Medicare Part A, B, C & D – What Each Covers

Medicare is the federal health insurance program for people 65 and older—and for most retirees, it becomes the cornerstone of their healthcare coverage. But Medicare isn't a single plan. It's a system with four distinct parts, each covering different aspects of healthcare, with different costs, rules, and enrollment considerations.

Understanding the parts—A, B, C, and D—is the foundation of making smart Medicare decisions. Here's what you need to know about each one.

Part A covers inpatient hospital care, skilled nursing facility care (following a hospital stay), hospice care, and some home health services. For most people, Part A is premium-free—if you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years), you've already paid for it through payroll taxes.

What you still pay with Part A:

• Inpatient hospital deductible: $1,676 per benefit period in 2026 (a benefit period begins when you're admitted and ends 60 days after discharge)

• Days 61–90 in hospital: $419/day coinsurance

• Beyond 90 days: lifetime reserve days apply at $838/day; after those are exhausted, you pay 100%

• Skilled nursing facility: days 1–20 are fully covered after a qualifying hospital stay; days 21–100 have $209.50/day coinsurance; beyond 100 days, no coverage

One common misconception: Part A does not cover long-term custodial care—help with daily activities like bathing and dressing in a nursing home. That's a separate planning challenge entirely.

Part B covers outpatient services: doctor visits, preventive care, lab tests, X-rays, durable medical equipment, and outpatient procedures. Unlike Part A, Part B requires a monthly premium paid by everyone who enrolls.

2026 Part B costs:

• Standard monthly premium: $185.00 (higher for higher-income beneficiaries via IRMAA surcharges)

• Annual deductible: $257

• After deductible: you pay 20% of Medicare-approved amounts; Medicare pays 80%

That 20% coinsurance with no out-of-pocket maximum is significant. A major medical event—cancer treatment, cardiac surgery, orthopedic procedures—can generate tens of thousands of dollars in 20% coinsurance. This is the primary reason most Medicare beneficiaries purchase supplemental coverage (Medigap or Medicare Advantage).

Part B also covers preventive care—annual wellness visits, cancer screenings, flu shots, diabetes monitoring—at no cost to you when provided by Medicare-participating providers.

Part C, also called Medicare Advantage, is an alternative way to receive your Medicare benefits through private insurance companies approved by Medicare. Instead of Original Medicare (Parts A and B), you enroll in an Advantage plan that bundles your coverage—and usually includes Part D drug coverage as well.

Medicare Advantage plans typically offer:

• All Part A and Part B benefits (required by law)

• Often lower or zero premiums beyond what you pay for Part B

• Fixed copays instead of 20% coinsurance—making costs more predictable

• Extra benefits Original Medicare doesn't cover: dental, vision, hearing, fitness memberships, transportation

• An annual out-of-pocket maximum (required by law)—protecting you from catastrophic costs

The tradeoffs: Advantage plans have networks. You generally need to use in-network providers, get referrals for specialists, and stay within the plan's service area. Coverage quality varies significantly by plan and location. If you travel frequently or split time between two states, network restrictions can be a real limitation.

Medicare Advantage enrollment has grown dramatically—now covering more than half of Medicare beneficiaries—but it's not universally the better choice. Compare carefully, especially if you have established relationships with specialists or a preference for broad provider choice.

Part D covers prescription medications. It's offered through private insurance companies as a standalone plan (paired with Original Medicare) or bundled into a Medicare Advantage plan. Every Part D plan has a formulary—a list of covered drugs organized into cost tiers.

Part D 2026 key features:

• Monthly premiums vary by plan—typically $20 to $80/month for standalone plans, with IRMAA surcharges for higher earners

• Annual deductible: up to $590 (plans may waive this for lower-tier drugs)

• The catastrophic cap: beginning in 2025 under the Inflation Reduction Act, out-of-pocket drug costs are capped at $2,000 per year—a significant protection for people on expensive medications

• Medicare Extra Help (Low Income Subsidy): available for those with limited income and assets; substantially reduces Part D costs

Choosing the right Part D plan depends heavily on which medications you take. Use Medicare's Plan Finder tool at medicare.gov to compare plans based on your specific drug list—the cost differences between plans for the same person can be substantial.

The combination of Parts A, B, and D (Original Medicare plus a drug plan) leaves a significant cost-sharing gap—which is why Medigap supplement insurance exists. Or you can replace A and B entirely with Part C (Medicare Advantage), which typically bundles drug coverage and caps your out-of-pocket spending.

Neither path is universally superior. Your health status, budget, preferred doctors, and geography all factor in. The next step is understanding Medigap vs. Medicare Advantage—covered in the comparison worksheet in this series.