Key Takeaways

• Medicare offers four parts—A, B, C, and D—but not every combination works for every person. Your ideal setup depends on your healthcare needs, lifestyle, and budget.

• Choosing the right combination means understanding what each part offers and what gaps may remain if you skip or delay enrollment.

Understanding the Core Structure of Medicare

Medicare, the federal health insurance program primarily for people aged 65 and older, is divided into four parts. While this structure might seem straightforward, each part serves a distinct role—and only certain combinations make sense for real-life coverage needs.

Part A: Hospital Insurance

Part A helps pay for:

• Inpatient hospital care

• Skilled nursing facility care (following a hospital stay)

• Hospice care

• Limited home health services

In 2025, most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 40 quarters (10 years). However, there’s a deductible of $1,676 for each benefit period, and coinsurance applies after a certain number of hospital days.

Part B: Medical Insurance

Part B covers:

• Doctor visits

• Outpatient care

• Preventive services

• Durable medical equipment

In 2025, the standard monthly premium for Part B is $185, with an annual deductible of $257. After the deductible, you typically pay 20% of the Medicare-approved amount for services.

Part C: Medicare Advantage

Medicare Advantage plans (Part C) are offered by private insurance companies approved by Medicare. These plans combine Parts A and B and often include Part D (prescription drug coverage). Some offer additional benefits, such as dental or vision care. However, they operate within a network of providers and often have different rules, such as referrals for specialists.

While premiums and cost-sharing vary by plan, in-network rules and annual maximum out-of-pocket limits are important factors to consider.

Part D: Prescription Drug Coverage

Part D helps cover the cost of prescription medications. Plans are offered by private insurers and vary in formulary, pharmacy network, and monthly premium. In 2025, the deductible can be up to $590, and once your out-of-pocket spending hits $2,000, the plan must cover the rest of your drug costs for the year.

The Common Medicare Combinations

There is no one-size-fits-all plan. Here are the most common combinations that people choose:

1. Original Medicare (Part A + Part B) Only

This setup provides hospital and medical coverage but lacks prescription drug coverage and financial protection from high out-of-pocket costs.

Pros:

• Nationwide access to any provider that accepts Medicare

• Simplicity with no networks

Cons:

• No cap on out-of-pocket spending

• No drug coverage (unless Part D is added)

• No coverage for dental, vision, or hearing

2. Original Medicare + Part D

This setup adds prescription drug coverage to your hospital and medical insurance.

Pros:

• Flexibility to choose any provider

• Covers medications

Cons:

• Still no out-of-pocket spending limit

• Additional premiums and deductibles

• May need supplemental insurance to cover costs

3. Original Medicare + Medigap + Part D

Adding a Medigap policy (also called Medicare Supplement Insurance) can help pay for costs like coinsurance, copayments, and deductibles.

Pros:

• Predictable costs

• Nationwide provider access

Cons:

• Higher monthly premiums overall

• Separate policies to manage

• Medigap doesn’t cover prescriptions, so Part D is still needed

4. Medicare Advantage (Part C)

This all-in-one alternative to Original Medicare may include Part D and extra benefits.

Pros:

• Annual out-of-pocket limits

• Often includes drug coverage

• May offer additional benefits

Cons:

• Limited to network providers

• May require referrals

• Coverage and costs vary widely by plan and location

Choosing What Works for You in 2025

To find the right combination, ask yourself:

• Do I want access to any doctor or am I okay with provider networks?

• How often do I visit doctors or need medication?

• Do I travel often or live in multiple states?

• Do I need extra benefits like dental, hearing, or vision?

• Can I afford high monthly premiums for lower out-of-pocket costs—or vice versa?

Each of these questions affects which combination makes sense for your lifestyle.

Enrollment Windows Matter

Timing is everything. Choosing the wrong moment to enroll—or not enrolling at all—can lead to gaps in coverage or financial penalties.

Initial Enrollment Period (IEP)

You have a 7-month window to enroll in Medicare starting three months before the month you turn 65, your birth month, and ending three months after.

General Enrollment Period (GEP)

If you missed IEP and aren’t eligible for a Special Enrollment Period, you can enroll from January 1 to March 31. Coverage begins the following month, and you may face late penalties.

Annual Enrollment Period (AEP)

From October 15 to December 7, you can:

• Switch from Original Medicare to Medicare Advantage (or vice versa)

• Change or add a Part D plan

Medicare Advantage Open Enrollment (MA OEP)

Between January 1 and March 31, those already enrolled in a Medicare Advantage plan can switch to another plan or go back to Original Medicare.

What’s Missing from All Medicare Parts

Even the best combination of Medicare parts doesn’t cover everything. Here’s what you’ll likely pay out of pocket or need separate coverage for:

• Long-term custodial care

• Routine dental, vision, and hearing (unless included in Medicare Advantage)

• Overseas care

• Most cosmetic procedures

Having realistic expectations about what’s not covered helps you plan smarter.

What Happens If You Delay Enrollment?

If you don’t sign up for Part B or Part D during your eligibility period, you might face late penalties:

• Part B penalty: A 10% increase in monthly premiums for every 12-month period you were eligible but not enrolled

• Part D penalty: 1% of the national base premium multiplied by the number of uncovered months

These penalties are typically permanent.

Out-of-Pocket Limits Vary

Original Medicare doesn’t include a maximum limit on what you spend out-of-pocket each year. But Medicare Advantage plans must include a cap. For 2025, the maximum in-network limit is $9,350, with a combined in-network and out-of-network maximum of $14,000.

Choosing the right combination may hinge on how much financial risk you’re willing or able to take.

Re-Evaluating Your Coverage Annually

Your health needs change over time—and so do Medicare plans. Reviewing your coverage each year during the Annual Enrollment Period ensures that your current setup still matches your lifestyle, medical usage, and financial goals.

Things to look at:

• Are your prescriptions still covered?

• Have your plan’s copays or networks changed?

• Are there more cost-effective options available?

Matching Medicare’s Structure to Your Life in 2025

Medicare’s four-part structure may seem complex at first glance, but it’s actually designed to give you flexibility. The key is to choose a combination that fits your personal health profile and financial circumstances. Whether that’s Original Medicare with Part D, a Medigap policy, or a Medicare Advantage plan, what works for someone else may not work for you.

Understanding each part—and how they work together—can help you avoid coverage gaps, reduce unexpected costs, and support your long-term health goals.

For help reviewing your options, consider speaking with a licensed agent listed on this website. Their guidance can help you make confident, informed choices.