A, B, C, D—Medicare’s Parts Seem Straightforward Until You Actually Use Them

Key Takeaways

• Medicare is split into four parts: A, B, C, and D. While they seem clearly labeled, each part carries separate rules, costs, and coverage limitations that can become confusing when you’re actually using the benefits.

• You must understand how enrollment periods, coordination of benefits, and coverage gaps work under each part to avoid unexpected bills or denied services.

The Four Parts of Medicare Aren’t Just Letters

At first glance, Medicare seems like a simple program: Part A covers hospitals, Part B covers doctors, Part C is an alternative plan, and Part D covers prescriptions. But once you begin using the benefits, these categories blur. Overlapping coverage, enrollment rules, and limitations can make the experience unexpectedly complex.

Let’s break it all down in real terms so you know what to expect from each part before you need it.

Part A: Hospital Insurance With Limits

Part A is the part of Original Medicare that covers inpatient hospital stays, hospice care, and some skilled nursing facility care. Many assume this means their hospital stays are fully covered. But here’s the reality:

• Deductible: In 2025, you pay a $1,676 deductible per benefit period. A benefit period begins when you’re admitted to a hospital and ends after you’ve been out for 60 days.

• Coinsurance: After 60 days in the hospital, daily coinsurance kicks in: $419 per day for days 61–90 and $838 for each lifetime reserve day beyond that.

• Skilled Nursing Facilities: Coverage is only available if you were admitted to a hospital for at least 3 days prior. The first 20 days are covered in full; from day 21 to 100, you pay $209.50 per day.

This means long hospital stays or rehab can become quite expensive if you’re not prepared with supplemental coverage.

Part B: Medical Insurance With Monthly Costs and Rules

Part B covers outpatient care, doctor visits, lab tests, preventive screenings, durable medical equipment, and some home health care. But it doesn’t come automatically or for free.

• Premium: The standard monthly premium for 2025 is $185, but you may pay more based on your income.

• Annual Deductible: You pay the first $257 out of pocket each year.

• Coinsurance: After the deductible, you typically pay 20% of the Medicare-approved amount for covered services.

Even though Medicare Part B covers a broad range of outpatient services, there are gaps. Most dental care, eye exams, hearing aids, and cosmetic procedures are excluded. Also, without additional coverage, there’s no annual out-of-pocket maximum.

Part C: Medicare Advantage Sounds Simple, But Isn’t

Medicare Advantage, or Part C, is offered by private insurance companies approved by Medicare. It bundles Part A and B and usually includes Part D. But this is where confusion often begins.

Here’s what you need to know:

• You still must be enrolled in Part A and B to join a Medicare Advantage plan.

• Each plan sets its own rules for copayments, deductibles, provider networks, and coverage areas.

• Coverage may vary widely by county and ZIP code.

• Prior authorizations are often required for procedures or specialist visits.

Medicare Advantage plans often advertise lower out-of-pocket costs, but these savings may depend on staying in-network and following utilization rules. It’s easy to underestimate your costs if your health needs change.

Part D: Prescription Drug Coverage With Layers of Complexity

Part D plans are offered by private insurers to cover prescription medications. Like Part C, Part D plans vary in structure. And that variation can lead to frustration.

Here’s how it’s set up in 2025:

• Deductible: The maximum annual deductible is $590.

• Initial coverage phase: You and your plan share the cost of drugs.

• Catastrophic phase: After spending $2,000 out of pocket, your plan pays 100% of covered drug costs for the rest of the year.

Each plan has its own formulary (list of covered drugs) and tiers. You might pay more if your prescription isn’t on your plan’s formulary or is placed in a higher-cost tier.

Also, switching plans is only allowed during certain enrollment windows. If your medication needs change midyear, you might get stuck with high costs until the next enrollment period.

Enrollment Timing Matters More Than You Think

A common misconception is that Medicare will just start when you turn 65. But the timing and method of enrollment vary.

• Initial Enrollment Period (IEP): Starts 3 months before the month you turn 65, includes your birthday month, and ends 3 months after (7 months total).

• General Enrollment Period (GEP): January 1 to March 31 annually for those who missed their IEP. Coverage begins July 1, and late penalties may apply.

• Annual Enrollment Period (AEP): October 15 to December 7 each year. You can switch Part C and Part D plans.

• Special Enrollment Periods (SEP): Triggered by qualifying events like moving or losing employer coverage.

If you miss your enrollment window for Part B, you may pay a late penalty for life—10% for each 12-month period you delayed.

Coordination With Other Insurance Isn’t Automatic

If you have other coverage, such as employer insurance or retiree benefits, Medicare may not always pay first. The order of payment—known as “coordination of benefits”—can affect what gets covered and when.

Examples:

• Still working with employer insurance: Your group plan may pay first and Medicare second.

• Retired with retiree insurance: Medicare usually pays first and your retiree coverage acts as secondary.

Failing to understand this order can lead to denied claims or duplicate premiums.

Out-of-Pocket Maximums Depend on Your Plan Type

Original Medicare (Parts A and B) does not have an out-of-pocket cap. That means your 20% share for Part B services could become overwhelming in a serious illness.

Medicare Advantage plans must have an annual out-of-pocket maximum for in-network care. In 2025, this limit is $9,350 for in-network services. However, out-of-network care may not count toward this cap.

If you’re staying with Original Medicare, adding a Medigap policy may help reduce your out-of-pocket exposure—but you need to pass medical underwriting unless you apply during a guaranteed issue period.

Preventive Services Aren’t Always Fully Covered

Part B offers many preventive services like screenings, flu shots, and wellness visits—but not everything is free. Some tests or follow-ups after a screening might fall outside preventive classification and result in coinsurance.

Additionally:

• Part C plans must cover all Part B preventive services, but how they are billed or authorized may differ.

• Some services are one-time only (like the “Welcome to Medicare” visit) or allowed annually.

You need to ask in advance whether the full visit will be covered or whether parts of it will incur charges.

Travel Coverage Is Extremely Limited

If you plan to travel, especially outside the U.S., Medicare’s coverage is limited:

• Original Medicare does not cover health services outside the U.S. except in very rare emergency cases near U.S. borders.

• Part C plans may offer limited travel benefits but usually only within the U.S. and territories.

• Medigap policies may cover emergency care abroad, but typically with a $50,000 lifetime cap and 20% coinsurance.

If you live part-time in multiple states, check whether your Medicare Advantage plan offers national coverage or restricts you to your home area.

You Can’t Mix and Match Just Anything

One of the most common mistakes is assuming you can enroll in both a Medicare Advantage plan and a Medigap policy. That’s not allowed.

• Medigap only works with Original Medicare (A and B).

• Medicare Advantage replaces Original Medicare.

You also can’t be in two Part D plans at once or combine a standalone Part D plan with a Medicare Advantage plan that already includes drug coverage.

Review Notices and Letters Carefully

Every fall, Medicare beneficiaries receive an Annual Notice of Change (ANOC) from their plan. This document outlines:

• Premium or copayment changes

• Covered services adjustments

• Drug formulary updates

Missing this information could mean staying in a plan that no longer meets your needs in the new year. You should also keep an eye on the Medicare Summary Notice (MSN) for Original Medicare or the Explanation of Benefits (EOB) for Advantage/Part D plans.

Errors, delays, or denials can sometimes be appealed, but only if you act promptly.

Medicare’s Moving Parts Require Regular Attention

Medicare is not a set-it-and-forget-it program. Even if you’re already enrolled, changes in your health, prescriptions, or financial situation might make it worth reevaluating your plan every year.

Make use of the Open Enrollment Period from October 15 to December 7 to:

• Switch between Original Medicare and Medicare Advantage

• Change or drop your Part D plan

• Evaluate whether your doctors and medications are still covered

Failing to review your plan can lead to surprises in January.

Ready to Make Sense of It All?

Medicare’s four-part structure only scratches the surface. Once you’re enrolled, real-world use uncovers details that aren’t always obvious. That’s why it’s important to read the fine print, monitor changes each year, and ask for help when necessary.

If you’re feeling unsure about which parts you need or how to combine them in a way that fits your situation, it’s best to get expert guidance. Speak with a licensed agent listed on this website to help you avoid costly missteps.