Medicare Parts A, B, C and D explained

Medicare is the federal health insurance program for people 65 and older and for some younger people with certain disabilities or conditions. It is divided into lettered parts that cover different things, are paid for differently and, in some cases, are run by private insurers. This article explains what each part does and how the pieces fit together. The official overview is on Medicare.gov.

Original Medicare: Parts A and B

Part A: hospital insurance

Part A helps cover inpatient hospital stays, skilled nursing facility care, hospice care and some home health care.

Most people pay no monthly premium for Part A because they or a spouse paid Medicare taxes while working, generally for at least 10 years. People who do not qualify can often buy it. According to Medicare.gov's cost page, in 2026 the Part A premium for those who buy it is either $311 or $565 a month, depending on work history.

Premium-free does not mean cost-free. In 2026:

• The inpatient hospital deductible is $1,736 for each benefit period. The deductible is charged each time a new benefit period starts, not once per calendar year, so it can apply more than once in a year.
• Days 61 through 90 of a hospital stay cost $434 a day.
• Days 21 through 100 of a covered skilled nursing facility stay cost $217 a day.

Part B: medical insurance

Part B helps cover doctors' services, outpatient care, durable medical equipment such as walkers and wheelchairs, and many preventive services.

Part B has a monthly premium. The standard premium is $202.90 a month in 2026, and people with higher incomes pay more, as explained in IRMAA: how income affects Medicare premiums. The Part B deductible is $283 for 2026. After the deductible, a person generally pays 20% of the Medicare-approved amount for most covered services. These figures are confirmed in the CMS fact sheet for 2026.

As of mid-November 2026, the 2027 Part A and Part B amounts had not yet appeared on Medicare.gov. The cost page linked above is updated when they are released.

Parts A and B together are called Original Medicare. With Original Medicare, a person can use any doctor or hospital in the country that takes Medicare.

The gap in Original Medicare

Medicare.gov's comparison page points out that Original Medicare has no yearly limit on what a person pays out of pocket. The 20% coinsurance continues no matter how large the bills get. Original Medicare also does not include most prescription drug coverage.

That leaves two broad ways to fill the gaps: add separate coverage to Original Medicare, or choose a Medicare Advantage plan.

Part C: Medicare Advantage

Medicare Advantage is an alternative way to receive Medicare benefits. A person joins a plan run by a private company that Medicare has approved. The plan provides Part A and Part B coverage, and most plans include Part D drug coverage.

Features that differ from Original Medicare:

• Networks. Many plans require using doctors and hospitals in the plan's network for non-emergency care, and some require referrals to see specialists.
• Prior authorization. Plans may require approval before covering certain services.
• An out-of-pocket limit. Plans have a yearly limit on what a member pays for covered services.
• Extra benefits. Many plans offer some vision, hearing or dental benefits that Original Medicare does not.

A person must have both Part A and Part B to join, and continues to pay the Part B premium. Some plans charge an additional premium and some do not.

Part D: prescription drug coverage

Part D helps pay for prescription drugs. It is offered through private plans, either as a stand-alone drug plan added to Original Medicare or as part of a Medicare Advantage plan. Premiums, covered drug lists and pharmacy networks vary by plan.

According to Medicare.gov's page on drug coverage costs:

• No plan's deductible may be more than $615 in 2026 or $700 in 2027. Some plans have no deductible.
• After the deductible, a person generally pays 25% of the cost of covered drugs.
• Once out-of-pocket spending on covered drugs reaches $2,100 in 2026 ($2,400 in 2027), the person pays nothing more for covered Part D drugs for the rest of the year.

Going without Part D or other comparable drug coverage can lead to a late-enrollment penalty later. See Medicare enrollment periods and late-enrollment penalties.

Medigap: supplemental insurance for Original Medicare

Medicare Supplement Insurance, known as Medigap, is sold by private companies to help pay the deductibles, copayments and coinsurance left by Original Medicare. Medigap policies are standardized and identified by letters in most states, so a policy with a given letter offers the same basic benefits regardless of the company selling it.

Two rules shape the decision:

• Medigap works only with Original Medicare. It cannot be used with a Medicare Advantage plan.
• There is a six-month Medigap open enrollment period that starts the first month a person has Part B and is 65 or older. During that window an insurer cannot refuse coverage because of health problems. Afterward, a policy may be unavailable or cost more.

What Medicare generally does not cover

Medicare.gov's list of services that are not covered by Original Medicare includes non-medical long-term care, most dental care, eye exams for glasses, and hearing aids. Long-term custodial care in particular is a large potential expense that Medicare is not designed to pay for.

Questions worth asking

• Are current doctors in a plan's network, or is the freedom to see any provider that takes Medicare more important?
• Which specific prescriptions need to be covered, and how does each plan treat them?
• How would a year with very high medical bills be paid for under each option?

Health costs are a significant line in a retirement budget. The article on turning savings into retirement income discusses how they fit with other spending.