13.1 Medicare Parts A, B, C, and D

Medicare: The Federal Senior Health Program

Medicare is the federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). It covers people age 65 and older, certain individuals under 65 receiving Social Security Disability Insurance (SSDI) for 24 months, and people with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). Most people earn premium-free Part A by accumulating 40 quarters (10 years) of Medicare-taxed work. Exam questions test which part covers which service, the cost-sharing numbers, and the enrollment timing rules.

Eligibility trap: ALS recipients get Medicare the first month SSDI begins (no 24-month wait). ESRD coverage generally starts the 4th month of dialysis. Standard SSDI recipients wait 24 months.

The Four Parts at a Glance

Part A: Hospital Insurance Mechanics

Part A uses a benefit period, not a calendar year. A benefit period begins on admission and ends after 60 consecutive days without inpatient or skilled care. A new benefit period means a new deductible. For 2025, the inpatient deductible is roughly $1,676 per benefit period. Days 1-60 have no coinsurance; days 61-90 carry a daily coinsurance; days 91+ draw on 60 lifetime reserve days that never renew once exhausted.

• SNF care: days 1-20 are fully covered, days 21-100 carry coinsurance, beyond 100 days the patient pays all costs.
• SNF coverage requires a qualifying 3-day inpatient hospital stay first.
• Part A covers skilled care, never custodial (help with bathing, dressing, eating only).

Part B: Medical Insurance Mechanics

Everyone pays the Part B premium ($185.00/month standard in 2025). After a small annual deductible, Medicare pays 80% of the approved amount and the beneficiary pays the 20% coinsurance with no out-of-pocket maximum. Higher-income beneficiaries pay an IRMAA surcharge based on income from two years prior. Most preventive services (annual wellness visit, flu shots, many screenings) are covered at 100%.

Worked numeric: Part A coinsurance

A patient is hospitalized for 75 days in one benefit period (2025 rates). The patient pays the deductible once (~$1,676), then $0 for days 1-60. Days 61-75 = 15 days of coinsurance at $419/day = 15 x $419 = $6,285. Total patient cost ≈ $1,676 + $6,285 = $7,961. Days 91+ would have triggered lifetime reserve days at a higher daily rate.

Medicare Assignment and the Limiting Charge

Part C: Medicare Advantage

Medicare Advantage (MA) plans are sold by private insurers approved by CMS. The member must have both Part A and Part B and keep paying the Part B premium. MA plans must cover everything Original Medicare covers, must include an annual out-of-pocket maximum (Original Medicare has none), and often bundle Part D plus extras like dental, vision, and hearing. Common designs: HMO (network + referrals), PPO (out-of-network at higher cost), PFFS, and Special Needs Plans (SNP) for dual-eligible/chronic/institutional populations. You cannot use a Medigap policy with an MA plan.

Part D: Prescription Drug Coverage

Part D is voluntary prescription drug coverage from private plans. Beneficiaries who go 63 or more consecutive days without creditable drug coverage owe a lifetime late-enrollment penalty (roughly 1% of the national base premium per month uncovered). Beginning in 2025, Part D includes a $2,000 annual out-of-pocket cap on covered drugs, eliminating the old coverage-gap ("donut hole") catastrophic exposure.

Enrollment Periods (high-frequency exam item)

Exam trap: COBRA and retiree coverage are NOT creditable employer coverage for delaying Part B. Only active-employment group coverage allows penalty-free delay.

The Four Parts and Their Cost Structure

Medicare covers those 65 and older, those receiving Social Security disability for 24 months, and those with ESRD or ALS. It has four parts the exam expects you to separate cleanly:

Enrollment Windows

The Initial Enrollment Period is the 7-month window around the 65th birthday month. The General Enrollment Period runs Jan 1-Mar 31 for those who missed it, often with a late-enrollment penalty that permanently raises Part B and Part D premiums. A Special Enrollment Period waives penalties for those who kept creditable employer coverage past 65. Part A's hospital deductible resets each new benefit period, which begins on admission and ends after 60 consecutive days out of a facility - so a person can owe the deductible more than once a year.