Medicare Parts A, B, C, D Explained: What Each One Covers and Costs
I watched my dad stare at his Medicare welcome packet for twenty minutes, then ask me: “Do I need all four of these?” He wasn’t alone. The four-part structure confuses nearly everyone at first, because the parts don’t stack the way you’d expect — Part C isn’t an add-on, it’s a replacement, and Part D slots in differently depending on which other parts you choose.
The short answer
Medicare has four parts. Part A covers hospital stays (usually free). Part B covers doctor visits and outpatient care (standard premium around $175/month in 2024). Part C (Medicare Advantage) is a private plan that replaces A and B and usually includes drug coverage. Part D covers prescriptions if you stick with Original Medicare (A + B). You don’t take all four — you choose either Original Medicare (A + B, plus D for drugs) or Part C (which bundles all three).
How the four parts fit together
Here’s the framework that makes the rest of this make sense:
| Structure | Hospital (A) | Doctor visits (B) | Prescriptions | Run by |
|---|---|---|---|---|
| Original Medicare | Part A | Part B | Part D (separate plan) | Federal government |
| Medicare Advantage | Part C (includes A + B + usually D in one plan) | — | — | Private insurers |
You pick one of these two structures when you turn 65. Most people start with Original Medicare because it’s automatic if you’re already receiving Social Security. Part C is an opt-in choice.
Now let’s walk through each part.
What is Medicare Part A (Hospital Insurance)
Part A covers inpatient hospital care — surgeries, serious illnesses, overnight stays. It also covers up to 100 days in a skilled nursing facility per benefit period (if you need rehab after a hospital stay), hospice care, and some home health visits.
What it costs: If you or your spouse worked and paid Medicare taxes for at least 10 years (40 quarters), Part A is premium-free. The 2024 deductible is $1,632 per benefit period (a benefit period starts when you’re admitted to the hospital and ends 60 days after discharge). If you’re in the hospital beyond 60 days in one benefit period, you pay a daily copay — $408/day for days 61–90, and $816/day for days beyond that if you use your 60 lifetime reserve days.
If you don’t have the 40-quarter work history, you can buy Part A — premiums range from roughly $280 to $505/month in 2024, depending on how many quarters you’ve paid in. Most people qualify for the free version.
What it doesn’t cover: Custodial care (help with bathing, dressing, eating) isn’t covered, even in a nursing facility. Private hospital rooms, unless medically necessary, aren’t covered. Care outside the U.S. is rarely covered (emergencies in bordering Canada or Mexico are exceptions).
Source: CMS 2024 Medicare costs, Medicare.gov hospital coverage
Medicare Part B cost and what it covers
Part B is your outpatient insurance: doctor visits, lab tests, X-rays, preventive screenings (flu shots, mammograms, colonoscopies), physical therapy, mental health care, durable medical equipment (wheelchairs, walkers), and ambulance rides.
What it costs in 2024: The standard monthly premium is $174.70. You also pay a $240 annual deductible, then 20% coinsurance on most services after that (so if a test costs $500, you pay $100 after the deductible). There’s no annual out-of-pocket cap on Part B unless you add a Medigap policy.
Higher earners pay more under the Income-Related Monthly Adjustment Amount (IRMAA). If your Modified Adjusted Gross Income two years ago was over $103,000 (single) or $206,000 (married filing jointly), your premium can rise by 35% to 85% — adding roughly $70 to $560+ per month to the base premium. These thresholds adjust annually.
Late enrollment penalty: If you don’t sign up for Part B when you’re first eligible and you don’t have qualifying employer coverage, you’ll pay a 10% permanent surcharge for every 12-month period you delayed. This penalty sticks to your premium for life.
What it doesn’t cover: Routine dental care, dentures, eye exams for glasses, hearing aids, cosmetic surgery, and most long-term care. Physical and occupational therapy have usage limits unless your doctor documents medical necessity for an exception.
Source: CMS 2024 Part B premiums, Medicare.gov Part B coverage
What is Medicare Part C (Medicare Advantage)
Part C — also called Medicare Advantage — is a private insurance plan sold by companies like UnitedHealthcare, Humana, and Anthem. It replaces Original Medicare (Parts A and B), not adds to it. When you join a Part C plan, you remain in Medicare, but a private company administers your benefits instead of the federal government.
Most Part C plans include prescription drug coverage (Part D) in the same package, plus extras Original Medicare doesn’t cover: routine dental cleanings, vision exams, hearing aids, fitness programs. Premiums vary by location and plan — some charge $0/month beyond the Part B premium you still owe Medicare, others charge $50–$100+/month.
The trade-offs: Part C plans use provider networks. You’ll pay much more (or get no coverage) if you see a doctor outside the plan’s network, except in emergencies. Many plans require prior authorization for surgeries, imaging, or specialist visits — your doctor has to get the plan’s approval first. Drug formularies (the list of covered medications) are narrower than standalone Part D plans and change every year.
You cannot use a Medigap supplement policy if you’re in Part C — the plan’s copays and deductibles are what you’re stuck with. If you travel often or spend winters out of state, check whether your Part C plan covers care outside your home area. Many don’t, or charge higher rates for out-of-network care.
Switching: You can move between Part C and Original Medicare during the Annual Enrollment Period (October 15 – December 7 each year), or during Special Enrollment Periods if you move or lose other coverage. If you switch back to Original Medicare after being in Part C for more than 12 months, you may not be able to buy Medigap without medical underwriting in most states — meaning insurers can deny you or charge more based on health conditions.
Source: Medicare.gov Medicare Advantage overview, CMS Medicare Advantage fact sheets
Medicare Part D drug coverage: how it works and what it costs
Part D covers outpatient prescription drugs — the medications you pick up at the pharmacy or get by mail order. If you choose Original Medicare (A + B), you need to add a standalone Part D plan. If you choose Part C, drug coverage is usually included.
What it costs in 2024: Premiums for standalone Part D plans range from about $7 to $50+/month depending on the plan and location. Plans have formularies — lists of covered drugs organized into tiers. Tier 1 drugs (usually generics) have the lowest copays, often $0–$10. Tier 5 drugs (specialty medications) can cost hundreds of dollars per fill.
Part D has four cost phases each year:
- Deductible phase: You pay full price for drugs until you hit the plan’s deductible (anywhere from $0 to $545 in 2024, depending on the plan).
- Initial coverage phase: You pay copays or coinsurance (10%–50% depending on the drug tier) until you and your plan together spend around $5,030.
- Coverage gap (“donut hole”): Once you hit that $5,030 in combined spending, you enter the gap. In 2024, you pay 25% of the cost for brand-name and generic drugs until your out-of-pocket spending reaches about $8,000.
- Catastrophic coverage: After $8,000 out-of-pocket, you pay a small copay ($4.15 for generics, $10.35 for brand-name drugs, or 5% of the cost — whichever is greater) for the rest of the year.
These thresholds adjust every year and are tied to your total drug spending, not just what you paid. If your plan covers part of a $1,000 medication and you pay $250, the full $1,000 counts toward moving you through the phases.
Late enrollment penalty: If you go 63 days or more without Part D or other creditable drug coverage after you’re first eligible, Medicare adds a 1% penalty per month to your premium for as long as you have Part D. Delay two years and you’ll pay a 24% permanent surcharge.
What it doesn’t cover: Over-the-counter drugs, vitamins, drugs for cosmetic use, and some classes of drugs like benzodiazepines are excluded or have restrictions. Not every drug in a category is covered by every plan — check your plan’s formulary before enrolling to make sure your medications are included and what tier they’re on.
Source: Medicare.gov Part D coverage, CMS 2024 Part D fact sheet
The wrinkle: IRMAA hits Parts B, C, and D
If you’re a higher earner, the Income-Related Monthly Adjustment Amount (IRMAA) adds surcharges to your Part B premium, your Part D premium, and sometimes your Part C premium. IRMAA is based on your Modified Adjusted Gross Income (MAGI) from two years ago — so your 2024 premiums are based on your 2022 tax return.
In 2024, IRMAA kicks in at $103,000 MAGI for single filers and $206,000 for married filing jointly. The surcharges scale up in brackets — at the top bracket ($500,000+ single, $750,000+ joint), you’ll pay an extra $419.30/month for Part B and around $81/month for Part D, on top of standard premiums.
Why it matters: If you had a high-income year two years ago but your income dropped (retirement, job loss, divorce), you can file Form SSA-44 to request a reduction. Otherwise, the surcharge applies. Many retirees don’t realize IRMAA is coming until the Social Security Administration sends the bill.
Source: CMS IRMAA fact sheet, IRS Publication 915 (Medicare premiums)
What this means for you
Here’s the decision map:
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If you want flexibility to see any doctor nationwide and don’t mind paying 20% coinsurance with no annual cap, choose Original Medicare (A + B) and add a Part D plan. You can pair it with a Medigap policy to cover copays and deductibles.
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If you prefer lower copays, extras like dental and vision, and a single plan with a monthly out-of-pocket cap, Part C might work better — as long as you’re okay with network restrictions and prior authorization.
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If you take expensive medications, check Part D formularies carefully before choosing a plan. The cheapest premium doesn’t mean the lowest total cost if your drugs are on high tiers.
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If you’re still working at 65 and have employer coverage, you may be able to delay Part B and Part D without penalties — but confirm your employer plan is “creditable” (as good as Medicare). Get that in writing.
The choices aren’t permanent. You can change Part D plans every year during the Annual Enrollment Period, and you can switch between Part C and Original Medicare during that window too (October 15 – December 7). If you’re overwhelmed, your state’s SHIP (State Health Insurance Assistance Program) offers free one-on-one help. Find yours at shiphelp.org.
FAQ
Do I need all four parts of Medicare?
No. Part A (hospital) is usually automatic and free at 65 if you’ve worked 10+ years. Part B (doctor visits) is optional but has a late-enrollment penalty if you skip it without qualifying coverage. Part C replaces A and B with a private plan — you don’t take all three. Part D is separate drug coverage you add to Original Medicare, or it’s bundled into Part C.
What’s the difference between Medicare Part C and Part D?
Part C is a Medicare Advantage plan that replaces Original Medicare (Parts A and B) and usually includes drug coverage. Part D is a standalone prescription drug plan you add to Original Medicare if you don’t choose Part C. Part C bundles everything; Part D covers only drugs.
How much does Medicare Part B cost in 2024?
The standard premium is $174.70/month for most people. Higher earners pay 35–85% more under IRMAA if your income two years ago exceeded $103,000 (single) or $206,000 (married filing jointly). You also pay a $240 annual deductible and 20% coinsurance on most services after that.
Can I switch between Part C and Original Medicare?
Yes, during the Annual Enrollment Period (October 15 – December 7) or if you qualify for a Special Enrollment Period (like moving out of your plan’s service area). Timing matters — if you’ve been in Part C for over 12 months, you may not be able to buy Medigap without medical underwriting when you switch back to Original Medicare.
What drugs are covered by Part D?
Plans must cover most drugs in six protected categories (cancer, psychiatric, anticonvulsant, immunosuppressant, antiviral, antifungal), but specific drugs and tiers vary by plan. Not all drugs in a category are covered the same way — some are Tier 1 with low copays, others are Tier 4 or 5 with high out-of-pocket costs. Check your plan’s formulary before enrolling.
Need to check a specific drug’s coverage? Use the Medicare plan finder to compare Part D formularies in your area.
Not insurance or financial advice. This article explains how Medicare works. For help with your specific situation, visit Medicare.gov, call 1-800-MEDICARE, or contact your State Health Insurance Assistance Program (SHIP) at shiphelp.org.