The four parts at a glance
Medicare is built from four parts. Two of them (A & B) come directly from the federal government & are called Original Medicare. The other two (C & D) are sold by private insurance companies that Medicare approves & regulates.
- Part A — hospital insurance: inpatient stays, skilled nursing facility care, hospice & some home health care.
- Part B — medical insurance: doctor visits, outpatient care, preventive screenings, lab work, imaging & durable medical equipment.
- Part C — Medicare Advantage: a private plan that bundles Part A & Part B, usually with Part D & extras like dental, vision & hearing.
- Part D — prescription drug coverage: standalone drug plans, or drug coverage built into most Medicare Advantage plans.
Part A: hospital insurance
Most people pay no monthly premium for Part A because they or a spouse paid Medicare taxes for at least 40 quarters (about 10 years) of work. Part A costs are charged per benefit period rather than per calendar year, which surprises a lot of new enrollees — a second hospitalization later in the year can trigger a second deductible.
Part B: medical insurance
Part B carries a standard monthly premium that is usually deducted from your Social Security check. Higher-income households pay an income-related adjustment (IRMAA) on top of the standard amount. After you meet the annual Part B deductible, Original Medicare generally pays 80% of the approved amount & you pay the remaining 20% — with no annual out-of-pocket maximum. That missing cap is the main reason people add either a Medicare Supplement or a Medicare Advantage plan.
Part C: Medicare Advantage
A Medicare Advantage plan replaces the way you receive your Part A & Part B benefits. You still pay your Part B premium, but the plan takes over administration, sets its own copays & network, & adds an annual out-of-pocket maximum. Many plans include prescriptions plus benefits Original Medicare never covers.
- HMO plans use a defined network & often require referrals; premiums are frequently $0.
- PPO plans allow out-of-network care at a higher cost & usually skip referral requirements.
- Extras vary widely by county: dental, vision, hearing, transportation, over-the-counter cards & fitness memberships.
- You cannot use a Medicare Supplement policy while enrolled in a Medicare Advantage plan.
Part D: prescription drug coverage
Part D plans use a formulary — a tiered list of covered drugs. Two plans with the same premium can differ by thousands of dollars a year depending on how they tier your specific medications, so the right way to shop is by drug list, not by premium. Since 2025 there is a hard annual cap on what you pay out of pocket for covered Part D drugs, & the old coverage gap ('donut hole') stage no longer applies.
How people usually combine the parts
- Original Medicare (A & B) + a Medicare Supplement + a standalone Part D plan — predictable costs, any provider that accepts Medicare, higher monthly premium.
- Medicare Advantage (Part C) with drug coverage built in — lower or $0 premium, network rules, copays as you use care, extra benefits.
- Original Medicare alone — rarely a good idea because of the unlimited 20% exposure.
Frequently asked questions
Do I need Part B if I'm still working?+
If you have credible employer coverage through active employment at a company with 20 or more employees, you may be able to delay Part B without penalty. Confirm with your benefits administrator before declining it, because getting it wrong creates a lifetime late-enrollment penalty.
Can I have both a Medicare Advantage plan & a Medicare Supplement?+
No. Medicare rules prohibit using a Medigap policy to pay costs under a Medicare Advantage plan, & it is illegal for an agent to sell you one while you are enrolled in the other.
For educational purposes only. Alliance Global Insurance Group is not affiliated with or endorsed by Medicare.gov or the U.S. government. Plan availability, costs & rules vary by county & change annually — confirm details with a licensed advisor or at Medicare.gov.