Parts of Medicare

What are the Parts of Medicare?

Medicare has four different parts that provide coverage for specific services. Learning what each part covers can help you better understand your options and feel more confident about your decisions.

Medicare Part A (Hospital Coverage)

Together, Medicare Part A and Medicare Part B are known as Original Medicare. Medicare Part A is hospital insurance that provides coverage for:

Most people don’t pay a monthly premium for Medicare Part A. It’s coverage that’s earned from Medicare taxes that you or a spouse have paid while working. If you don’t qualify for premium-free Part A, you can also buy Part A coverage. Our licensed insurance agents can help guide you through that process.

Medicare Part B (Medical Coverage)

Most people will pay a monthly premium for Medicare Part B. The standard amount is set each year and may increase based on your gross income as reported to the IRS.

If you receive benefits from Social Security, the Railroad Retirement Board or the Office of Personnel Management, your Part B premium is automatically deducted from Security benefit payment. Otherwise, you will receive a bill.

You’re not required to enroll in Medicare Part B during your Initial Enrollment Period. However, in many cases delaying enrollment means you’ll have to pay a late enrollment penalty for as long as you have Part B coverage. We can help you decide if enrolling in Part B is right for you.

Medicare Part C (Medicare Advantage)

Medicare Part C, commonly known as Medicare Advantage, is coverage offered by private insurance companies that have a contract with the federal government. Medicare Advantage combines your Part A hospital, Part B medical and often Part D prescription drug coverage into one plan.

Provide all the benefits of Original Medicare (Parts A and B).
Often include extra benefits — like vision, hearing, dental and wellness — that Original Medicare doesn’t cover.
Limit the amount of money you pay out-of-pocket for medical expenses each year.
May require you to use providers within the plan’s network and charge you more when you use out-of-network providers.
Must notify you of any changes to the plan before the next enrollment year.
Are only available to you if you’re enrolled in both Medicare Part A and Medicare Part B.

With Medicare Advantage, you must continue to pay your Medicare Part B premium. You may also have to pay a monthly premium to the insurance company that provides your coverage.

Medicare Part D (Prescription Drugs)

Offered by private insurance companies, Medicare Part D coverage helps you pay for your prescription drugs. There are two basic ways to get Part D prescription drug coverage:

Purchase a standalone Medicare Part D plan. You must have Parts A and/or B (Original Medicare) to join a Part D plan.

You’ll need both Part A and Part B to qualify for the full benefits that cover certain dialysis and kidney transplant services.

Join a Medicare Advantage (Medicare Part C) plan that includes Part D prescription drug coverage.

All Part D plans — including Medicare Advantage plans with Part D benefits — cover a wide range of prescription drugs. However, coverage and cost vary from plan to plan:

Each plan has a formulary — a list of the specific prescription drugs the plan covers.
Many plan formularies also have tiers that place covered prescription drugs into different cost levels.
Prescription drugs in a lower tier will generally cost you less than those in a higher tier.

All Part D plans — including Medicare Advantage plans with Part D benefits — cover a wide range of prescription drugs. However, coverage and cost vary from plan to plan:

Each plan has a formulary — a list of the specific prescription drugs the plan covers.
Many plan formularies also have tiers that place covered prescription drugs into different cost levels.
Prescription drugs in a lower tier will generally cost you less than those in a higher tier.

Medicare Supplement (Medigap)

Original Medicare (Parts A and B) doesn’t cover everything. It only covers a portion of your costs for covered services — and it doesn’t limit what you pay out-of-pocket for health care expenses each year.

To help fill these coverage gaps, many private insurance companies offer Medicare Supplement, or “Medigap”, insurance policies that help pay for your health care costs. When you have a Medigap policy, Medicare continues to pay its share of the approved amount for covered services. Your Medigap policy then pays its share.

Here are some important things to know about Medigap policies:

You must have Original Medicare (Parts A and B) to buy one.
They have a monthly premium that you pay to the insurance company.
You must also continue to pay your Medicare Part B premium.
They don’t include prescription drug coverage — you must purchase a Part D plan separately.
They generally don’t cover things like long-term care, vision, dental, hearing or private-duty nursing.
They only cover one person — if you and your spouse want Medigap coverage, you’ll each need separate policies.