Key Takeaways

• Medicare is divided into four parts: A, B, C, and D. Each part plays a specific role in your healthcare coverage, and understanding how they work together affects what you actually pay.

• Failing to enroll in the right part at the right time can trigger late enrollment penalties, gaps in coverage, or higher long-term costs.

Medicare Part A: Hospital Coverage, But Not Entirely Free

Medicare Part A covers inpatient care. That means care you receive when admitted to a hospital, skilled nursing facility, or hospice. It also includes limited home health services under specific conditions.

You typically don’t pay a premium for Part A if you or your spouse worked and paid Medicare taxes for at least 10 years. This is often referred to as “premium-free Part A.” However, premium-free doesn’t mean cost-free.

Here are the standard 2025 Part A costs:

• Inpatient hospital deductible: $1,676 per benefit period

• Coinsurance: $0 for days 1–60; $419 per day for days 61–90; $838 per day beyond 90 (using lifetime reserve days)

• Skilled nursing facility coinsurance: $0 for the first 20 days; $209.50 per day for days 21–100

A benefit period begins the day you’re admitted and ends after 60 days without inpatient care. You can have multiple benefit periods in a year.

Medicare Part B: Your Outpatient Safety Net

Part B covers doctor visits, outpatient procedures, diagnostic tests, durable medical equipment, and preventive services like flu shots and cancer screenings.

In 2025, the standard monthly premium for Part B is $185. Higher-income individuals pay more under the Income-Related Monthly Adjustment Amount (IRMAA). There’s also a $257 annual deductible.

After meeting the deductible, you typically pay 20% of the Medicare-approved amount for most services. Importantly, there’s no out-of-pocket maximum, so your costs can add up quickly without supplemental coverage.

Delaying enrollment in Part B without having other creditable coverage can result in a permanent late enrollment penalty: an extra 10% of the premium for every 12-month period you delayed.

Medicare Part C: Also Known as Medicare Advantage

Part C is an alternative way to receive your Medicare benefits. These plans are offered by private companies that are approved by Medicare. They bundle Part A and Part B and often include Part D.

Here’s what you should know:

• You still pay your Part B premium, plus any additional amount the plan charges.

• Most plans include extra benefits like dental, vision, and hearing, but these vary by plan.

• Costs and provider networks differ significantly. Some plans may require referrals or limit your access to out-of-network care.

• Many plans offer annual out-of-pocket limits for Part A and B services, which Original Medicare doesn’t have.

Even though Medicare Advantage plans are popular for their convenience, they come with trade-offs in flexibility and provider access.

Medicare Part D: Prescription Drug Coverage

Part D covers your prescription medications. Plans are offered by private companies and vary widely in formulary (covered drugs), pharmacy network, and cost-sharing.

In 2025, the major change is the $2,000 annual out-of-pocket cap for covered drugs. This cap replaces the old coverage gap (donut hole), providing more protection for those with high drug costs.

Part D plans may charge:

• A monthly premium (varies by plan)

• An annual deductible (up to $590 in 2025)

• Copayments or coinsurance for each medication, based on tiers

Just like Part B, enrolling late in Part D without other creditable drug coverage will result in a late enrollment penalty. It’s calculated as 1% of the national base beneficiary premium for each full month you were uncovered.

How the Parts Work Together

If you enroll in Original Medicare (Parts A and B), you can add:

• Part D for drug coverage

• Medigap for help with out-of-pocket costs

If you choose a Medicare Advantage (Part C) plan, it typically includes Part A, Part B, and often Part D in one package. You cannot have both a Medicare Advantage plan and a Medigap policy.

Your costs and coverage will depend on which path you choose.

What’s Not Covered by Any Part

Even with all four parts, there are still services Medicare doesn’t cover:

• Long-term custodial care (e.g., assisted living or nursing home care without a skilled need)

• Most dental care, hearing aids, and routine vision exams (unless added by a Part C plan)

• Overseas medical care, unless in limited circumstances

• Cosmetic surgery and elective procedures

You’ll need to pay out-of-pocket or look for supplemental coverage for these gaps.

When to Enroll to Avoid Penalties

Understanding enrollment timelines is critical. Here are the major windows:

• Initial Enrollment Period (IEP): Starts 3 months before you turn 65, includes your birth month, and ends 3 months after

• General Enrollment Period (GEP): January 1 to March 31 annually if you missed your IEP; coverage starts July 1

• Special Enrollment Periods (SEPs): Triggered by qualifying events like losing employer coverage or moving

• Annual Enrollment Period (AEP): October 15 to December 7; allows changes to your Part C or Part D plan

Failing to enroll during your IEP and not qualifying for an SEP often results in permanent late enrollment penalties.

The Role of Income in What You’ll Pay

In 2025, your income directly impacts your Medicare costs. If your modified adjusted gross income (MAGI) from 2023 exceeds $106,000 (individual) or $212,000 (joint), you’ll pay more for Part B and Part D due to IRMAA.

The higher your income, the higher your premiums. These surcharges are reassessed annually and can change based on your most recent tax return.

Supplementing Medicare: What Are Your Options?

You have two general strategies for filling Medicare’s gaps:

1. Original Medicare + Medigap + Part D

• Offers flexibility in choosing providers nationwide

• Medigap helps pay Part A and B costs (deductibles, coinsurance, copays)

• Requires separate Part D plan for prescription drugs

• Higher monthly costs, but predictable and broad access

2. Medicare Advantage (Part C)

• Combines A, B, and often D

• May include extras like dental or vision

• Lower premiums, but higher out-of-pocket risk

• Local network restrictions and possibly prior authorization requirements

Each strategy has trade-offs, and the right one for you depends on your health needs, lifestyle, and budget.

Why You Can’t Afford to Ignore the Details

Even small misunderstandings about Medicare’s parts can lead to major expenses. For example:

• Delaying Part B can create permanent penalties

• Skipping Part D when first eligible can cost you for years

• Choosing a Part C plan without understanding the network may limit your doctors or hospitals

The decisions you make now shape what you’ll pay later. That’s why you should evaluate your options annually during the Open Enrollment period.

Making Medicare Work for You

Understanding how the parts of Medicare fit together isn’t just academic. It determines how much you pay for care, whether your prescriptions are covered, and if you’ll face surprise bills after a hospital stay.

If you’re unsure which path makes the most sense for your needs, speak with a licensed agent listed on this website. They can walk you through your coverage options, estimate your costs, and help you choose confidently before any deadlines pass.