Medicare Explained Simply: Parts A, B, C, and D in Plain English

Medicare is the health insurance program that covers 67+ million Americans — mostly people 65 and older. It's also one of the most confusing programs in existence. Four parts. Lettered A through D (but C isn't what comes after B). Supplemental plans with letters of their own. Enrollment periods that, if you miss them, come with permanent penalties.

Nobody designed this to be user-friendly. But it doesn't have to be this confusing. Let's break it down.

Who Qualifies for Medicare?

You're eligible for Medicare if you're:

• 65 or older and a U.S. citizen or permanent resident who has lived in the U.S. for at least 5 years
• Under 65 with a qualifying disability — if you've received Social Security Disability Insurance (SSDI) for 24 months
• Any age with End-Stage Renal Disease (ESRD) — permanent kidney failure requiring dialysis or a transplant
• Any age with ALS (Lou Gehrig's disease) — Medicare begins the month your disability benefits start

Most people get Medicare when they turn 65. If you're already receiving Social Security benefits, you'll be enrolled automatically. If not, you need to sign up during your Initial Enrollment Period (more on that below).

The Four Parts of Medicare — A Quick Overview

Think of Medicare like a buffet with four stations. Parts A and B are the main course (Original Medicare). Part C is an alternative all-in-one plate (Medicare Advantage). Part D is dessert (prescription drugs).

• Part A: Hospital insurance
• Part B: Medical insurance (doctor visits, outpatient care)
• Part C: Medicare Advantage (private insurance alternative to A + B)
• Part D: Prescription drug coverage

Now let's dig into each one.

Part A: Hospital Insurance

What It Covers

• Inpatient hospital stays — room, meals, nursing care, medications during your stay, lab tests
• Skilled nursing facility (SNF) care — up to 100 days per benefit period (after a qualifying 3-day hospital stay)
• Home health services — part-time skilled nursing, physical therapy, etc.
• Hospice care — comfort care for terminal illness
• Inpatient psychiatric care — up to 190 days lifetime in a psychiatric hospital

What It Costs (2026)

Premium: Most people pay $0 for Part A. You qualify for premium-free Part A if you (or your spouse) worked and paid Medicare taxes for at least 10 years (40 quarters). If you don't have enough work history, the premium is up to $518/month in 2026.

Deductible: $1,676 per benefit period (2026). A "benefit period" starts when you're admitted to the hospital and ends when you've been out for 60 consecutive days. If you're readmitted after 60 days, you pay the deductible again.

Coinsurance for hospital stays:

• Days 1–60: $0 after deductible
• Days 61–90: $419/day (2026)
• Days 91–150: $838/day (using "lifetime reserve days" — you get 60 total, ever)
• Beyond 150 days: You pay everything

Skilled nursing facility:

• Days 1–20: $0
• Days 21–100: $209.50/day (2026)
• Beyond 100 days: You pay everything

Key takeaway: Part A covers hospital stays, but it has significant gaps after 60 days. A long hospitalization without supplemental coverage can get very expensive very fast.

Part B: Medical Insurance

What It Covers

• Doctor visits — primary care, specialists, surgeons
• Outpatient care — same-day surgery, ER visits (the doctor's services), outpatient procedures
• Preventive services — annual wellness visit, screenings (mammograms, colonoscopies, flu shots), many at no cost
• Durable medical equipment — wheelchairs, walkers, oxygen equipment
• Lab tests and diagnostic imaging
• Mental health services — outpatient therapy, psychiatry (see our guide on therapy costs)
• Ambulance services
• Some home health services

What It Does NOT Cover

This is important — and catches a lot of people off guard:

• Most dental care — no routine cleanings, fillings, or dentures
• Vision — no routine eye exams or glasses (except after cataract surgery)
• Hearing aids — not covered under Original Medicare
• Long-term care — nursing home custodial care (non-skilled) is not covered
• Most care outside the U.S.

What It Costs (2026)

Premium: The standard Part B premium is $185/month in 2026. If your income exceeds $106,000 (individual) or $212,000 (couple), you pay more — this is called IRMAA (Income-Related Monthly Adjustment Amount). High earners can pay up to $628/month.

Deductible: $257/year (2026)

Coinsurance: After the deductible, you pay 20% of the Medicare-approved amount for most services. There is no out-of-pocket maximum in Original Medicare — your 20% coinsurance is unlimited. This is one of the biggest reasons people buy supplemental (Medigap) insurance.

Key takeaway: Part B's 20% coinsurance with no cap means a major illness could cost you tens of thousands. This is the gap that Medigap or Medicare Advantage plans fill.

Parts A + B Together = "Original Medicare"

When someone says "Original Medicare" or "Traditional Medicare," they mean Parts A and B together. This is the government-run program that lets you see any doctor or hospital that accepts Medicare (which is most of them — about 97% of doctors participate).

Pros of Original Medicare:

• See any Medicare-accepting provider nationwide — no network restrictions
• No referrals needed for specialists
• Can add a Medigap (supplemental) policy to reduce out-of-pocket costs

Cons of Original Medicare:

• No out-of-pocket maximum — costs are theoretically unlimited
• No drug coverage — you must add Part D separately
• No dental, vision, or hearing coverage
• You pay 20% of everything with no cap

Part C: Medicare Advantage (The Alternative)

Medicare Advantage (MA) plans are offered by private insurance companies approved by Medicare. They replace Parts A and B — you get the same basic benefits, but through a private insurer's network instead of through the government.

How It Works

• You still pay your Part B premium to Medicare.
• The MA plan may charge an additional monthly premium (many charge $0).
• Instead of Original Medicare's 20% coinsurance with no cap, MA plans have fixed copays and an annual out-of-pocket maximum (capped at $8,850 in 2026 for in-network services).
• Most MA plans include Part D (drug coverage) built in.

Extra Benefits

Many Medicare Advantage plans include benefits that Original Medicare doesn't:

• Dental coverage — routine cleanings, X-rays, sometimes major work
• Vision coverage — eye exams, glasses, contacts
• Hearing coverage — hearing exams, hearing aids
• Fitness programs — gym memberships (SilverSneakers, etc.)
• Transportation — rides to medical appointments
• Over-the-counter benefits — quarterly allowances for OTC items

The Trade-Off

MA plans sound great — and for many people, they are. But there's a catch: network restrictions.

• Most MA plans are HMOs or PPOs with provider networks. You'll pay more (or won't be covered at all) for out-of-network care.
• You may need referrals to see specialists (HMO plans).
• Some procedures may require prior authorization that Original Medicare wouldn't require.
• If you travel or split time between states, network restrictions can be a problem.

Key takeaway: Medicare Advantage often costs less monthly and includes extras like dental and vision. But you give up the freedom to see any doctor anywhere. The right choice depends on your health needs, your budget, and how much you travel.

Part D: Prescription Drug Coverage

What It Covers

Part D covers outpatient prescription drugs. Each Part D plan has a formulary (a list of covered drugs organized into tiers), and your cost depends on which tier your medication falls on.

Typical Drug Tiers (2026)

• Tier 1 — Preferred generics: $0–$15 copay
• Tier 2 — Non-preferred generics: $15–$40 copay
• Tier 3 — Preferred brand-name: $40–$100 copay
• Tier 4 — Non-preferred brand-name: 25–50% coinsurance
• Tier 5 — Specialty drugs: 25–33% coinsurance

The $2,000 Out-of-Pocket Cap (New in 2025)

This is a big deal. Starting in 2025, Part D has an annual out-of-pocket maximum of $2,000 for prescription drugs. Once you hit that cap, you pay nothing for covered drugs for the rest of the year. Before this change, patients on expensive medications could pay $10,000+ per year in drug costs.

Part D also offers a Medicare Prescription Payment Plan that lets you spread your drug costs evenly across the year instead of paying big lump sums at the pharmacy.

What It Costs

Premium: Varies by plan — the national average is about $40–$55/month in 2026. Some plans are as low as $0 premium (but may have higher copays).

Deductible: Up to $590 (2026 max). Many plans have lower or no deductible.

Late enrollment penalty: If you don't sign up for Part D when first eligible and don't have other creditable drug coverage, you'll pay a permanent penalty added to your premium for as long as you have Part D. The penalty is 1% of the national base premium × the number of months you were without coverage.

For tips on reducing drug costs, see our guide on getting cheap prescription drugs.

Medigap (Medicare Supplement Insurance)

Medigap policies are supplemental insurance sold by private companies that help cover the "gaps" in Original Medicare — deductibles, coinsurance, and copays.

Key facts:

• Medigap plans are standardized by letter (A, B, C, D, F, G, K, L, M, N). Plan G is the most popular in 2026.
• Plan G covers: Part A deductible, Part A and B coinsurance (that uncapped 20%), skilled nursing coinsurance, and foreign travel emergency care. You only pay the Part B deductible ($257/year).
• Premiums range from $100–$350+/month depending on the plan, your age, and location.
• You can only have Medigap with Original Medicare — not with Medicare Advantage.
• Best time to buy: During your 6-month Medigap Open Enrollment Period (starts the month you turn 65 AND are enrolled in Part B). During this window, insurers must sell you any plan regardless of health conditions. After this window, you may face medical underwriting and can be denied.

Medicare Enrollment: When to Sign Up (and Penalties for Missing It)

Initial Enrollment Period (IEP)

A 7-month window around your 65th birthday: 3 months before your birthday month, your birthday month, and 3 months after. This is the most important enrollment window.

General Enrollment Period (GEP)

January 1 – March 31 each year. If you missed your IEP, you can sign up here — but coverage doesn't start until July 1, and you may face permanent late enrollment penalties (10% added to your Part B premium for each 12-month period you were eligible but didn't enroll).

Special Enrollment Period (SEP)

If you're still working and covered by an employer plan at 65, you get a Special Enrollment Period — 8 months after the employment or coverage ends (whichever comes first). No penalty.

Medicare Advantage Open Enrollment

October 15 – December 7 each year. This is when you can switch between Original Medicare and Medicare Advantage, or change MA plans.

Key takeaway: Don't miss your Initial Enrollment Period. Late penalties for Part B are permanent — a 10% surcharge for each year you delayed, for the rest of your life on Medicare.

Original Medicare + Medigap vs. Medicare Advantage: How to Choose

Choose Original Medicare + Medigap + Part D if:

• You want maximum freedom to see any doctor nationwide
• You have complex health needs and see many specialists
• You travel frequently or live in multiple states
• You can afford the Medigap premium ($150–$300/month) for predictable costs
• You don't need dental/vision/hearing coverage through Medicare

Choose Medicare Advantage if:

• You want lower monthly premiums (many plans are $0 beyond your Part B premium)
• You want dental, vision, and hearing included
• You're comfortable using a provider network
• You prefer an out-of-pocket maximum for cost certainty
• You're relatively healthy and don't expect high medical costs

How to Save Money on Medicare

• Medicare Savings Programs: If your income is low, your state may pay your Part B premium, deductibles, and coinsurance. Four programs exist based on income level.
• Extra Help (Low Income Subsidy): Helps pay Part D premiums, deductibles, and copays. If your income is below $22,590 (individual) or $30,660 (couple), you may qualify.
• Compare plans annually: During open enrollment, review your current plan. Drug formularies and costs change every year.
• Use preventive services: Medicare covers many preventive screenings at 100% — annual wellness visits, cancer screenings, vaccinations. Using them can catch problems early, saving thousands later.
• Compare provider costs: Even on Medicare, where you get care matters. Use Taven to compare what different facilities charge.

For a comparison with Medicaid, see our guide on Medicaid vs. Medicare.

The Bottom Line

Medicare is complicated, but here's the short version:

• ✅ Part A = hospital coverage (usually free)
• ✅ Part B = doctor/outpatient coverage (~$185/month)
• ✅ Part C (Medicare Advantage) = private plan alternative to A+B, often with extras
• ✅ Part D = prescription drugs (now capped at $2,000/year out of pocket)
• ✅ Medigap = supplemental coverage for Original Medicare's gaps
• ✅ Enroll on time — late penalties are permanent
• ✅ Review your plan every year during open enrollment

The most important thing you can do is enroll on time and choose the right combination for your situation. If you're approaching 65, start researching at least 3 months before your birthday. And don't be afraid to ask for help — your State Health Insurance Assistance Program (SHIP) provides free, unbiased Medicare counseling in every state.