Understanding Medicare Parts A, B, C, and D: What Each Part Covers and How Enrollment Works

Medicare at a glance: four parts with different roles

Medicare is divided into four parts: Part A, Part B, Part C, and Part D. Each part is designed to cover a different set of health-related services, which is why understanding the structure matters before choosing coverage. Some people enroll as they approach age 65, while others look into Medicare to help a family member or friend. Although many enrollees are retired, some people who sign up are still working.

As of August 2024, Medicare enrollment exceeded 67 million people. With that many participants—and with coverage split across multiple parts—knowing what each part does (and does not) cover can help you anticipate costs and avoid gaps in protection.

Eligibility and automatic enrollment

In general, you become eligible for Medicare when you reach age 65. If you already receive Social Security, you will be enrolled in Medicare automatically the month you turn 65, and your Medicare card will arrive in the mail.

Automatic enrollment can also apply in another situation: you are automatically enrolled in Medicare Parts A and B if you are disabled and have received disability payments from Social Security for 24 months.

Medicare Part A: hospital insurance and inpatient-related care

Medicare Part A is commonly described as hospital insurance because it covers the costs of hospitalization. Part A coverage includes inpatient care at a hospital, skilled nursing facilities, hospice care, and home health care.

For many people, Part A does not come with a monthly premium. Specifically, most people pay no monthly cost for Part A if they or their spouse paid Medicare taxes for at least 10 years. If you did not pay enough into Medicare, Part A has a premium. In 2025, that premium is either $285 or $518 per month, up from $278 or $505 in 2024.

Part A also includes cost-sharing that begins with an annual deductible tied to hospitalization coverage. In 2025, the deductible is $1,676 (up from $1,632 in 2024). After that deductible is met, you pay $0 for the first 60 days of coverage. Co-payments apply for stays beyond 60 days, and after 150 days you pay for the entirety of your hospital stay.

Hospice care is included under Part A, but there is a key condition: although Medicare Part A covers hospice care at an inpatient facility, it must be arranged through a Medicare-approved hospice provider.

Medicare Part B: doctor visits, outpatient services, and preventive care

Medicare Part B covers visits to the doctor and a wide range of outpatient and medically necessary services. The services described under Part B include lab tests, home health care services, medical equipment, services a doctor provides while you are a hospital inpatient, outpatient mental health care, and other outpatient services.

Part B also covers several preventive services, including cardiac rehabilitation, mammograms, cardiovascular screenings, diabetes screenings, flu shots, and other preventive services.

Unlike Part A for many enrollees, Part B involves a monthly premium that is based on annual income. A single person who earned $103,000 or less (or a married couple earning $206,000 or less) would pay $185 per month in 2025, up from $174.70 per month in 2024. This amount is deducted from your Social Security benefit.

Enrollment in Part B is not always mandatory. You are not required to enroll in Part B if you have creditable coverage from another source, such as an employer or a spouse’s employer. However, if you do not enroll and you do not have creditable coverage from another source, you may have to pay a penalty if you enroll later.

Part B cost-sharing also includes an annual deductible. Medicare Part B begins to pay after an annual deductible of $257, up from $240 in 2024. After meeting the deductible, you generally pay 20% for services, provided your doctor accepts the Medicare-approved amount as full payment.

A critical feature of Part B is that the 20% cost share does not come with a cap on out-of-pocket expense. The example given is that if you had $100,000 in medical bills in a year, you would need to pay $20,000. This is in addition to any charges incurred under Parts A and D. There is also no lifetime maximum.

Coverage limits in Original Medicare: what Parts A and B do not include

Original Medicare generally refers to Parts A and B together. While these parts cover many hospital and medical services, they do not cover everything. Medicare Part A and Part B do not cover services such as dental care, eye exams, and hearing aids.

Another major limitation is long-term care. Traditional Medicare does not cover long-term care for people who live in an assisted-living facility or nursing home, or who require assisted living at home. In other words, Medicare (and most health insurance) does not pay for long-term medical or assisted living care that is also called “custodial care.”

Medicare may still cover certain hospital-related services in specific circumstances. For example, Medicare will cover acute-care hospital services for patients who are transferred from an intensive care or critical care unit. Covered services could include head trauma treatment or respiratory therapy. As with other Part A hospital benefits, a deductible applies and benefits taper out after 60 days.

Managing exposure to out-of-pocket costs: why some people consider supplemental coverage

Because Part B includes 20% coinsurance without an out-of-pocket cap, some people look for ways to reduce the risk of large medical bills. Financial advisor Kathryn B. Hauer, who is also the author of Financial Advice for Blue Collar America, warns that devastating illnesses such as cancer can wreck finances in retirement and urges Medicare recipients to consider supplementary coverage. She also notes that Medicare users without Medigap coverage spend 25% to 64% of their income on medical expenses.

Separately, Carlos Dias Jr., founder and managing partner of Dias Wealth, emphasizes that Medicare was never intended to provide long-term care and suggests looking into long-term care insurance to address those expenses. He also advises retirees to look for a life insurance policy with a long-term care rider, a specifically designed long-term care annuity (as opposed to an annuity with a chronic care rider), or a life settlement that converts an old life insurance policy into funds that can be used for long-term care.

Medicare Part C (Medicare Advantage): a private-plan alternative that bundles benefits

Medicare Part C is also known as Medicare Advantage. It is offered by private insurers under contract with the federal government and typically provides a bundle of Medicare Part A, Part B, and Part D (the prescription drug benefit).

If you sign up for a Medicare Advantage plan, you continue paying your Part B premium. Whether you need to pay an additional premium depends on your provider.

One of the main differences highlighted between Medicare Advantage and Original Medicare is the potential for additional services. Medicare Advantage plans may include benefits such as dental and vision care. At the same time, there can be trade-offs. Some plans do not offer Part D coverage, and other pitfalls can include a limited network of doctors.

There is also an administrative detail that may matter for budgeting: if you sign up for Medicare Part C, you can elect to have payments deducted from your Social Security benefit along with fees associated with the Part D benefit. If your Medicare Part C premium is lower than what you would pay under Part B, the Social Security Administration takes the difference into account.

Medicare Part D: prescription drug coverage and changes to the “donut hole”

Medicare Part D is an optional prescription drug benefit administered by private insurance companies and is usually included in Medicare Advantage plans. Depending on the plan, you may need to pay a yearly deductible before eligible drug costs are covered, and some Part D plans also have a co-pay.

Part D is known for a coverage gap that is sometimes called the Medicare “Donut Hole.” This term describes when Medicare recipients begin to pay more for prescription drugs after hitting a spending threshold. In 2024, that threshold was $5,030. Once you and your plan spend that amount on Part D drugs, you enter the donut hole and pay 25% for drugs going forward.

In 2024, once out-of-pocket costs reach a second threshold of $8,000, you exit the donut hole and “catastrophic coverage” begins. After $8,000 in spending is reached, no coinsurance or copayment is owed for the rest of the year.

For 2025, Part D is described as changing significantly: the donut hole will be largely eliminated in favor of a $2,000 limit on out-of-pocket Part D drug spending. Once you hit that threshold, you pay nothing else out of pocket for the year.

Medigap: supplemental coverage that works with Parts A and B

If you only have Medicare Parts A and B, you might consider supplementary private insurance to help cover out-of-pocket costs such as copays, coinsurance, and deductibles. Medigap (also called Medicare Supplement Insurance) is designed for that purpose. Unlike Part C, which works as an alternative to Original Medicare, Medigap works together with Parts A and B and helps fill in coverage gaps.

There are several practical points to understand about Medigap:

• You must have Medicare Parts A and B before buying a Medigap policy, because it is a supplement and not a stand-alone policy.
• You and your spouse must buy separate Medigap policies.
• Insurance companies can only sell “standardized” Medigap policies. These are regulated by federal and state laws and provide a standard level of benefits, though prices can differ among providers.

Because pricing varies, shopping around is described as important. MoneyCoach founder Patrick Traverse says he recommends Medigap policies for clients to cover their needs. He adds that even though premiums may be higher, they can be easier to plan for than the possibility of a large out-of-pocket outlay that could come with lesser coverage.

Putting the pieces together: choosing coverage based on what Medicare does and does not cover

When people ask what parts they “really need,” the answer depends on what coverage they already have and what risks they are trying to manage. Original Medicare (Parts A and B) does not cover long-term care, routine dental or eye care, dentures, or hearing aids. For fuller coverage, the options discussed include additional coverage through Medicare Advantage (Part C) or Medigap coverage that supplements Parts A and B.

It can help to think of the four parts in functional categories:

• Part A: Hospital insurance, including hospital stays, skilled nursing facilities, hospice care, and home health care.
• Part B: Medical services such as doctor visits, outpatient care, home health care, medical equipment, and preventive services.
• Part D: Prescription drug benefits, often with plan-specific deductibles and co-pays, and rules around coverage thresholds.
• Part C (Medicare Advantage): A private-plan alternative that typically bundles Parts A, B, and (usually) D, and may also include services such as hearing, dental, and vision care.

Medicare has evolved over the years into this four-part structure. If you are age 65 or older and receive Social Security, you will automatically be enrolled in Part A. Parts B (outpatient services) and D (prescription drug benefits) are voluntary, though under certain circumstances a person may be automatically enrolled in Parts A and B as described earlier. Part C remains an alternative to Original Medicare that bundles Parts A, B, and typically D.