Medicare Basics: A Complete Guide to Parts A, B, C, and D

Nearly 65 million Americans rely on Medicare for their healthcare coverage, and most people become eligible at age 65. As a caregiver, understanding Medicare isn't just helpful—it's essential for ensuring your parent gets the care they need without unexpected financial surprises.

This guide covers the four parts of Medicare, what each covers, the costs involved, enrollment windows, and how to choose between Original Medicare and Medicare Advantage. By the end, you'll have a solid foundation for making informed healthcare decisions.

Medicare at a Glance

Before diving into details, here's a quick overview of Medicare's structure:

Original Medicare = Part A + Part B (government-run)
Medicare Advantage = Part C (private insurance that includes A + B, often D)

Part A: Hospital Insurance

Medicare Part A is sometimes called "hospital insurance" because it primarily covers inpatient care. Most people get Part A premium-free if they or their spouse paid Medicare taxes while working.

What Part A Covers

Inpatient Hospital Care:

• Semi-private rooms
• Meals
• General nursing care
• Drugs administered during the stay
• Lab tests, X-rays, and other diagnostic services
• Operating and recovery room costs
• Inpatient rehabilitation

Skilled Nursing Facility (SNF) Care:

• Up to 100 days per benefit period
• Must follow a qualifying hospital stay (at least 3 days)
• Must need skilled care (physical therapy, wound care, IV medications)
• Days 1-20: $0 copay
• Days 21-100: Daily copay (around $200/day in 2025)
• Beyond 100 days: Not covered

Home Health Care:

• Part-time skilled nursing
• Physical, occupational, and speech therapy
• Medical social services
• Must be homebound and need skilled care
• 100% covered with no copay

Hospice Care:

• Comfort care for terminal illness (life expectancy of 6 months or less)
• Doctor services, nursing, pain medication
• Counseling, respite care
• Medical equipment and supplies
• Minimal copays for drugs and respite care

Part A Costs (2025)

• Premium: $0 for most people (if you or spouse worked 10+ years paying Medicare taxes)
• Hospital deductible: Approximately $1,632 per benefit period
• Days 1-60: $0 coinsurance after deductible
• Days 61-90: Approximately $408/day coinsurance
• Days 91+: Lifetime reserve days with approximately $816/day coinsurance

Part B: Medical Insurance

Part B covers outpatient medical services—essentially, healthcare you receive outside of a hospital stay.

What Part B Covers

Doctor and Outpatient Services:

• Doctor office visits
• Outpatient hospital care
• Lab tests and X-rays
• Mental health services
• Ambulance services
• Second opinions before surgery

Preventive Services (many at no cost):

• Annual wellness visits
• Flu, pneumonia, and COVID-19 vaccines
• Mammograms and other cancer screenings
• Cardiovascular disease screenings
• Diabetes screenings and monitoring
• Depression screening
• "Welcome to Medicare" preventive visit (within first 12 months)

Durable Medical Equipment (DME):

• Wheelchairs and walkers
• Hospital beds for home use
• Oxygen equipment
• CPAP machines for sleep apnea
• Blood sugar monitors for diabetics

Other Services:

• Outpatient physical, occupational, and speech therapy
• Home health care (if not covered by Part A)
• Some diabetes supplies
• Kidney dialysis

What Part B Does NOT Cover

• Routine dental care (cleanings, fillings, dentures)
• Routine vision care (eye exams for glasses, eyeglasses)
• Hearing aids and exams for fitting hearing aids
• Routine foot care
• Most cosmetic surgery
• Acupuncture (except for chronic low back pain)
• Care received outside the US (with limited exceptions)

Part B Costs (2025)

• Monthly premium: Approximately $174.70 (standard); higher for higher incomes (IRMAA)
• Annual deductible: Approximately $240
• After deductible: You pay 20% of Medicare-approved amount
• No out-of-pocket maximum: Costs can be unlimited (why Medigap is important)

Part C: Medicare Advantage

Medicare Advantage (Part C) is an alternative to Original Medicare offered by private insurance companies approved by Medicare. It's not a supplement to Medicare—it replaces Parts A and B.

How Medicare Advantage Works

• Private insurers contract with Medicare to provide Part A and B benefits
• Plans must cover everything Original Medicare covers
• Most plans include additional benefits (dental, vision, hearing, fitness)
• Most plans include prescription drug coverage (Part D)
• Plans have network requirements (HMO, PPO, etc.)
• Plans have annual out-of-pocket maximums (unlike Original Medicare)

Types of Medicare Advantage Plans

HMO (Health Maintenance Organization):

• Must use network providers (except emergencies)
• Usually need referrals for specialists
• Often lower premiums
• Less flexibility but more coordinated care

PPO (Preferred Provider Organization):

• Can see any provider, but pay less for network providers
• No referral needed for specialists
• More flexibility, often higher premiums

Special Needs Plans (SNPs):

• For people with specific diseases, conditions, or characteristics
• Examples: chronic conditions, dual-eligible (Medicare + Medicaid), nursing home residents

Medicare Advantage Pros and Cons

Advantages:

• Annual out-of-pocket maximum protects against catastrophic costs
• Often includes dental, vision, hearing coverage
• Usually includes drug coverage (no separate Part D needed)
• Many plans have $0 premiums (beyond Part B premium)
• May include extras like gym memberships, transportation, meal delivery

Disadvantages:

• Network restrictions limit provider choice
• May need referrals for specialists
• Coverage limited when traveling outside service area
• Plan benefits and networks change yearly
• Harder to switch to Medigap later (limited guarantee issue rights)

Part D: Prescription Drug Coverage

Part D covers outpatient prescription medications. It's optional but highly recommended—even if your parent takes few medications now, the late enrollment penalty makes waiting costly.

How Part D Works

• Offered by private insurance companies approved by Medicare
• Can be a standalone plan (with Original Medicare) or included in Medicare Advantage
• Each plan has a formulary (list of covered drugs) organized into tiers
• Different tiers have different costs (generics cheaper, brand names more expensive)
• Plans can require prior authorization, step therapy, or quantity limits

Part D Cost Structure

Part D has a unique coverage structure that includes a coverage gap (historically called the "donut hole"):

2025 Standard Benefit Structure:

1. Deductible phase: You pay 100% until meeting the deductible (around $545)
2. Initial coverage: You pay copays/coinsurance (typically 25%); plan pays the rest
3. Coverage gap: After total drug costs reach approximately $5,030, you pay 25% of brand-name and generic costs
4. Catastrophic coverage: After you've spent approximately $8,000 out-of-pocket, you pay $0 (as of 2025 changes)

Choosing a Part D Plan

When selecting a Part D plan for your parent, consider:

• Formulary: Are their current medications covered?
• Tier placement: What tier are their drugs on?
• Pharmacy network: Is their preferred pharmacy in network?
• Premium vs. out-of-pocket: Balance monthly premium against drug costs
• Mail-order options: Often cheaper for maintenance medications

Use the Medicare Plan Finder at Medicare.gov to compare plans based on your parent's specific medications.

Medicare Enrollment: When and How

Missing enrollment deadlines can result in coverage gaps and permanent late penalties. Understanding the enrollment periods is crucial.

Initial Enrollment Period (IEP)

For most people, this is the 7-month period surrounding their 65th birthday:

• Starts 3 months before the month you turn 65
• Includes your birthday month
• Ends 3 months after your birthday month

When coverage starts:

• Enroll during 3 months before birthday month: Coverage starts the 1st of birthday month
• Enroll during birthday month: Coverage starts the 1st of the following month
• Enroll during 3 months after: Coverage starts 1-2 months later

Special Enrollment Period (SEP)

If you delayed Medicare because of employer coverage, you get a Special Enrollment Period:

• 8-month SEP for Part B after employer coverage ends
• No late enrollment penalty if you had creditable coverage
• Must have been covered by employer plan based on current employment (not COBRA or retiree coverage)

General Enrollment Period (GEP)

If you missed your IEP and don't qualify for a SEP:

• January 1 - March 31 each year
• Coverage starts July 1
• Late enrollment penalty may apply permanently

Annual Enrollment Period (AEP)

October 15 - December 7 each year. During this period, you can:

• Switch from Original Medicare to Medicare Advantage (or vice versa)
• Change Medicare Advantage plans
• Change Part D plans
• Add or drop Part D coverage

Late Enrollment Penalties

Delaying enrollment without creditable coverage results in permanent penalties:

Part B penalty: 10% increase in premium for each 12-month period you could have had Part B but didn't. Lasts as long as you have Medicare.

Part D penalty: 1% of the national base premium for each month you went without creditable drug coverage. Added to your Part D premium permanently.

Original Medicare vs. Medicare Advantage

Choosing between Original Medicare (with a Medigap policy) and Medicare Advantage is one of the most important healthcare decisions your parent will make.

Choose Original Medicare + Medigap If:

• Your parent has multiple doctors and specialists they want to keep
• They travel frequently or live part of the year elsewhere
• They value the freedom to see any Medicare-accepting provider
• They prefer predictable costs (Medigap covers most out-of-pocket costs)
• They can afford the higher monthly premiums for Medigap
• They have complex health conditions requiring specialized care

Choose Medicare Advantage If:

• Your parent is comfortable using network providers
• They want dental, vision, and hearing coverage included
• They prefer lower monthly premiums (many Advantage plans have $0 premiums)
• They like the security of an out-of-pocket maximum
• They don't travel much outside their plan's service area
• They want the simplicity of one plan covering everything

Medigap (Medicare Supplement Insurance)

Medigap policies are sold by private insurers to fill "gaps" in Original Medicare—the deductibles, copays, and coinsurance you'd otherwise pay out of pocket.

What Medigap Covers

Medigap plans are standardized and labeled with letters (A, B, C, D, F, G, K, L, M, N). Each letter offers a specific set of benefits. The most popular plans are:

Plan G: Most comprehensive plan available to new enrollees. Covers:

• Part A hospital coinsurance and costs up to 365 additional days
• Part B coinsurance or copayment
• Blood (first 3 pints)
• Part A hospice care coinsurance or copayment
• Skilled nursing facility care coinsurance
• Part A deductible
• Foreign travel emergency care (80%)
• Does NOT cover Part B deductible (about $240/year)

Plan N: Lower premium option. Similar to Plan G but:

• May have copays for some office visits ($20) and ER visits ($50)
• Does not cover Part B excess charges
• Often significantly cheaper than Plan G

When to Buy Medigap

The best time to buy Medigap is during your Medigap Open Enrollment Period:

• 6-month period starting the month you turn 65 AND have Part B
• During this window, insurers cannot deny coverage or charge more due to health conditions
• After this period, insurers can underwrite based on health

Getting Help with Medicare Decisions

Medicare decisions are complex. Fortunately, free help is available:

State Health Insurance Assistance Program (SHIP)

• Free counseling in every state
• Trained counselors help with Medicare decisions
• Find your local SHIP at shiphelp.org

Medicare.gov

• Official Medicare website
• Plan Finder tool compares plans based on your needs
• 1-800-MEDICARE (1-800-633-4227) for questions

Social Security Administration

• Handles Medicare enrollment
• ssa.gov or 1-800-772-1213

Common Medicare Mistakes to Avoid

1. Missing Enrollment Deadlines

Late enrollment penalties are permanent. Mark calendar reminders for the Initial Enrollment Period and Annual Enrollment Period.

2. Assuming Medicare Covers Everything

Medicare has significant gaps: no dental, vision, hearing, or long-term care. Plan accordingly.

3. Not Reviewing Plans Annually

Plan benefits, costs, and formularies change yearly. Review your parent's plan every fall during Annual Enrollment.

4. Choosing Based Only on Premium

A $0 premium plan may cost more overall if copays and deductibles are high or medications aren't covered well.

5. Not Using Preventive Services

Many preventive services are free under Part B. Annual wellness visits help catch problems early.

Resources

• Medicare.gov: Official Medicare information and plan finder
• 1-800-MEDICARE: 1-800-633-4227 (24/7)
• SHIP (State Health Insurance Assistance): shiphelp.org
• Social Security: ssa.gov | 1-800-772-1213
• Medicare Rights Center: medicarerights.org | 1-800-333-4114