Understanding Medicare's Structure

Medicare is the federal health insurance program primarily for people aged 65 and older, as well as certain younger people with disabilities or specific conditions. It's divided into four parts — A, B, C, and D — each designed to cover different aspects of healthcare. Understanding how these parts work (and how they interact) is essential to getting the most from your benefits.

Part A: Hospital Insurance

Medicare Part A covers inpatient care — the services you receive when you're formally admitted to a hospital or facility.

What it covers:

  • Inpatient hospital stays
  • Skilled nursing facility (SNF) care (following a qualifying hospital stay)
  • Hospice care
  • Some home health services

Cost: Most people don't pay a premium for Part A if they (or a spouse) worked and paid Medicare taxes for at least 10 years. However, there is a deductible per benefit period and potential daily coinsurance for extended stays.

Part B: Medical Insurance

Medicare Part B covers outpatient care — services you receive without being admitted to a hospital.

What it covers:

  • Doctor's office visits
  • Preventive services (screenings, vaccines, annual wellness visits)
  • Outpatient surgery and procedures
  • Durable medical equipment (wheelchairs, walkers, etc.)
  • Mental health services
  • Some home health services

Cost: Part B requires a monthly premium (which can be income-adjusted) plus an annual deductible. After the deductible, Medicare typically pays 80% of approved costs and you pay 20%.

Part C: Medicare Advantage

Medicare Part C, known as Medicare Advantage, is an alternative way to receive your Medicare benefits through a private insurer approved by Medicare.

Key features:

  • Bundles Part A and Part B coverage (and usually Part D) into one plan
  • Often includes extra benefits like dental, vision, and hearing — not covered by Original Medicare
  • Uses networks similar to HMOs or PPOs
  • May have lower out-of-pocket costs than Original Medicare in some situations

Trade-off: You're tied to the plan's network and coverage rules. Not all doctors accept Medicare Advantage plans.

Part D: Prescription Drug Coverage

Medicare Part D adds outpatient prescription drug coverage, available as a standalone plan (with Original Medicare) or included in many Medicare Advantage plans.

Key features:

  • Covers a formulary (list) of approved prescription drugs
  • Plans vary by premium, deductible, and which drugs are covered
  • Late enrollment penalty applies if you go without creditable drug coverage

Original Medicare vs. Medicare Advantage at a Glance

Feature Original Medicare (Parts A & B) Medicare Advantage (Part C)
Provider Choice Any Medicare-accepting provider Network-based (varies)
Extra Benefits Limited Often includes dental, vision, hearing
Drug Coverage Requires separate Part D plan Usually included
Out-of-Pocket Cap No annual cap Mandatory annual cap

When to Enroll

Your Initial Enrollment Period spans the 7-month window around your 65th birthday (3 months before, the month of, and 3 months after). Missing this window without creditable coverage can result in permanent premium penalties. If you're still working and covered by employer insurance, you may have a Special Enrollment Period when that coverage ends.

Take time to review your specific health needs and budget before choosing between Original Medicare and Medicare Advantage — the right choice depends on your doctors, medications, and where you live.