What Is Medicare Parts A, B, C, and D? Breaking it Down
6 minutes
Understanding Medicare, including its Parts A, B, C, and D, is essential as you plan for your healthcare needs in later life. Medicare is a federal health insurance program that provides coverage for hospital stays (Part A), medical services like doctor visits (Part B), prescription drugs (Part D), and more comprehensive plans through private insurers (Part C, also known as Medicare Advantage).
In this guide, we'll explore what Medicare is, how each part works, eligibility requirements, and what each part covers. We'll also discuss costs, enrollment periods, and other key details, giving you a clear understanding of how Medicare can support your health as you age.
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What is Medicare?
Medicare is a federal health insurance program for people aged 65 and older, as well as some younger individuals with disabilities or specific conditions like End-Stage Renal Disease. It helps cover various medical costs, including hospital stays (Part A), outpatient care and doctor visits (Part B), and prescription drugs (Part D).
Medicare also includes preventive services like screenings and vaccines at no cost, helping you stay healthy and catch issues early. Additionally, Medicare Advantage (Part C) plans offer extra benefits like vision, dental, and hearing coverage through private insurers.
What Are Medicare Parts A, B, C, and D?
Medicare is divided into four parts, each covering different types of healthcare services. They each have their own eligibility criteria, costs, and coverage specifics. Here's a breakdown:
Part A: Hospital Insurance
Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
Eligibility:
Generally, you're eligible if you're 65 or older and either you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters).
If you're under 65, you may qualify if you have a disability, End-Stage Renal Disease (ESRD), or Amyotrophic Lateral Sclerosis (ALS).
Costs:
Premiums: Most people don't pay a premium for Part A if they meet the work requirement. If you don't qualify for premium-free Part A, you can buy it, and the premium can be up to $506 per month (in 2024).
Deductibles and Coinsurance: There is a deductible for each benefit period ($1,632 in 2024). Coinsurance costs apply for extended hospital stays (e.g., $0 for the first 60 days, then $408 per day for days 61–90).
Part B: Medical Insurance
Covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Eligibility:
Available to all Medicare-eligible individuals (typically those 65 or older, or younger individuals with disabilities).
Enrollment is usually automatic if you’re receiving Social Security benefits.
Costs:
Premiums: Most people pay a standard monthly premium ($174.70 in 2024). Higher-income individuals may pay more (Income-Related Monthly Adjustment Amount, or IRMAA).
Deductibles and Coinsurance: There is an annual deductible ($240 in 2024). After meeting the deductible, you typically pay 20% of the Medicare-approved amount for services.
Part C: Medicare Advantage
An alternative to Original Medicare, offered by private companies. It includes Part A and Part B coverage, and often Part D.
Eligibility:
Must be enrolled in both Medicare Part A and Part B.
Must live in the service area of the Medicare Advantage plan you wish to join.
Costs:
Premiums: Varies by plan; you continue to pay your Part B premium, and some Medicare Advantage plans may have an additional premium.
Out-of-Pocket Costs: Vary widely based on the specific plan (e.g., copayments, coinsurance, deductibles).
Coverage: Medicare Advantage plans often include additional benefits like vision, dental, and hearing, which are not covered by Original Medicare.
Part D: Prescription Drug Coverage
Helps cover the cost of prescription drugs.
Eligibility:
Available to anyone enrolled in Medicare Part A and/or Part B.
Costs:
Premiums: Varies by plan and income; higher-income individuals may pay an IRMAA (Income-Related Monthly Adjustment Amount).
Deductibles and Copayments: Plans have different cost structures, including annual deductibles, copayments, and coinsurance. There’s also a coverage gap (the “donut hole”), after which catastrophic coverage kicks in.
Penalty: A late enrollment penalty applies if you go without creditable prescription drug coverage for 63 days or more after your Initial Enrollment Period.
When are the enrollment periods?
Knowing when to enroll in Medicare is crucial to avoid penalties and ensure you have coverage when you need it:
AEP (Annual Enrollment Period): The period from Oct. 15 to Dec. 7 each year when you can review, switch, or join new Medicare plans. This is the ideal time to make any necessary changes to your Medicare Advantage (Part C) or Part D (prescription drug) plan, or to switch between Original Medicare and Medicare Advantage.
IEP (Initial Enrollment Period): The 7-month window around your 65th birthday to sign up for Medicare. This includes the 3 months before, the month of, and the 3 months after your 65th birthday.
GEP (General Enrollment Period): A period from January 1 to March 31 each year for those who didn’t sign up for Medicare during their IEP and aren’t eligible for a SEP. Coverage begins on July 1 of the same year.
SEP (Special Enrollment Period): A time outside the usual enrollment periods when you can sign up for Medicare due to specific life events, such as losing employer coverage, moving out of your plan’s service area, or qualifying for Medicaid.
Note: Late enrollment in Part B or Part D can result in lifelong penalties, increasing your premium. It's important to enroll on time to avoid these extra costs.
How much does Medicare cost?
Medicare isn't free, and costs can vary. The following figures for each part are approximate and subject to change, so it's always a good idea to verify with the latest information from Medicare or consult with a Medicare advisor for the most accurate and personalized details.
Medicare Part A
Premium: Still generally premium-free if you or your spouse paid Medicare taxes for at least 10 years. If not, the premium can be up to approximately $506 per month, depending on your work history.
Deductible: The inpatient hospital deductible is around $1,632 per benefit period.
Medicare Part B
Premium: The standard monthly premium for 2024 is approximately $174.70. Higher-income beneficiaries pay more, with premiums ranging from about $243 to over $560 per month.
Deductible: The annual deductible is around $240.
Medicare Part C (Medicare Advantage)
Premium: Varies widely depending on the plan and location. Some plans have premiums as low as $0, but others can be over $100 per month. You must also pay the Part B premium.
Medicare Part D
Premium: Varies based on the plan and coverage chosen. Premiums can range from about $12 to over $100 per month. Higher-income beneficiaries may pay an additional surcharge.
What things does Medicare not pay for?
Medicare does not cover everything. Some services, like long-term care, most dental care, hearing aids, and vision care, are not included. To cover these gaps, you might consider supplemental insurance like Medigap.
What’s the difference between Medicare and Medicaid?
It's easy to confuse Medicare with Medicaid, but they are different programs. Medicare is a federal program primarily for seniors, while Medicaid is a state and federal program for those with low income.
People can qualify for both Medicare and Medicaid, known as "dual eligibles." These individuals are typically seniors or those with disabilities who meet the income and asset limits for Medicaid.
Dual eligibles benefit from both programs, with Medicare covering services like hospital stays and outpatient care, while Medicaid helps with costs Medicare doesn’t cover, such as premiums, deductibles, and long-term care. This combination often leads to lower out-of-pocket expenses and access to additional services like dental, vision, and hearing care.