The ABCD of Medicare Isn’t a Children’s Song—Each Letter Means a Lot for You

Key Takeaways

• Each letter in Medicare (A, B, C, and D) represents a different part of your health coverage—and skipping over one can leave serious gaps.

• Understanding what’s covered, what isn’t, and how costs work in 2025 can protect you from unexpected expenses.

Why the Letters in Medicare Matter More Than You Might Think

Medicare isn’t just a government health program—it’s a patchwork of distinct components. If you’re approaching age 65 or already enrolled, the letters A, B, C, and D have real consequences for your healthcare and finances. Skimming past them like they’re harmless acronyms can be a costly mistake.

Here’s what each part covers, what it doesn’t, how it works in 2025, and how to decide what combination works best for you.

Medicare Part A: Hospital Insurance

Part A is your coverage for inpatient care. You earn it through work credits, and most people don’t pay a monthly premium for it because they’ve paid into Medicare through payroll taxes.

What It Covers

• Inpatient hospital stays

• Skilled nursing facility care (following a hospital stay)

• Hospice care

• Limited home health services

What It Doesn’t Cover

• Long-term custodial care

• Personal care assistance

• Doctor visits during your hospital stay (billed separately under Part B)

2025 Costs

• Deductible: $1,676 per benefit period

• Hospital Coinsurance:

  • $0 for days 1–60

  • $419/day for days 61–90

  • $838/day for days 91–150 (lifetime reserve days)

Part A may seem straightforward, but missing the fine print around benefit periods and hospital readmissions could leave you paying far more than expected.

Medicare Part B: Medical Insurance

This is the part that pays for outpatient care and doctor services. You’ll pay a monthly premium, which in 2025 starts at $185 unless your income is high enough to trigger IRMAA (an income-related monthly adjustment amount).

What It Covers

• Doctor visits and outpatient services

• Preventive screenings (like mammograms, colonoscopies, and flu shots)

• Durable medical equipment (like wheelchairs and oxygen)

• Mental health outpatient services

• Emergency room visits (if not admitted)

What It Doesn’t Cover

• Most dental, hearing, and vision care

• Prescription drugs (that’s Part D)

• Routine foot care (unless medically necessary)

2025 Costs

• Monthly premium: $185 (standard rate)

• Annual deductible: $257

• Coinsurance: Typically 20% of Medicare-approved amount, after deductible

Enrollment in Part B is not automatic unless you’re already receiving Social Security. Missing your initial enrollment window can result in a lifetime penalty.

Medicare Part D: Prescription Drug Coverage

Medicare Part D handles your outpatient prescription medications. You enroll in it through a standalone plan or a Medicare Advantage plan that includes drug coverage. Each plan has its own list of covered drugs (formulary), pharmacy network, and cost-sharing structure.

What It Covers

• Outpatient prescription drugs

• Vaccines (including shingles and RSV, starting in 2025)

• Insulin and other diabetic supplies (subject to federal price limits)

What It Doesn’t Cover

• Over-the-counter medications

• Drugs not on the plan’s formulary (unless exceptions are granted)

2025 Highlights

• Deductible: Capped at $590

• Out-of-pocket cap: $2,000 maximum for the year

• Monthly smoothing option: Lets you pay drug costs over 12 months instead of all at once

This $2,000 cap—new in 2025—is a game-changer for those with high prescription costs. But you’ll still want to examine each plan’s formulary to make sure your specific medications are covered.

Medicare Part C: Medicare Advantage (All-in-One Plans)

Medicare Part C isn’t a separate benefit—it’s an alternative way to get your Parts A and B (and often D) coverage through a bundled plan offered by private companies. These plans must cover at least what Original Medicare does, but many offer additional benefits.

What It Can Include

• Hospital and medical coverage (A and B)

• Prescription drug coverage (Part D)

• Additional benefits: dental, vision, hearing, fitness memberships, and transportation services

What to Watch Out For

• Provider networks (you may need referrals or be limited to specific doctors)

• Regional availability (plan options vary widely by ZIP code)

• Preauthorization rules

You must be enrolled in both Part A and Part B to join a Medicare Advantage plan. These plans come with their own premiums, deductibles, copays, and out-of-pocket limits (which vary widely), but they cannot be paired with Medicare Supplement (Medigap) coverage.

Medicare Supplement Insurance (Medigap)

While Medigap isn’t one of the ABCD parts of Medicare, it plays a major role in how well your Medicare coverage works. These policies help fill the “gaps” in Original Medicare (Parts A and B), such as deductibles and coinsurance.

Key Features

• Standardized plans labeled A through N

• Accepted nationwide with any Medicare provider

• Doesn’t cover prescription drugs (you’ll need Part D separately)

Not Allowed With

• Medicare Advantage plans

The best time to buy a Medigap policy is during your one-time open enrollment period, which starts the month you turn 65 and are enrolled in Part B. After that, you could be denied coverage or charged more due to pre-existing conditions.

When and How to Enroll

You can’t just pick and choose your parts of Medicare at any time. There are specific periods when you can enroll or make changes.

Initial Enrollment Period (IEP)

• Starts three months before your 65th birthday, includes your birthday month, and ends three months after

• Ideal time to sign up for Parts A, B, and D without penalties

General Enrollment Period (GEP)

• January 1 to March 31 annually

• For those who missed their IEP for Part B (late penalties may apply)

Open Enrollment Period (AEP)

• October 15 to December 7 annually

• You can switch, drop, or join Part D and Medicare Advantage plans

Medicare Advantage Open Enrollment

• January 1 to March 31 annually

• If you’re already in a Medicare Advantage plan, you can switch to a different one or return to Original Medicare

Missing deadlines—especially for Part B or Part D—can leave you uninsured or subject to lifelong penalties. Set calendar reminders or speak with a licensed agent to ensure timely enrollment.

Coordination With Other Coverage

Medicare doesn’t always operate in a vacuum. If you have other coverage—such as from a former employer, Medicaid, or a spouse—your Medicare benefits might be affected.

Examples Include:

• Employer or retiree coverage: May reduce the need for Part B or Part D, but always check before declining

• Veterans Affairs (VA) benefits: Can work alongside Medicare, but Medicare won’t pay for VA care

• TRICARE: Requires enrollment in Medicare Part B at 65 to keep TRICARE coverage

Understanding how Medicare coordinates with your other benefits is essential to avoid duplicate coverage—or worse, unintentional gaps.

Penalties and Pitfalls to Avoid

Even a simple mistake—like skipping Part D because you aren’t on medications—can turn into a costly misstep.

Common Penalties in 2025

• Part B Late Enrollment Penalty: 10% added to your premium for each full 12-month period you were eligible but didn’t enroll

• Part D Late Enrollment Penalty: 1% of the national base premium for each month you didn’t have creditable drug coverage

These penalties stick with you as long as you have Medicare coverage, so enrolling on time is crucial.

What This Means for Your Future

Each part of Medicare serves a unique purpose. Treating them like interchangeable puzzle pieces is a risky approach. In 2025, the system includes more protections than ever before—like the new $2,000 cap for drug costs—but it’s still up to you to make smart enrollment choices.

Choosing the right mix—Original Medicare plus Medigap and Part D, or an all-in-one Advantage plan—requires evaluating your health needs, financial situation, and comfort with provider networks.

Make Medicare Work for You in 2025

The ABCD of Medicare isn’t just an educational acronym—it’s your roadmap to healthcare as you age. Each letter comes with real choices, real coverage, and real consequences.

If you’re unsure about what parts you need or when to enroll, now is the time to act. Get in touch with a licensed agent listed on this website to review your options and avoid costly mistakes.