Medicare Explained: What Parts A, B, C, and D Cover

Understanding the Medicare System in the United States

The Medicare system plays a critical role in providing healthcare coverage for millions of Americans, especially older adults and individuals with certain disabilities. With the rising cost of healthcare, it's increasingly important for beneficiaries to understand how each part of Medicare works to make informed decisions about their health and financial planning.

Medicare Part A: Hospital Insurance

Medicare Part A is often referred to as hospital insurance. It covers essential costs related to hospital stays due to illness or surgery. This includes care in skilled nursing facilities, hospice care, and some home health services. Most people do not pay a monthly premium for Part A because it is typically funded through Medicare taxes that are withheld from their wages over the years. However, there are out-of-pocket expenses, such as a $1,676 deductible per benefit period in 2025 for hospitalizations, and daily coinsurance if the stay exceeds 60 days.

Medicare Part B: Medical Insurance

Medicare Part B functions as medical insurance and covers a wide range of services from doctors and other healthcare providers. This includes physical therapy, outpatient care, durable medical equipment like wheelchairs and hospital beds, and preventive services such as screenings, vaccines, and annual wellness visits. Unlike Part A, Part B requires a monthly premium, which was $185 for 2025 and is expected to increase to $206.50 in 2026. Beneficiaries also face an annual deductible—$240 in 2025 and projected to be $288 in 2026—and usually a 20% coinsurance of Medicare-approved costs for most Part B services after the deductible is met. Higher-income individuals may also pay an additional amount called IRMAA (Income-Related Monthly Adjustment Amount).

Medicare Part C: Medicare Advantage

Medicare Part C, known as Medicare Advantage, offers an alternative way to receive Medicare benefits. Instead of using Original Medicare (Parts A and B), these plans are provided by private insurance companies. Medicare Advantage plans include the benefits of Parts A, B, and usually Part D (prescription drug coverage). In addition to covering what Parts A and B offer, many plans provide extra benefits such as vision and dental services. While some plans have low or even $0 premiums, it's important to consider potential network limitations and prior authorization rules, which may require using specific doctors and hospitals within the plan’s network.

Medicare Part D: Prescription Drug Coverage

Medicare Part D focuses on prescription drug coverage. These plans are offered by private insurers and are available to those enrolled in Original Medicare or included in most Medicare Advantage plans. Part D helps cover a significant portion of medication costs and many recommended vaccines. The costs associated with Part D can vary, including monthly premiums (estimated at $38.99 for 2026), deductibles (maximum of $615 for 2026), and a 25% coinsurance for generic and brand-name drugs after the deductible is met. A key benefit is that insulin costs are capped at $35 or less per month since 2023, with this cap applying annually starting in 2026, and no deductible for insulin. Additionally, recommended adult vaccines are covered at $0 under Part D plans. To assist with costs, there is a Medicare Prescription Payment Plan (MPPP) that allows beneficiaries to spread their payments throughout the year.