Medicare, the federal health insurance program that covers most people who are 65 and older, is made up of different parts that help cover specific services. Original Medicare is divided into hospital insurance (Part A) and medical insurance (Part B), which are run by the federal government. Medicare Part C (Medicare Advantage) and Part D (prescription drug coverage) are provided by private insurance companies approved by Medicare.
Medicare Part A (hospital insurance)
Part A covers services associated with inpatient care in a hospital, skilled nursing facility, or psychiatric hospital. It covers charges for the room, meals, and nursing services. Part A also covers hospice care and home health care, but not long-term care. Part A is premium-free for most people, but deductibles and coinsurance costs apply to some services.
Medicare Part B (medical insurance)
Part B covers other medical care, including inpatient or outpatient physician care, lab tests, physical therapy, and ambulance services. Medicare Part B also covers 100% of the cost of many preventive services. Everyone pays a monthly premium for Part B. Most people pay the standard monthly premium, which is $170.10 in 2022. People with higher incomes may pay more than this amount, while some people will pay less. Beneficiaries will need to meet an annual deductible and after that pay 20% of the Medicare-approved amount for most services.
Medicare Part C (Medicare Advantage)
A Medicare Advantage plan is a private, all-in-one health-care plan that contracts with Medicare to provide Part A and Part B benefits. A Medicare Advantage plan covers all of the services that Original Medicare covers. Some plans offer extra coverage for expenses not covered by Original Medicare such as vision, hearing, and dental costs. Most also offer prescription drug (Part D) coverage. Several types of Medicare Advantage plans may be available, including HMOs and PPOs. There is a separate monthly premium for the Medicare Advantage plan in addition to the monthly Part B premium.
Medicare Part D (prescription drug coverage)
All Medicare beneficiaries are eligible to join a Medicare prescription drug plan offered by private companies or insurers that have been approved by Medicare. Premiums, copayments, and coinsurance costs vary by plan, but all cover a broad number of brand-name and generic drugs.
When it's time to enroll in Medicare, you can choose how you want to get your coverage. There are two main ways, as shown in the chart below.