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Medicare isn't just one insurance plan—it's a system made up of four different parts that work together to provide your healthcare coverage. Think of it like pieces of a puzzle that fit together to create your complete Medicare picture.
Understanding what each part covers, what it costs, and how they connect is essential for making informed decisions about your healthcare. Let's break down each part of Medicare so you know exactly what you're getting.
Part A is your hospital insurance. It covers the big-ticket items when you need inpatient care.
Inpatient Hospital Care: Semi-private room, meals, general nursing, hospital services and supplies for up to 90 days per benefit period, plus 60 lifetime reserve days.
Skilled Nursing Facility Care: Up to 100 days per benefit period, but only after a qualifying 3-day minimum hospital stay. Days 1-20 are covered fully. Days 21-100 cost you $217 per day in 2026.
Home Health Care: Intermittent skilled nursing care, physical therapy, and occupational therapy when medically necessary and ordered by your doctor.
Hospice Care: Pain relief, symptom management, medical and nursing services, counseling, and bereavement support when you're terminally ill.
Premium: $0 for most people who worked and paid Medicare taxes for at least 10 years. If you don't qualify, you'll pay $311 or $565 monthly depending on your work history.
Deductible: $1,736 per benefit period. Remember, a benefit period starts when you're admitted to a hospital and ends when you haven't received inpatient care for 60 consecutive days. You could pay this deductible multiple times in a year.
Daily Coinsurance: Days 1-60 are covered after your deductible. Days 61-90 cost $434 per day. Lifetime reserve days 91-150 cost $868 per day.
Here's something critical most people don't realize: Medicare only covers skilled nursing facility care under very specific conditions. You must have a qualifying 3-day inpatient hospital stay first, and the care must be for skilled services like physical therapy or IV medications—not custodial care like help with bathing or dressing.
After 100 days, Medicare pays nothing. This gap is why many people consider supplemental coverage. [Link to The Umbrella Coverage System]
Part B covers outpatient services and medical care outside of a hospital setting.
Doctor Services: Office visits, specialist consultations, outpatient mental health services.
Preventive Care: Annual wellness visits, cardiovascular screenings, diabetes screenings, cancer screenings (mammograms, colonoscopies), vaccines (flu, pneumonia, COVID-19).
Outpatient Services: Lab tests, X-rays, outpatient surgery, emergency department visits, ambulance services.
Medical Equipment: Wheelchairs, walkers, hospital beds, oxygen equipment, diabetic supplies.
Other Services: Physical therapy, occupational therapy, speech-language pathology, chiropractic services (limited).
Premium: $202.90 per month for most people. High-income earners pay additional IRMAA surcharges ranging from $81.20 to $487 per month based on income from two years prior.
Deductible: $283 per year.
Coinsurance: 20% of the Medicare-approved amount for most services—with no annual maximum. This is the most significant exposure in Part B.
Let's talk about that 20% coinsurance. A $50,000 surgery means you pay $10,000. A $100,000 hip replacement means you pay $20,000. There's no cap on this annual exposure, which is why most people choose either a Medicare Supplement or Medicare Advantage plan to protect against these costs.
Medicare Advantage (Part C) is an alternative way to get your Medicare benefits through private insurance companies approved by Medicare.
Instead of getting coverage directly from Medicare, you receive all your Part A and Part B benefits through a private plan. Most Medicare Advantage plans also include Part D prescription drug coverage and extra benefits like dental, vision, and hearing.
Important: You're still in Medicare—you're just getting your benefits through a private plan instead of Original Medicare. You must continue paying your Part B premium.
HMO Plans: Must use network doctors and hospitals (except emergencies). Require referrals to see specialists. Lower costs, less flexibility.
PPO Plans: Can see out-of-network providers at higher cost. No referrals needed. More flexibility, higher costs.
Special Needs Plans (SNPs): Designed for people with specific conditions like chronic illness or dual Medicare/Medicaid eligibility.
Premium: Many plans cost $0 in additional premium (you still pay Part B premium of $202.90). Some plans charge $20-$100+ monthly.
When You Use Services: Typical copays include $0-35 for primary care visits, $30-50 for specialists, $90-120 for emergency room visits, $250-400 per day for hospital stays (usually days 1-5).
Out-of-Pocket Maximum: Plans have annual caps typically ranging from $3,000-$8,000. Once you reach this limit, the plan pays 100% for covered services for the rest of the year.
Part D helps cover the cost of prescription medications through private insurance plans approved by Medicare.
Generic drugs, brand-name drugs, biologics, and some vaccines (like shingles). It does not cover over-the-counter medications (unless prescribed), vitamins, supplements, or drugs for cosmetic purposes.
Part D has been dramatically improved thanks to the Inflation Reduction Act. Starting in 2026, your out-of-pocket costs are capped at $2,100 per year.
Deductible Phase: You pay full cost until you meet your plan's deductible (up to $590 maximum, though many plans waive this).
Initial Coverage Phase: You pay copays or coinsurance based on your drug's tier until your out-of-pocket costs reach $2,100.
Catastrophic Coverage: Once you've spent $2,100 out-of-pocket, you pay nothing for covered drugs for the rest of the year.
Premium: Varies by plan, typically $0-$100+ per month. National average is around $46.50. High-income earners pay additional IRMAA surcharges from $13.70 to $85.80 monthly.
The $2,100 Cap Benefit: This is massive protection for people with expensive medications. Once you hit $2,100 in out-of-pocket costs, all covered prescriptions are free for the rest of the year.
Plans vary significantly in which drugs they cover, which tier drugs are placed in, and total costs. The same drug can be Tier 1 ($5 copay) in one plan and Tier 3 ($75 copay) in another. Compare plans based on your specific medications every year during Annual Enrollment Period (October 15 - December 7).
Understanding the four parts of Medicare is the foundation for making smart coverage decisions. Part A covers hospital care, Part B covers medical services, Part C is an alternative delivery method through private plans, and Part D covers prescriptions.
At A&E Insurance Agency, we help you understand which parts you need, when to enroll, and how to structure your coverage for maximum protection at the best price. Whether you choose Original Medicare with a supplement or Medicare Advantage, we'll make sure you have the coverage that fits your health needs and budget. Schedule a free consultation to review your options.
