Understanding Medicare
A plain-English overview of Medicare's four parts and how they fit together.
What Medicare is
Medicare is federal health insurance run by the Centers for Medicare & Medicaid Services (CMS). It covers people 65 and older, some people under 65 with qualifying disabilities, and people of any age with End-Stage Renal Disease (ESRD) or ALS. It is not one single plan — it is a program made up of four parts (A, B, C, and D) that work together in different combinations.
Part A — Hospital Insurance
Part A covers inpatient hospital care, skilled nursing facility care after a qualifying hospital stay, hospice, and some home health services. Most people pay $0 premium for Part A because they (or a spouse) paid Medicare payroll taxes for at least 40 quarters (10 years) of work. Part A has a per-benefit-period deductible for hospital stays rather than a yearly one, so it can apply more than once in a year if you're admitted for separate episodes.
Part B — Medical Insurance
Part B covers doctor visits, outpatient care, preventive services (annual wellness visit, screenings, vaccines), lab work, mental health services, and durable medical equipment like walkers and CPAP machines. It has a standard monthly premium set by CMS each year, a small annual deductible, and then generally pays 80% of the Medicare-approved amount — leaving you responsible for the remaining 20% with no cap unless you add Medigap or an Advantage plan.
Part C — Medicare Advantage
Part C, called Medicare Advantage, is an all-in-one alternative to Original Medicare offered by private insurers approved by CMS. Advantage plans must cover everything Parts A and B cover, and most also include Part D drug coverage plus extras like dental, vision, hearing, and fitness benefits. In exchange, they use provider networks (HMO or PPO), often require referrals or prior authorization, and set their own copays and yearly out-of-pocket maximum.
Part D — Prescription Drug Coverage
Part D helps pay for prescription drugs. You get it either as a stand-alone plan added to Original Medicare or bundled into a Medicare Advantage plan. Each plan publishes its own formulary (list of covered drugs) organized into tiers that determine cost. Enrolling on time matters: going without creditable drug coverage triggers a lifetime late-enrollment penalty added to your premium.
Original Medicare vs. Medicare Advantage
The biggest decision most people make is Original Medicare (Parts A + B, usually plus Medigap and a Part D plan) versus Medicare Advantage (Part C). Original Medicare lets you see any doctor nationwide that accepts Medicare and has no networks; Advantage plans typically cost less up front and bundle extras but restrict you to a network and geographic service area.
What Medicare doesn't cover
Original Medicare generally does not cover routine dental, vision, or hearing care; long-term custodial care in a nursing home; most care received outside the United States; or cosmetic procedures. Many of these gaps can be filled by Medicare Advantage, standalone dental/vision policies, long-term care insurance, or a Medigap plan with foreign travel emergency coverage.
How you pay for Medicare
Part A is premium-free for most people. Part B has a standard premium — higher earners pay more through the IRMAA surcharge. If you take Social Security, both are usually deducted from your monthly benefit. Advantage and Part D plans have their own premiums (which may be $0), plus copays, deductibles, and coinsurance depending on the plan.