Medicare covers roughly 68 million Americans, according to the Centers for Medicare & Medicaid Services. That's about one in five people in the country. Yet surveys consistently show that most beneficiaries can't explain the difference between Part A and Part B, let alone how Part C and Part D fit in.

That confusion has real financial consequences. Choosing the wrong combination of coverage can mean thousands of dollars in unexpected bills each year, or paying premiums for benefits you already have.

Here's what each part of Medicare actually covers, what it doesn't, and how to figure out which mix makes sense for your situation.

Part A: Hospital Insurance

Part A is the hospital side of original Medicare. It covers inpatient care when you're admitted to a hospital, skilled nursing facility care after a qualifying hospital stay, hospice care, and some home health services.

Most people don't pay a premium for Part A. You qualify premium-free if you or your spouse paid Medicare taxes for at least 10 years, which is the standard work history requirement. If you don't meet that threshold, the premium can run several hundred dollars a month depending on how long you worked.

But "free" doesn't mean costless. Part A has a deductible per benefit period — the amount changes annually, but it has hovered around $1,600 in recent years. A benefit period starts when you're admitted as an inpatient and ends when you've been out of the hospital for 60 consecutive days. That matters because you can pay that deductible more than once in a single year if you have separate hospital stays.

After the deductible, Medicare covers the first 60 days of inpatient care in full. For days 61 through 90, you pay a daily coinsurance amount. Beyond 90 days, you can tap lifetime reserve days — 60 extra days you can use once in your lifetime — with higher daily coinsurance.

What Part A does not cover: long-term custodial care, which is the day-to-day help with bathing, dressing, and eating that many older adults eventually need. Medicare covers skilled nursing care for recovery, not permanent nursing home residency. That gap pushes many families toward Medicaid or private long-term care insurance.

Part B: Medical Insurance

Part B covers what most people think of as regular medical care. Doctor visits, outpatient procedures, preventive services, lab tests, imaging, durable medical equipment like wheelchairs and oxygen tanks, and mental health services all fall under Part B.

Unlike Part A, Part B charges a monthly premium for everyone. The standard premium has been in the $170 to $185 range in recent years, but higher earners pay more through income-related monthly adjustment amounts, or IRMAA. If your modified adjusted gross income exceeds certain thresholds — roughly $103,000 for individuals and $206,000 for couples filing jointly — you pay a surcharge on top of the standard premium.

Part B also carries an annual deductible, and after that you typically pay 20 percent of the Medicare-approved amount for most services. There's no annual out-of-pocket cap on original Medicare, which is the single biggest reason many beneficiaries add supplemental coverage.

That 20 percent coinsurance has no ceiling. A single complex surgery or cancer treatment can leave you owing tens of thousands of dollars if you rely on original Medicare alone.

Preventive care is a bright spot. Annual wellness visits, mammograms, colonoscopies, flu shots, and diabetes screenings are covered at no cost to you when you use providers who accept Medicare assignment. About 90 percent of non-pediatric physicians accept Medicare patients, according to KFF, though acceptance rates vary by specialty and region.

Part B does not cover routine dental care, vision exams for glasses, hearing aids, or cosmetic procedures. Those exclusions surprise a lot of new enrollees.

Part C: Medicare Advantage

Part C is Medicare Advantage — a private insurance alternative to original Medicare. When you enroll in a Medicare Advantage plan, you're still in Medicare, but a private insurer administers your benefits. The plan receives a fixed payment from the federal government for each enrollee and must cover everything original Medicare covers, with some exceptions.

Medicare Advantage has grown fast. Enrollment passed 50 percent of all eligible beneficiaries in recent years, and roughly 30 million people now get their Medicare through these plans. That's a major shift from a decade ago, when Advantage held closer to a quarter of the market.

Most Advantage plans bundle in extra benefits that original Medicare doesn't touch: dental, vision, hearing aids, gym memberships, and sometimes over-the-counter drug allowances. Many include Part D prescription coverage built in, which is why you'll often hear the term "MAPD" — Medicare Advantage Prescription Drug plan.

The tradeoffs matter. Advantage plans use provider networks. If you see specialists outside the network, you may pay more or get no coverage at all. Prior authorization requirements are common — a 2023 KFF analysis found that Medicare Advantage plans denied about 3.4 million prior authorization requests in a single year, though most denials were later overturned on appeal.

Advantage plans also cap your annual out-of-pocket spending, which original Medicare does not. In-network maximums have generally ranged from about $3,000 to $8,850, with most plans landing well below the federal ceiling.

If you travel frequently or split time between states, original Medicare plus a supplement often works better because it's accepted nationwide without network restrictions. If you want predictable costs and extra perks, Advantage can be a strong fit.

Part D: Prescription Drug Coverage

Part D covers prescription medications. It's delivered through private insurers, either as a standalone plan you add to original Medicare or as part of a Medicare Advantage plan.

Standalone Part D premiums average somewhere in the $30 to $40 range per month, though they vary widely by plan and region. The program has changed significantly in recent years thanks to the Inflation Reduction Act, which restructured how much beneficiaries pay.

Three changes stand out. First, insulin costs are now capped at $35 per month per covered insulin product. Second, recommended adult vaccines — including shingles — are free under Part D. Third, annual out-of-pocket spending on covered drugs is now capped at $2,000, a provision that took effect and eliminated the old "catastrophic coverage" phase where patients could owe thousands.

Before that cap, roughly 1.5 million beneficiaries were spending more than $2,000 a year out of pocket on medications, according to KFF estimates. Cancer drugs, rheumatoid arthritis biologics, and hepatitis C treatments drove many of those costs.

Part D formularies vary. Each plan publishes a list of covered drugs, organized into tiers. A drug on a low tier might cost $10; the same drug on a specialty tier under a different plan could cost hundreds. That's why checking your specific medications against a plan's formulary before enrolling is essential.

Part D also has a coverage gap — sometimes called the "donut hole" — though the Inflation Reduction Act reshaped it. Under current rules, once you and your plan have spent a set amount on covered drugs, you move into a phase where your share drops and the cap applies.

How the Parts Fit Together

Original Medicare means Part A plus Part B. It covers hospital and medical care but leaves you exposed to the 20 percent coinsurance with no cap and no drug coverage.

That's why most people with original Medicare add a Medigap supplement — plans labeled A through N — and a standalone Part D plan. Medigap picks up much of what Part B doesn't, including that 20 percent, and some plans cover the Part A deductible. Medigap premiums vary by plan, age, and location, often running $100 to $200 or more per month.

Medicare Advantage, by contrast, replaces the need for Medigap. You get Part A, Part B, and usually Part D through one private plan, often with a $0 monthly premium beyond the standard Part B premium. You trade network flexibility and prior authorization exposure for lower upfront costs and extra benefits.

Neither path is universally better. The right choice depends on your health, your medications, your doctors, your travel habits, and your tolerance for risk.

Practical Takeaways

  • Check your doctors first. Before choosing any plan, confirm that your physicians and hospitals are in network or accept Medicare assignment. Switching plans mid-year is limited to specific enrollment periods.
  • List your prescriptions. Write down every drug you take, the dosage, and the quantity. Then check each plan's formulary. A plan that looks cheap can cost you thousands if it doesn't cover one of your medications.
  • Understand the enrollment windows. Your Initial Enrollment Period runs seven months around your 65th birthday. Miss it without other qualifying coverage and you can face lifetime late-enrollment penalties on Part B and Part D.
  • Review your coverage every fall. The Annual Enrollment Period from October 15 to December 7 lets you switch between original Medicare and Advantage, or change Part D plans. Formularies and networks change every year.
  • Compare total costs, not just premiums. Add up premiums, deductibles, copays, and the maximum out-of-pocket limit. A $0 premium Advantage plan with a $7,000 out-of-pocket maximum can cost more than a $150 Medigap plan in a bad health year.
  • Use the official tools. Medicare's Plan Finder at Medicare.gov lets you enter your drugs and doctors and compare plans side by side. State SHIP programs offer free one-on-one counseling.