Learn the A, B, C, and Ds of Medicare: What Parts Do You Really Need?

Medicare comes in four parts. Parts A, B, C, and D are designed to cover different services. Whether you're close to 65 or you want to help a family member or friend sign up for Medicare, knowing how each part differs can help you choose the right coverage.

If you already receive Social Security, you're automatically enrolled in Medicare the month you turn 65, and your card arrives in the mail. You're also automatically enrolled in Medicare Parts A and B if you are disabled and received disability payments from Social Security for 24 months.

Medicare Part A: Hospital Insurance

Medicare Part A covers hospital costs. This includes inpatient care at a hospital, skilled nursing facilities, hospice care, and home health care. For most people, there is no monthly cost for Part A if you or your spouse paid Medicare taxes for at least 10 years. If you didn’t pay enough into Medicare, the Part A premium is either $311 or $565 per month in 2026, up from $285 or $518 in 2025.

In 2026, a $1,736 deductible (up from $1,676 in 2025) applies before Part A begins to cover hospitalization costs. At that point, you pay $0 for the first 60 days of coverage. Co-payments apply for stays beyond 60 days, and you pay for the entirety of your hospital stay after 150 days.

Although Medicare Part A covers hospice care at an inpatient facility, it must be arranged through a Medicare-approved hospice provider.

Medicare Part B: Doctors and Tests

Medicare Part B covers doctor visits. This includes lab tests, home health care services, medical equipment, services a doctor provides while you’re a hospital inpatient, outpatient mental health care, and other outpatient services. Part B also covers cardiac rehabilitation, mammograms, cardiovascular screenings, diabetes screenings, flu shots, and other preventive services.

You pay a monthly premium for Medicare Part B based on your annual income. In 2026, a single person who earned $109,000 or less (or a married couple earning $218,000 or less) would pay $202.90 per month, up from $185 per month in 2025. This amount is deducted from your Social Security benefit.

You're not required to enroll in Part B if you have creditable coverage from another source, such as an employer or your spouse's employer. If you don't enroll and don't have creditable coverage from another source, you may have to pay a penalty if you enroll later.

Medicare Part B begins to pay after an annual deductible of $283, up from $257 in 2025. Once you meet the deductible, you pay 20% for services, provided your doctor accepts the Medicare-approved amount as full payment.

Kathryn B. Hauer, a financial advisor at Wilson David Investment Advisors and the author of "Financial Advice for Blue Collar America," warns that devastating illnesses such as cancer can wreck your finances in retirement and urges Medicare recipients to consider supplementary coverage. She notes that Medicare users without Medigap coverage spend 25% to 64% of their income on medical expenses.

What Parts A and B Don't Cover

Medicare Parts A and B don't cover services like dental care, eye exams, and hearing aids. Traditional Medicare doesn't cover long-term care for those who live in an assisted-living facility, nursing home, or require assisted living at their home.

However, Medicare will cover acute-care hospital services for patients who are transferred from an intensive or critical care unit. Services covered could include head trauma treatment or respiratory therapy. As mentioned earlier, a deductible applies, and benefits taper out after 60 days.

Carlos Dias Jr., founder and managing partner of Dias Wealth, notes that Medicare was never intended to provide long-term care. “To take care of these expenses, look into long-term care insurance,” Dias says.

He advises retirees to look for a life insurance policy with a long-term care rider, a specifically designed long-term care annuity (versus an annuity with a chronic care rider), or even a life settlement, which will convert an old life insurance policy into funds that can be used for long-term care.

Medicare Part C: Medicare Advantage

Medicare Part C, also known as Medicare Advantage, is offered by private insurers under contract with the federal government and typically provides a bundle of Medicare Part A, Part B, and Part D, the prescription drug benefit.

If you sign up for a Medicare Advantage plan, you continue paying your Part B premium. Whether you need to pay an additional premium depends on your provider.

The key benefits of Medicare Advantage versus original Medicare include additional services, such as dental and vision care. Some plans don't offer Part D coverage, and there are other pitfalls to Medicare Advantage plans, such as a limited network of doctors.

If you sign up for Medicare Part C, you can elect to have payments deducted from your Social Security benefit, along with fees associated with the Part D benefit. If your Medicare Part C premium is lower than what you would pay under Part B, the Social Security Administration takes the difference into account.

Medicare Part D: Prescription Drugs

Medicare Part D is an optional prescription drug benefit administered by private insurance companies and is usually included in Medicare Advantage plans. Depending on your plan, you may need to pay a yearly deductible before eligible drug costs are covered, and some Part D plans have a co-pay.

This part had a coverage gap, often called the Medicare donut hole. Until Dec. 31, 2024, Medicare Part D had a temporary limit on what was covered for prescriptions. The gap went into effect after you and your plan spent a certain amount for covered drugs. The Inflation Reduction Act of 2022 changed that, setting an out-of-pocket maximum of $2,000 as of Jan. 1, 2025. That limit increased to $2,100 for 2026. Here's how it works:

• You pay 100% of the costs until you reach a $615 deductible.
• You pay a 25% coinsurance until you reach the out-of-pocket maximum.
• You pay nothing for covered drugs after you reach the maximum, which is called the catastrophic period.

Although your drug costs may be covered after reaching the max, you're still responsible for paying your premiums.

Medicare Advantage vs. Medigap

If you only have Medicare Parts A and B, supplementary private insurance may help cover your out-of-pocket costs, such as copays, coinsurance, and deductibles. This is where Medigap supplementary insurance comes in. While Medicare Part C works as an alternative to your original Medicare plan, Medigap works together with Parts A and B and helps fill in any coverage gaps.

There are a few important things to know about Medigap. First, you must have Medicare Parts A and B before buying a Medigap policy, as it is a supplement to Medicare and not a stand-alone policy. Secondly, you and your spouse must buy separate policies. 

Insurance companies can only sell a “standardized” Medigap policy. These policies are regulated by federal and state laws and provide a standard level of benefits. However, prices differ among providers, so it’s important to shop around.

"I recommend that my clients purchase Medigap policies to cover their needs,” says MoneyCoach founder Patrick Traverse. “Even though the premiums are higher, it is much easier to plan for them than what could be a large out-of-pocket outlay they might have to face if they had lesser coverage."

The Bottom Line

Medicare has evolved over the years and now has four parts. If you're 65 or older and receive Social Security, you'll automatically be enrolled in Part A, which covers hospitalization costs. Parts B (outpatient services) and D (prescription drug benefits) are voluntary, though under certain circumstances, you may be automatically enrolled in either or both of these as well. Part C is an alternative to original Medicare that includes a bundle of Parts A, B, and (typically) D services.