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What Are the Parts of Medicare? Part A, B, C, D Explained

Published January 25, 2022

Overview

There are four parts to Medicare, which are simply labeled A, B, C, and D. Parts A and B are often referred to as Original Medicare. Part C is often called Medicare Advantage, and it is a managed care plan that wraps Parts A, B, and typically D together in one package. Part D is the standalone Medicare prescription drug plan.

Medicare Part A

Part A: To begin, let’s talk about Medicare Part A, which is the coverage for your hospital care, along with limited services in a nursing home (Skilled Nursing Facility or SNF), some home health services, and Hospice (end-of-life) services. If you are going to turn 65, are a U.S. citizen (or have been a legal resident for at least 5 years), and have Social Security or Railroad Retirement Board benefits, you will automatically be enrolled in the hospital coverage part of Medicare (Part A). If you are not receiving Social Security yet, you will need to fill out an application to enroll in Medicare. The key to receiving premium-free Part A benefits is for you or your spouse to have worked an paid Medicare taxes for at least ten years.

If you are admitted to a hospital, Original Medicare requires a deductible and coinsurance. However, if you have a Medicare Supplement Insurance or (Medigap) plan, it can help pay some of the remaining health care costs, like copayments, coinsurance and deductiblesthose costs are covered for an entire year after your Original Medicare coverage has been used up.

Medicare Part A is known for covering inpatient hospital costs, but it also covers other services like semi-private rooms, meals, general nursing, inpatient drugs, and other hospital services and supplies while you are in the hospital.

Medicare Part B

Part B: Medicare Part B covers physician services, outpatient services, ambulance services, equipment like wheelchairs, mental health services, and some types of prescription drugs, such as injectable drugs you might get in a doctor’s office or outpatient clinic. Part B is not required or automatically provided to you. It is voluntary, and you can turn it down. However, if you turn it down, there is a monthly late enrollment penalty if you decide later on that you want it after all.

There is a monthly premium for Part B which is based on your income, and starts at $164.90 a month in 2023 and may be as high as $560.50 in 2023 if you make more than $500,000 a year.

Medicare Part C

Part C: This part of Medicare is what people commonly call Medicare Advantage. Medicare Advantage plans are offered by Medicare-approved contracts with private insurance companies' plans like HMOs (and PPOs) to provide Part A and B services (and usually prescription drug coverage too) to Medicare beneficiaries.

You can read more about Medicare Advantage, and its pros and cons here, but basically these plans bundle the benefits of Medicare Part A, B and usually D into one package. These plans restrict your use of providers to a network they develop, but in return, you may get extra benefits like vision, dental, and even hearing aids at a low or zero monthly premium. Medicare pays these plans a fixed amount per month to take care of you. If they spend less, they get to keep the change, which they may return to you in more benefits.

Medicare Part D

Part D: You may be taking very few prescription drugs now and think you don’t need Part D. But like Medicare Part B, however, there is a late-enrollment penalty for waiting to get Part D until after you enroll in Medicare. For every month that you do NOT obtain Part D coverage, you will face a late enrollment penalty of 1% for every month of what is called the “national base beneficiary premium”, or $32.74 in 2023. If you have what is called ""creditable"" prescription drug coverage through a current or former employer or the Veterans Affairs (VA) or other individual insurance plans, those plans must tell you the rules for avoiding late Part D penalties. Check with those plans before you turn down Part D prescription drug coverage.



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