What’s the Difference Between Medicare Parts A, B, C and D?

You’ve likely heard of Medicare Parts A, B, C and D – but what do they mean? Do you need all of the above or just one? What do they cover? When can you qualify?

There are many questions surrounding Medicare – and even though millions of people enroll in the program each year (with north of 65 million as of March 2023), there is still quite a lot of confusion surrounding exactly how Medicare benefits actually work. 

But understanding your Medicare options is crucial to creating a long-term retirement plan. It can help:

• Make sure you have enough coverage for your healthcare needs in retirement
• Choose a plan that’s in your budget
• Make sure you enroll at the right time to avoid penalties

To help demystify this healthcare benefit program, let’s explore the main four parts of Medicare, including how to know if you’re eligible and steps for enrolling. 

What are the Four Parts of Medicare?

Medicare Part A: Hospital Coverage

Medicare Part A covers hospital care, including:

• Inpatient care
• Nursing facility care
• Hospice
• Home health care
• Blood transfusions
• And more

It’s important to understand that Part A doesn’t always cover all costs – things like long-term care, hearing aids and most vision and dental are excluded from coverage. You can find a full list of non-covered items at this link.

The good news is that most people enrolled in Medicare Part A don’t have to pay a premium, although there are deductibles for certain types of care.

Who is eligible?

To qualify for premium-free Medicare Part A, you must:

• “Have at least 40 calendar quarters of work in any job where you paid Social Security taxes in the U.S.
• Are eligible for Railroad Retirement benefits
• Or, have a spouse that qualifies for premium-free Part A”

Some people under 65 with certain disabilities may also qualify, as well as certain local, state and federal employees. 

How do I enroll?

Some individuals are automatically enrolled in Medicare Part A when they turn 65, particularly if they’re already receiving Social Security benefits. Others may need to actively enroll, which you can do through the Medicare website. 

Medicare Part B: Medical Coverage

Medicare Part B is for more general medical coverage, and often covers:

• outpatient care and preventive services like visits to doctors’ offices, specialists and outpatient clinics. 
• certain home healthcare services. 
• blood tests and X-rays, as well as equipment like wheelchairs, walkers, and oxygen equipment 
• mental health services
• ambulances/transportation
• some prescription drugs and injections
• and more

The official Medicare website says “most people enrolled pay the standard Part B monthly premium amount (which is $164.90 in 2023).” However, that can vary depending on your income in previous years. 

Who is eligible?

Most people become eligible for Medicare Part B at the age of 65 (although the enrollment period begins a few months prior). You must enroll through the Medicare website to receive benefits, and in most cases you’ll need to have Medicare Part A in order to sign up for Medicare Part B.

How do I enroll?

You can enroll at the same website as Medicare Part A. Note that if you delay enrollment until after your initial enrollment period (IEP) and don’t have other qualified coverage, you may face a penalty in the form of higher premiums when you do enroll (which lasts the rest of your life!)

Medicare Part C: Advantage

Medicare Part C is also known as Medicare Advantage – and it functions a bit differently than Parts A and B. 

Instead of receiving coverage directly from the government as with A and B, with Part C you get your Medicare benefits from a private insurance company that is approved by Medicare. These companies offer plans that must cover at least the same benefits as A and B. 

A few things to note:

• Advantage plans often include additional benefits such as vision, dental and hearing coverage. Some plans also include prescription drug coverage (Part D).
• You will need to use doctors and hospitals that are in the plan’s network to get the full benefits. 
• There are different types of Advantage plans, each with their own set of rules and benefits.
• These plans have an annual out-of-pocket maximum. Once you reach this limit, the plan covers 100% of your covered services for the rest of the year.

Be aware that in addition to paying your Part B premium (which is usually $164.90), you may also have to pay a premium for your Medicare Advantage plan.

There have been reported issues with Medicare Advantage plans, including that benefits are denied or costs are variable. The requirement to seek care within an approved network of doctors and hospitals may also limit your care options.

Who is eligible?

Although Medicare Part C is a privately-funded “alternative” to Parts A and B, you must be enrolled in both of those plans in order to qualify for Advantage plans. You will also need to verify that you live within your chosen plan’s approved service area. 

How do I enroll?

You can enroll in a Medicare Advantage plan during your Initial Enrollment Period (IEP), Special Enrollment Period, or during the Annual Enrollment Period, which runs from October 15th to December 7th each year. You can also disenroll from a Medicare Advantage plan and return to Original Medicare during specific periods.

Medicare Part D: Prescription Coverage

Part D is a prescription drug coverage program offered by private insurance companies that are approved by Medicare. These plans work alongside Part A and B or an Advantage plan that doesn’t already include prescription drug coverage.

You typically pay a monthly premium, and may have an annual deductible/copays for a Part D plan. The cost of premiums can vary depending on the plan you choose, so it’s important to select a plan that covers the specific medications you need.

Each Part D plan has a list of covered drugs called a “formulary.” The formulary categorizes drugs into different “tiers” with different costs. You can check the formulary of a plan before enrolling to make sure it covers your prescriptions.

Note: limited income individuals may qualify for extra help with Part D costs. 

Who is eligible?

Just as with Parts A, B and C, you can enroll in Part D during your Initial Enrollment Period, Special Enrollment Period or during the Annual Enrollment Period. Be aware that you must already have Part A and B to qualify. 

How do I enroll?

You can search, browse and enroll for a Medicare Part D drug plan through this website, or reach out to Medicare directly at 1-800-MEDICARE (1-800-633-4227) to begin the enrollment process. 

Finding a plan (or combination of plans) that works for you and your family can be confusing – but with the right information and resources, you can successfully choose and enroll in Medicare, giving you peace of mind that your healthcare needs will be covered in retirement. 

Find a Medicare Plan That Fits Your Needs

Our team of financial planning experts here at PrairieView can help you explore all your Medicare options. Click here to connect with a member of our team and get started today.