How Does it Work? The Different Parts of Medicare Explained

If you’ve ever felt confused while reading about Medicare, you’re not alone. Medicare is a complicated program, and it can be tricky to keep track of the many options and layers of information. Thankfully, the program has been broken down into four basic parts that make it clear and easy to understand:

• Part A
• Part B (when combined, Part A & Part B are referred to as “Original Medicare)
• Part C (also known as Medicare Advantage)
• Part D

Here’s a detailed rundown of each of the four parts of Medicare and how they may apply to you:

• Medicare Part A: This first part covers your stays for inpatient care in a hospital or a skilled nursing facility, which may be necessary for rehabilitation after a stroke or serious injury. It also covers hospice care and some home health care (but not custodial or long-term care).
• Medicare Part B: Medicare’s second part covers doctor visits. It also takes care of medically necessary services and supplies, which includes preventive services, ambulance services, medical equipment, mental health coverage and a few types of outpatient prescription drugs.
• What is the Medicare Part B penalty? If you’re not automatically enrolled in Medicare (more on that below), you’ll need to sign up when you’re first eligible. If you miss the deadline, you could face a penalty each time you pay your monthly premium. To avoid penalties, take a look at Medicare Enrollment and Election Periods to find out when to sign up. However, you may be able to avoid the permanent penalty if you had health insurance through your job or your spouse’s job when you first became eligible.
• Medicare Advantage (Part C) Looking for an all-in-one alternative to Original Medicare (Part A and Part B)? A Medicare Advantage Plan, also known as “Part C” or an “MA plan” covers everything that Original Medicare covers, including Part A (hospital insurance) and Part B (medical insurance). It may also cover extra benefits as well, including vision, hearing, dental, and/or health and wellness programs.

Medicare Advantage Plans are offered by private companies that must follow rules set by Medicare. However, it’s important to know that each Medicare Advantage Plan can charge different out-of-pocket costs and may enforce different rules for how you get services (such as requiring a referral before you can see a specialist, etc). 

• Medicare Part D: Medicare Part D helps pay for the medications your doctor prescribes. It’s important to know that Original Medicare (Parts A and B) does not cover prescription drugs. That’s why most people who choose Original Medicare add a prescription drug (Part D) plan or choose a Medicare Advantage plan that includes Part D.

Every Medicare Part D plan is required to cover certain common types of drugs, which will be listed on their drug list (also known as formulary). However, each plan may choose which specific drugs it covers, so make sure you choose a plan that covers your medications before you enroll.