Medicare is divided into four lettered parts. Two of them come from the federal program directly; two are offered through private companies that Medicare approves. Once you see which is which, most of the paperwork starts to make sense.
Part A: hospital insurance
Part A helps cover inpatient care in a hospital, care in a skilled nursing facility after a qualifying hospital stay, hospice care, and some home health care.
Most people don't pay a monthly premium for Part A, because they or their spouse paid Medicare taxes while working for long enough. You can still have costs when you use it, such as a deductible for a hospital stay.
Part B: medical insurance
Part B helps cover doctor visits, outpatient care, many preventive services, lab tests and medical equipment such as walkers or oxygen. Part B has a monthly premium, and you generally pay a share of the cost of services after a yearly deductible.
Parts A and B together are called Original Medicare. With Original Medicare you can generally see any doctor or hospital in the country that accepts Medicare.
Part C: Medicare Advantage
Medicare Advantage is a different way to get your Part A and Part B coverage: through a private plan approved by Medicare, instead of directly from Original Medicare. These plans must cover everything Original Medicare covers, and most also include Part D drug coverage. Many add extra benefits that Original Medicare doesn't cover.
Medicare Advantage plans usually have a network of doctors and hospitals, and the rules for using care outside it depend on the plan type. They also have a yearly limit on what you pay out of pocket for covered Part A and Part B services — a protection Original Medicare doesn't have on its own.
Part D: prescription drug coverage
Part D covers prescription drugs. It's offered by private plans approved by Medicare, either as a stand-alone drug plan alongside Original Medicare, or built into a Medicare Advantage plan.
Every Part D plan has its own drug list, called a formulary, that sorts covered drugs into tiers. The tier decides what you pay. Drug lists can change from year to year, which is why the drug section of your Annual Notice of Change matters so much.
The two names people mix up
| Medicare Advantage | Medicare Supplement (Medigap) | |
|---|---|---|
| What it is | A replacement way to get Parts A and B, through a private plan | A separate policy that helps pay costs Original Medicare leaves to you |
| Works with | Replaces Original Medicare as how you're covered | Only Original Medicare |
| Drug coverage | Usually included | Not included; you'd add a Part D plan |
| Fall Open Enrollment | Yes, you can change plans Oct 15 – Dec 7 | Has its own rules and timing |
You can't use a Medigap policy together with a Medicare Advantage plan. They're two different routes, not two layers.
And one more pair that sounds alike: Medicare is the federal health program for people 65 and older and some younger people with disabilities. Medicaid is a joint federal and state program based on income and resources. Some people qualify for both.
Free printable
The annual review checklist
Seven things to check before December 7, in the order they appear in your plan's letter. The email version is coming soon.