Free Guide to Understanding Medicare Coverage for Seniors

How Medicare's Four Parts Work Together

Medicare isn't a single program—it's actually four separate parts that cover different types of medical care. Understanding what each part does is the foundation for making sense of your coverage. Many people over 65 find the system confusing at first because the parts overlap in some ways and don't overlap in others, which means gaps can appear if you're not paying attention.

Free Guide to Senior Cruise Discounts and Offers →

Part A covers hospital care. This includes inpatient hospital stays, skilled nursing facility care after you leave the hospital, hospice care, and some home health services. When you go to the hospital as an inpatient (meaning you stay overnight for treatment), Part A is what pays for your room, meals, nursing care, and most of the medical supplies used during your stay. However, Part A does not cover outpatient care—meaning you go to the hospital but don't stay overnight. That's a crucial distinction many seniors miss.

Part B covers doctor visits and outpatient care. This includes visits to your primary care doctor and specialists, lab tests, X-rays and imaging, outpatient surgery, and medical equipment like wheelchairs or oxygen tanks. Part B is what you use when you go to a doctor's office or visit an urgent care clinic. About 97% of people on Medicare have Part B, according to the Centers for Medicare & Medicaid Services, because it covers the most frequent type of health care most people use.

Part D covers prescription drugs. This part helps pay for medications you take at home. Different Part D plans cover different medications, and the amount you pay varies depending on which plan you choose. Some drugs might be $5 per month while others could be $200 or more, so the specific plan you pick really matters for your wallet.

Part C, also called Medicare Advantage, is different from the others. It's an alternative to Parts A and B offered by private insurance companies. If you choose Part C, a private insurance company becomes your new Medicare provider instead of the government. Part C typically includes drug coverage (like Part D) built in, and it often adds benefits that original Medicare doesn't cover, such as dental or vision care. However, Part C plans usually have networks, meaning you may pay more if you see doctors outside the plan's preferred providers.

Practical takeaway: Write down which parts of Medicare you currently have or will have. If you have original Medicare (Parts A and B), note that you'll need to choose Part D separately for drug coverage and that gaps in coverage may exist. If you have Part C, confirm whether your plan covers the doctors and hospitals you want to use.

What You'll Actually Pay Out of Pocket

Medicare covers a lot, but it doesn't cover everything, and it doesn't pay 100% of what it does cover. Understanding what you pay is essential for budgeting and avoiding surprise bills. The costs break down into several categories: premiums, deductibles, copays, and coinsurance. Each works differently, and they add up differently depending on which parts of Medicare you use.

Learn About Hulu Pricing and Senior Streaming Plans →

Premiums are the monthly fees you pay to have coverage. Most people don't pay a premium for Part A if they or their spouse paid Medicare taxes while working for at least 10 years. However, many people do pay a Part B premium—in 2024, this ranges from $174.70 to $356.40 per month depending on your income level. Higher-income earners pay more. Part D premiums vary widely based on which drug plan you choose, typically ranging from $0 to $100+ per month. If you have Part C, you pay that plan's premium instead, which can be $0 to several hundred dollars per month depending on the plan and your location.

Deductibles are the amount you pay out of pocket before Medicare starts paying. For 2024, the Part A deductible is $1,632 per hospital stay. Part B has a deductible of $240 per year. Once you've paid these amounts, Medicare begins to cover its portion. Part D has a deductible too, typically between $0 and $560 depending on your plan. After you meet the deductible, you move into the initial coverage phase where you pay a copay or coinsurance for each prescription filled.

Copays are fixed amounts you pay for a specific service. For example, you might pay $20 every time you visit your doctor under Part B, or $10 for a generic drug and $50 for a brand-name drug under Part D. Coinsurance is different—it's a percentage of the cost. Under Part B, you typically pay 20% of the cost of services after you meet your deductible, while Medicare pays 80%. For hospital stays under Part A, the coinsurance amount changes depending on how many days you've been in the hospital.

There's also something called the "donut hole" in Part D coverage that confuses many people. Once you and your plan have spent $5,030 on drugs in 2024, you enter a phase where you pay more out of pocket for a while. The good news is that this gap has been shrinking. In 2024, you only pay 25% of brand-name drug costs and about 25% of generic costs while in the donut hole. Once your total out-of-pocket costs reach $8,000, you move to "catastrophic coverage" where you pay only a small copay for the rest of the year.

Practical takeaway: Calculate your estimated annual out-of-pocket costs by adding up premiums, deductibles, and typical copays for the services you use most. For Part D specifically, look at your actual medications to see which plan would cost you the least over a full year, since prices vary significantly between plans.

Coverage Gaps You Need to Know About

Medicare covers a remarkable range of medical services, but it has distinct gaps that catch many people off guard. These aren't small gaps either—they're significant areas where you'll pay the full cost yourself unless you have supplemental coverage. Knowing where these gaps exist helps you plan financially and make decisions about whether to purchase additional insurance.

Learn About Treating Crepey Skin Options →

Long-term care is perhaps the biggest gap. Medicare does not cover nursing home care, assisted living, or in-home personal care for activities of daily living like bathing or dressing. This is true even if you're in a nursing home for years. Medicare will cover short-term skilled nursing care after a hospital stay—typically up to 100 days—but only if you're recovering from an acute illness. If you need ongoing custodial care (help with daily activities), that's on you. This is why many seniors purchase long-term care insurance or why adult children end up paying for their parents' care. The average cost of nursing home care in the United States is roughly $8,000 to $10,000 per month, depending on location.

Dental care is largely uncovered under original Medicare. Cleanings, fillings, root canals, and dentures—you pay for these yourself. Some Part C (Medicare Advantage) plans include dental benefits, but they're usually limited, like one cleaning per year or a $1,000 annual maximum. If you need significant dental work, the costs add up quickly.

Vision and hearing aids are similarly not covered by original Medicare. Eye exams for glasses or contacts aren't covered. Hearing aids, which can cost $2,000 to $6,000 per ear, are completely your responsibility. Some Part C plans include vision or hearing benefits, but again, they're often limited. For example, a plan might cover one eye exam every two years or offer a $500 hearing aid benefit.

Routine foot care is not covered unless you have diabetes. If you need a pedicure for general foot health, you pay the full cost. Routine eye exams for glasses are not covered. Preventive care like annual physicals is covered, but certain screening tests and preventive services have restrictions or aren't covered at all. For instance, routine screening colonoscopies are covered, but if a polyp is found and removed, you may have a copay.

Prescription drugs are covered by Part D, but not every drug is on every plan's formulary—the list of drugs the plan will pay for. Sometimes your doctor prescribes a medication that your specific Part D plan doesn't cover, and you'll need to either pay the full cost or work with your doctor to find a covered alternative.

Practical takeaway: Make a list of medical services you think you'll need in the coming year—dental work, eye exams, hearing aids, ongoing prescriptions, etc. Cross-reference each with Medicare's coverage rules.