Medicare 101
If you're about to become Medicare eligible or are uncertain about how Medicare works, this guide will help you understand the different parts of Medicare in simple, easy-to-understand language.
Medicare can seem complicated because it’s divided into “parts.” In reality, those parts are just different types of coverage, such as hospital care, medical care, and prescriptions, plus a couple of ways to combine them. Here’s what each part means and how people often use them together.
Medicare Part A: Hospital coverage
What it is
Medicare Part A covers inpatient hospital care.
Used for:
Inpatient hospital stays
Skilled nursing facility care (after a qualifying hospital stay)
Hospice
Limited home healthcare.
What you pay
Many people pay a $0 monthly premium for Part A if they or their spouse paid Medicare taxes for enough years while working.
Keep in mind
Part A still has cost sharing, such as deductibles and daily copays for longer stays, so it’s not “free hospital coverage.”
Medicare Part B: Medical coverage
What it is
Medicare Part B covers medical and outpatient care.
Used for:
Doctor visits
Outpatient services
Lab work
Imaging
Preventive care
Durable medical equipment
Other non-hospital services
What you pay
Part B usually has a monthly premium. You’ll also typically pay a deductible and a share of the cost for many covered services.
Keep in mind
Delaying enrollment in Part B can sometimes lead to a late-enrollment penalty—especially if you don’t have other qualifying coverage.
Good to know
If you’re still working, Medicare Part B rules can vary based on your employer coverage.
Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Many people choose to add other coverage to help with prescriptions and out-of-pocket costs.
Medicare Part D: Prescription Drug coverage
What it is
Medicare Part D mainly covers outpatient prescription medications.
Used for:
Prescription drug coverage
What you pay
Part D costs vary by plan. You may pay a monthly premium, a deductible, copays, or coinsurance for your prescriptions.
Keep in mind
Each Part D plan has its own list of covered drugs, called a formulary, so it’s important to make sure your prescriptions are included.
Good to know
You enroll in a standalone Part D plan or you get drug coverage built into many Medicare Advantage (Part C) plans.
Medicare Advantage, also known as Part C (bundled alternative)
What it is
Medicare Advantage plans are offered by private insurance companies approved by Medicare. They provide Part A and Part B coverage in one plan and often include prescription drug coverage as well.
Used for:
Hospital coverage
Medical coverage
Prescription drug coverage in many plans
Sometimes extra benefits like dental, vision, hearing, or wellness programs.
Keep in mind
Medicare Advantage plans usually use provider networks (similar to how an HMO or PPO works).
Good to know
Costs and rules (referrals, prior authorization, out-of-network coverage) can vary by plan and by county.
Medicare Supplement (Medigap)
What it is
Medicare Supplement Insurance, also called Medigap, is extra insurance sold by private companies that helps pay some of the out-of-pocket costs that Original Medicare doesn’t cover.
It can be used for:
Deductibles
Copays
Coinsurance
Some out-of-pocket costs
Keep in mind
Medigap works with Original Medicare (Part A and Part B). It helps supplement that coverage, but it does not replace it.
Good to know
Costs and rules (referrals, prior authorization, out-of-network coverage) can vary by plan and by county.
Medicare parts quick cheat sheet
Hospital/inpatient: mainly Part A
Doctors/outpatient: mainly Part B
Prescriptions: Part D (standalone) or included in many Part C plans
All-in-one option: Part C (Medicare Advantage)
Medigap: private insurance that helps cover costs Original Medicare doesn't.