Each Medicare Part Has a Job—But Most People Don’t Know What They Actually Do

Key Takeaways

• Medicare is made up of multiple parts, each serving a distinct role in your healthcare coverage. Understanding the differences can help you avoid unexpected bills.

• As of 2025, Medicare includes Part A, Part B, Part C (advantage), and Part D, along with Supplement (Medigap) plans. Each one interacts with the others differently, and not knowing the basics could cost you.

What Medicare Parts Are and Why They Matter

Medicare is not a single, all-in-one plan. It’s a series of distinct parts, each responsible for covering specific aspects of your healthcare. This structure offers flexibility, but also creates confusion if you don’t know what each part does—or doesn’t do.

Many people assume that enrolling in Medicare automatically means full coverage for anything medically necessary. But the truth is more layered. You have to actively choose how you want to receive your benefits, especially when it comes to prescription drugs, outpatient care, and hospital coverage.

Let’s break down what each part of Medicare actually does in 2025 and what it doesn’t do.

Medicare Part A: Hospital Insurance

Medicare Part A handles inpatient hospital coverage. That includes hospital stays, skilled nursing facility care, hospice care, and some home health care services.

What It Covers:

• Inpatient hospital stays (after you’re formally admitted)

• Skilled nursing facility care after a qualifying hospital stay

• Hospice care for terminal illnesses

• Limited home health care

What You Should Know:

• There is a deductible of $1,676 per benefit period in 2025.

• You must have a qualifying 3-day inpatient stay to access skilled nursing facility care.

• Hospital coinsurance kicks in after day 60 and increases again after day 90.

While Part A is often considered free because most people don’t pay a premium (if they worked at least 10 years), the cost-sharing once you use the benefit can be substantial.

Medicare Part B: Medical Insurance

Part B covers outpatient care. This is the portion of Medicare that applies to things like doctor visits, lab tests, durable medical equipment, and preventive services.

What It Covers:

• Doctor’s visits (primary and specialist)

• Outpatient services and surgeries

• Preventive care (like screenings and vaccines)

• Durable medical equipment (like wheelchairs)

• Mental health outpatient care

What You Should Know:

• The monthly premium is $185 in 2025 for most people.

• You must meet an annual deductible of $257.

• After that, Medicare typically pays 80%, and you pay 20% of the cost.

Unlike Part A, Part B requires an active choice to enroll and a monthly premium, even if you’re not using it every month. If you delay enrollment without having other credible coverage, you may owe a permanent late enrollment penalty.

Medicare Part C: Also Known as Medicare Advantage

Part C is an alternative way to get your Medicare benefits. It’s offered by private companies approved by Medicare. These plans are required to provide at least the same coverage as Part A and Part B, but they often include extras.

What It Covers:

• All services covered by Parts A and B

• Usually includes Part D (drug coverage)

• May include extras like dental, vision, and hearing

What You Should Know:

• You still have to pay your Part B premium.

• These plans often have their own deductibles, copays, and provider networks.

• Costs and coverage vary significantly between plans and regions.

While the additional benefits may sound attractive, they come with restrictions. Networks can be narrow, and referrals are often required for specialist care. What sounds convenient may not be the right fit if you need flexibility.

Medicare Part D: Prescription Drug Coverage

Part D helps cover the cost of prescription drugs. This is not included in Original Medicare (Parts A and B), so you need to add it separately unless you opt for a Part C plan that includes it.

What It Covers:

• Generic and brand-name prescription drugs

• Common medications for chronic conditions

• Vaccines and certain outpatient medications

What You Should Know:

• The maximum deductible is $590 in 2025.

• After reaching the deductible, you pay a portion of drug costs.

• Once your total out-of-pocket reaches $2,000, your plan covers 100% for the rest of the year.

The $2,000 cap in 2025 is a new and important change. In previous years, people faced high costs if they hit the coverage gap (the “donut hole”), but that phase has been removed. Now, costs are more predictable once you reach the threshold.

Medigap (Medicare Supplement Insurance)

Medigap is optional insurance that you can buy to cover the costs that Original Medicare doesn’t—like coinsurance, copayments, and deductibles. These policies are only available if you have Original Medicare (Part A and Part B).

What It Helps With:

• Paying the 20% coinsurance from Part B

• Hospital coinsurance after day 60

• Part A and Part B deductibles, depending on the plan

What You Should Know:

• Plans are standardized (A through N), but not all are available in every state.

• You pay a monthly premium to a private insurer.

• You can’t have both a Medigap plan and a Part C (Advantage) plan.

Enrollment is easiest during your one-time Medigap Open Enrollment Period, which begins when you’re both 65 and enrolled in Part B. After that, you could be subject to medical underwriting.

How the Parts Work Together—or Sometimes Don’t

It’s common to think you’re getting one cohesive program with Medicare, but the parts don’t always communicate seamlessly. If you choose Original Medicare with a Medigap plan and a separate Part D plan, you’re working with multiple administrators. Coordination issues can arise.

If you opt for Part C (Advantage), you’re streamlining things through a single provider, but you’re agreeing to their terms, restrictions, and network rules.

That’s why understanding your specific healthcare needs and preferences is key before deciding which parts—and in what combination—fit best.

Enrollment Timelines and Penalties

Initial Enrollment Period:

• A 7-month window: 3 months before, the month of, and 3 months after your 65th birthday.

General Enrollment Period:

• January 1 to March 31 each year (if you missed your Initial Enrollment).

• Coverage starts July 1, and late penalties may apply.

Annual Enrollment Period:

• October 15 to December 7 every year.

• Make changes to your Part C or Part D plans.

Missing the right window can lead to permanent penalties:

• Part B late enrollment penalty: 10% for every full 12 months delayed.

• Part D late enrollment penalty: 1% of the national base premium for every month delayed.

These penalties are added to your monthly premiums for as long as you have the coverage.

Don’t Assume You’re Automatically Covered

Here’s the biggest misunderstanding: Medicare doesn’t cover everything, and it’s not automatic unless you’re already getting Social Security benefits when you turn 65. You need to actively enroll and make choices.

Medicare doesn’t include routine dental, vision, hearing aids, or long-term custodial care. That means unless you add a plan or buy supplemental coverage, you may have significant out-of-pocket costs.

Being proactive about how the parts fit together—and what gaps exist—is the best way to avoid surprise bills.

Knowing the Roles of Each Part Helps You Build the Right Coverage

When you understand the job of each Medicare part, you’re in a better position to choose a coverage strategy that actually fits your lifestyle, healthcare needs, and financial situation.

If you need help understanding your options or figuring out which parts you may be missing, get in touch with a licensed insurance agent listed on this website. They can help walk you through your options and enrollment windows, and make sure you aren’t overlooking anything.