16.1 Medicare Parts A and B (Original Medicare)

Medicare Parts A and B (Original Medicare)

Medicare is the federal health insurance program administered by the Centers for Medicare and Medicaid Services (CMS). It primarily covers people age 65 or older, plus people under 65 who have received Social Security Disability Insurance (SSDI) benefits for 24 months, and people of any age with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS). ALS and ESRD beneficiaries are exam favorites because they bypass the 24-month wait.

Original Medicare is the fee-for-service program made up of Part A (Hospital Insurance) and Part B (Medical Insurance). Together they are administered directly by the federal government, with no provider network: any provider who accepts assignment (agrees to the Medicare-approved amount) may bill Medicare. This is the baseline against which Part C, Part D, and Medigap are all measured on the exam.

Part A: Hospital Insurance

Part A covers inpatient hospital care, skilled nursing facility (SNF) care, hospice, and some home health care. Most beneficiaries pay no premium for Part A because they (or a spouse) paid the Medicare payroll tax (FICA) for at least 40 quarters (10 years) of work. Those with fewer than 30 quarters pay a full monthly premium; 30 to 39 quarters pay a reduced premium.

Part A cost-sharing is built around the benefit period, not the calendar year. A benefit period begins the day you are admitted as an inpatient and ends when you have been out of a hospital or SNF for 60 consecutive days. A new benefit period means a new deductible. Watch the trap: there is no annual cap on the number of benefit periods, so multiple readmissions can mean multiple deductibles in one year.

Representative 2026-style Part A inpatient hospital cost-sharing (memorize the structure, not exact dollars):

Skilled nursing facility: Days 1-20 are $0; days 21-100 carry a daily coinsurance (~$209.50); after day 100 the beneficiary pays all costs.

Part B: Medical Insurance

Part B is voluntary and requires a monthly premium (standard ~$185 in 2026). It covers physician services, outpatient care, durable medical equipment (DME), preventive services, lab tests, and limited outpatient prescription drugs (such as drugs administered in a clinic). Part B is the part that pays for doctor visits, so a question that asks 'which part covers the surgeon's fee' points to Part B even when surgery happens in a hospital.

Part B cost-sharing: after a relatively small annual deductible (~$257), the beneficiary generally pays 20% coinsurance of the Medicare-approved amount and Medicare pays 80%. There is no out-of-pocket maximum in Original Medicare — this open-ended 20% exposure is precisely the gap that Medicare Supplement (Medigap) plans exist to fill, a connection the exam loves to test.

IRMAA and the high-income surcharge

Higher-income beneficiaries pay an Income-Related Monthly Adjustment Amount (IRMAA) added to both the Part B and Part D premiums, based on Modified Adjusted Gross Income (MAGI) from two years prior. A single filer below the first threshold pays only the standard premium; income above it adds tiered surcharges. IRMAA never makes Part A premium-based — it only adjusts Part B and Part D.

Worked coinsurance scenario

Maria has Original Medicare and an outpatient procedure with a Medicare-approved amount of $3,000. She has already met her Part B deductible this year. Medicare pays 80% = $2,400; Maria owes 20% = $600. If she instead had a Medigap Plan G, the plan would pay that $600 coinsurance (after she meets the Part B deductible), reducing her out-of-pocket cost to $0 for this service. This contrast is the core reason seniors buy Medigap.

Enrollment periods

The Initial Enrollment Period (IEP) is a 7-month window: the 3 months before the month you turn 65, your birthday month, and the 3 months after. Miss it without other creditable coverage and you face the General Enrollment Period (GEP) (Jan 1 - Mar 31) plus a lifelong Part B late-enrollment penalty of 10% for each full 12-month period you delayed. A Special Enrollment Period (SEP) lets workers with active employer coverage delay Part B penalty-free.