 (1-800-MEDICARE) for assistance with a variety of issues.
“Medicare & You” handbook: Review the "Medicare & You" handbook online to get an in-depth overview of Medicare benefits. This handbook is also mailed out to enrollees annually.
State Health Insurance Assistance Programs (SHIPs): Local SHIP counselors provide free Medicare counseling, guidance, and application assistance.
U.S. Social Security Administration (SSA): Enroll in Medicare and verify your eligibility through the SSA website.
Medicare’s plan finder: Use the plan finder tool on the Medicare website to find and compare costs and coverage details for plans in your area.
National Council on Aging (NCOA): The NCOA is a nonprofit that provides helpful resources and assistance related to Medicare.
Medicare Savings Programs: Learn about your state’s Medicare Savings Program to find out if you might be eligible for assistance with Medicare costs.
Extra Help: The Extra Help program assists people with limited income with Part D costs.
Frequently asked questions
If your Medicare Part B premiums have stopped being automatically deducted from your Social Security benefits, it might be because your benefits are no longer enough to cover the premiums. Or it could be because you enrolled in a Medicare Advantage Plan that helps pay your premiums or a state program that assists with Medicare costs.
If your benefits have changed, you should receive a notice explaining the changes. If you’re unsure why changes have occurred, contact the SSA for clarification.
If you or your spouse worked and paid Medicare taxes for at least 10 years, you should be eligible for premium-free Part A when you turn 65. If you don’t meet this requirement, you’ll need to pay monthly premiums, which are based on how long you or your spouse worked and paid Medicare taxes.
Unlike Part A, which is mostly funded by payroll taxes, Medicare Part B relies on premiums paid by enrollees and funds from the U.S. Department of Treasury. The monthly premiums help cover Part B services and administration costs.
If your Medicare Part B premiums have stopped being automatically deducted from your Social Security benefits, it might be because your benefits are no longer enough to cover the premiums. Or it could be because you enrolled in a Medicare Advantage Plan that helps pay your premiums or a state program that assists with Medicare costs.
If your benefits have changed, you should receive a notice explaining the changes. If you’re unsure why changes have occurred, contact the SSA for clarification.
If you or your spouse worked and paid Medicare taxes for at least 10 years, you should be eligible for premium-free Part A when you turn 65. If you don’t meet this requirement, you’ll need to pay monthly premiums, which are based on how long you or your spouse worked and paid Medicare taxes.
Unlike Part A, which is mostly funded by payroll taxes, Medicare Part B relies on premiums paid by enrollees and funds from the U.S. Department of Treasury. The monthly premiums help cover Part B services and administration costs.
The bottom line
At first, Medicare might seem like a jumble of letters and confusing plans. But once you take the time to review Parts A, B, C, and D, you’ll be able to better understand your options and make informed choices when it’s time to sign up or switch.
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References
Centers for Medicare & Medicaid Services. (2020). Items and services not covered under Medicare.
Centers for Medicare & Medicaid Services. (2024). 2025 Medicare Parts A and B premiums and deductibles.
Centers for Medicare & Medicaid Services. (2024). Medicare & You 2025: The official U.S. government Medicare handbook. U.S. Department of Health and Human Services.
Centers for Medicare & Medicaid Services. (2024). Medicare Advantage and Medicare prescription drug programs to remain stable as CMS implements improvements to the programs in 2025.
Centers for Medicare & Medicaid Services. (2024). Medicare Part D vaccines.
Cubanski, J. (2024). A current snapshot of the Medicare Part D prescription drug benefit. KFF.
Medicare.gov. (n.d.). Copayment/coinsurance in drug plans.
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Medicare.gov. (n.d.). Medicare Savings Programs.
Medicare.gov. (n.d.). Parts of Medicare.
Medicare.gov. (n.d.). Prescription drugs (outpatient).
Medicare.gov. (n.d.). Preventive and screening services.
Medicare.gov. (n.d.). What Medicare Part D drug plans cover.
Medicare.gov. (n.d.). Yearly deductible for drug plans.
U.S. Social Security Administration. (n.d.). Apply for Medicare Part D Extra Help program.
