Confused by the A, B, C, and D of Medicare? Here’s the Breakdown You’ll Actually Understand

Key Takeaways

• Medicare is divided into four parts: A, B, C, and D, each serving a distinct purpose in your healthcare coverage.

• Understanding what each part covers, what it costs, and how they work together helps you make confident enrollment decisions in 2025.

Getting Started with Medicare: The Basics

If you’re turning 65 or nearing retirement, you’ve probably heard of Medicare. But the alphabet soup of Medicare Part A, B, C, and D can be overwhelming. It doesn’t have to be. Each part exists for a reason, and once you understand how they fit together, Medicare starts to make a lot more sense.

Medicare is a federal health insurance program for people aged 65 and older, and for some individuals under 65 with certain disabilities or end-stage renal disease. In 2025, the structure of Medicare remains mostly the same, but understanding its parts is key to maximizing your benefits.

What Is Medicare Part A?

Part A is known as hospital insurance. It generally covers:

• Inpatient hospital care

• Skilled nursing facility care (after a hospital stay)

• Hospice care

• Some home healthcare services

Most people don’t pay a monthly premium for Part A if they (or a spouse) paid Medicare taxes for at least 10 years (40 quarters). This is often referred to as “premium-free Part A.” However, there are deductibles and coinsurance to be aware of.

In 2025:

• The inpatient hospital deductible is $1,676 per benefit period.

• Coinsurance starts at $419 per day for hospital stays beyond 60 days.

What Does Medicare Part B Cover?

Part B is your medical insurance. It helps pay for:

• Doctor visits

• Outpatient care

• Preventive services (like screenings and vaccines)

• Durable medical equipment (like wheelchairs and oxygen)

Unlike Part A, almost everyone pays a monthly premium for Part B. In 2025, the standard premium is $185 per month. Higher-income beneficiaries may pay more.

There’s also an annual deductible of $257. After meeting this deductible, you typically pay 20% of the Medicare-approved amount for services.

What Is Medicare Part C?

Part C is also called Medicare Advantage. It’s an alternative way to receive your Part A and B benefits through a private insurance plan approved by Medicare.

Medicare Advantage plans must cover everything Original Medicare does (that’s Part A and B), but many also include:

• Prescription drug coverage

• Routine vision, dental, and hearing care

• Wellness programs or gym memberships

Costs and benefits vary by plan and location. While you still pay your Part B premium, the Medicare Advantage plan may have additional monthly costs. Since these are offered by private companies, you need to compare plans carefully.

Important in 2025:

• Coverage and plan availability can change yearly.

• Plan star ratings and benefits are worth reviewing during Medicare Open Enrollment from October 15 to December 7.

What Does Medicare Part D Cover?

Part D is your prescription drug coverage. It helps cover:

• Generic and brand-name medications

• Vaccines not covered under Part B

• Some supplies associated with insulin (like syringes and needles)

You can get Part D through a standalone prescription drug plan or bundled within a Medicare Advantage plan.

In 2025, there are some big updates:

• The deductible is capped at $590.

• There’s a $2,000 annual out-of-pocket cap, which means once you reach that amount, your covered drugs cost nothing for the rest of the year.

• The donut hole coverage gap no longer exists, simplifying costs.

Monthly premiums for Part D vary depending on the plan and income level.

How Do These Parts Work Together?

Let’s break it down. Here’s how the parts interact:

• Parts A and B (Original Medicare): This is your traditional government-provided coverage. You can add Part D for drug coverage and a Medigap plan (sold separately) to help with out-of-pocket costs.

• Part C (Medicare Advantage): Combines A and B, often D, and sometimes extras into one plan. You cannot have both Medicare Advantage and a Medigap policy.

• Part D: Needed if you choose Original Medicare and want drug coverage. Not needed if your Medicare Advantage plan includes it.

Enrollment Timeline You Need to Know

There are specific times when you can sign up for or change your Medicare coverage. Knowing these prevents late penalties or lapses in coverage.

1. Initial Enrollment Period (IEP)

This is a 7-month window:

• Begins 3 months before your 65th birthday month

• Includes your birthday month

• Ends 3 months after your birthday month

Sign up during this period to avoid late penalties, especially for Part B and Part D.

2. General Enrollment Period (GEP)

If you missed your IEP, you can sign up for Part A and/or B between January 1 and March 31. Coverage begins the first of the following month.

3. Medicare Advantage Open Enrollment Period (MA OEP)

From January 1 to March 31, if you’re already enrolled in a Medicare Advantage plan, you can switch to a different one or return to Original Medicare.

4. Annual Enrollment Period (AEP)

October 15 to December 7 every year. You can:

• Switch from Original Medicare to a Medicare Advantage plan

• Change from one Medicare Advantage plan to another

• Join, drop, or switch Part D plans

5. Special Enrollment Periods (SEPs)

SEPs allow changes outside regular windows for specific life events, such as:

• Losing employer coverage

• Moving out of your plan’s service area

• Becoming eligible for Medicaid

What Medicare Doesn’t Cover

Medicare covers a lot, but not everything. In 2025, you’re still responsible for:

• Long-term care (custodial care in a nursing home)

• Routine dental, vision, and hearing services (unless included in Part C)

• Most care received outside the U.S.

• Cosmetic procedures

To fill these gaps, many people add coverage through Medigap (for those on Original Medicare) or choose a Medicare Advantage plan that includes extras.

Costs You Should Be Ready For

Even with Medicare, there are out-of-pocket expenses. Understanding these helps you budget properly:

• Premiums: Most people pay for Part B and Part D; some may also pay for Part A.

• Deductibles: You’ll encounter them under Parts A, B, and D.

• Coinsurance/Co-payments: These are your share of service costs after Medicare pays.

• Out-of-pocket maximums: Medicare Advantage plans have a cap, while Original Medicare does not unless combined with Medigap.

In 2025:

• Original Medicare doesn’t include a limit on what you can spend in a year.

• Medicare Advantage plans must have an out-of-pocket limit; in-network maximums are $9,350 or less.

• Part D now includes a $2,000 annual cap.

How to Choose What’s Right for You

Choosing the right Medicare coverage depends on your health needs, budget, and lifestyle. Here’s what to consider:

• Do you want flexibility in choosing any doctor who accepts Medicare? Original Medicare may suit you.

• Would you prefer an all-in-one plan with potential extras like dental and vision? Medicare Advantage could be a better fit.

• Do you take regular prescriptions? Then make sure you have adequate Part D coverage.

• Do you travel frequently within or outside the U.S.? Make sure your plan offers portability.

Review your choices every year during the Annual Enrollment Period to make sure your plan still fits.

Why Understanding Medicare Matters in 2025

Medicare isn’t just a benefit; it’s a healthcare foundation as you age. With the updates in 2025—like the Part D cap and increased deductibles—it’s more important than ever to understand how the parts interact and what they mean for your wallet and well-being.

A poor choice can lead to higher costs, reduced access to care, and unnecessary stress. By grasping the differences between Parts A, B, C, and D, you can make informed decisions that help protect your health and finances.

Make Confident Medicare Decisions This Year

Understanding Medicare’s parts doesn’t have to be overwhelming. When you know what each part covers and how they fit together, you’re in a much stronger position to make informed, cost-effective decisions. And in 2025, with changes to prescription costs and coverage, staying up to date is more important than ever.

For personalized help, get in touch with a licensed agent listed on this website who can walk you through your options and provide expert guidance based on your situation.