Medicare Parts A, B, C, and D

Medicare: The Federal Program for Seniors

Medicare is a federal health insurance program administered by the Centers for Medicare & Medicaid Services (CMS). It primarily covers people age 65 or older, but also those under 65 who have received Social Security Disability Insurance (SSDI) for 24 months, and individuals with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS / Lou Gehrig's disease).

Medicare has four parts. Parts A and B together are called Original Medicare. Part C (Medicare Advantage) is a private alternative that bundles A and B, and Part D adds prescription drug coverage. Knowing what each part covers — and how it is funded — is heavily tested.

Part A — Hospital Insurance

Part A covers inpatient hospital care, skilled nursing facility (SNF) care, home health, and hospice. It is funded by the Medicare payroll tax (FICA) and is premium-free for most people who worked 40 quarters (10 years) in Medicare-covered employment.

Part A uses a benefit period framework, not a calendar year. A benefit period begins on admission and ends after the patient has been out of a hospital or SNF for 60 consecutive days.

Trap: SNF coverage requires a qualifying 3-day inpatient hospital stay first, and only covers up to 100 days. Medicare does not cover long-term custodial care.

Part B — Medical Insurance

Part B covers physician services, outpatient care, diagnostic tests, durable medical equipment (DME), and preventive services. It is voluntary and requires a monthly premium (income-adjusted via IRMAA for higher earners).

Part B has an annual deductible and then generally pays 80% of the Medicare-approved amount, leaving the beneficiary responsible for the remaining 20% coinsurance with no out-of-pocket maximum under Original Medicare. This open-ended 20% is the gap that Medigap policies fill.

Late-enrollment penalty: if a beneficiary does not enroll in Part B when first eligible (and has no qualifying group coverage), the premium increases 10% for each full 12-month period they could have had it — and the penalty is permanent.

Part C — Medicare Advantage (MA)

Part C lets beneficiaries receive their Medicare benefits through a private CMS-approved plan (HMO or PPO) instead of Original Medicare. The plan must cover everything Parts A and B cover and usually adds extras such as vision, dental, hearing, and a built-in Part D drug benefit (MA-PD).

To enroll, a person must already have both Part A and Part B and live in the plan's service area. Unlike Original Medicare, MA plans typically use networks and have an annual out-of-pocket maximum, which can make total exposure more predictable.

Part D — Prescription Drug Coverage

Part D is voluntary outpatient prescription drug coverage offered through private plans. It has its own premium, deductible, and a late-enrollment penalty for those who go 63+ days without creditable drug coverage. Plans use a formulary (tiered drug list). The former coverage gap ("donut hole") has been replaced by a hard annual out-of-pocket cap under recent law.

Enrollment Periods (high-yield)

• Initial Enrollment Period (IEP): the 7-month window around the 65th birthday month (3 before, the month of, 3 after).
• General Enrollment Period (GEP): January 1 – March 31 each year for those who missed IEP.
• Annual Election Period (AEP): October 15 – December 7 to change Part C / Part D.
• Special Enrollment Period (SEP): triggered by qualifying events such as losing employer coverage.

Trap: A producer must hold a valid Medicare Advantage / Part D certification (AHIP) and follow strict CMS marketing rules — no unsolicited door-to-door sales, no cross-selling at educational events, and a required Scope of Appointment before a sales meeting.

Enrollment Periods and Late Penalties

Medicare eligibility begins at age 65 (or after 24 months of SSDI, or immediately for ESRD/ALS). The exam tests the enrollment windows:

• Initial Enrollment Period (IEP) — 7 months: the 3 months before, the month of, and 3 months after the 65th birthday.
• General Enrollment Period (GEP) — Jan 1-Mar 31 each year for those who missed IEP, with possible late-enrollment penalties (Part B premium rises 10% for each 12 months delayed; Part D has its own penalty).
• Special Enrollment Period (SEP) — for those who kept employer group coverage past 65 and enroll within 8 months of losing it, avoiding penalty.

Part A Cost-Sharing Structure

Part A (hospital) is premium-free for those with 40 quarters of work credits but uses a benefit period: an inpatient deductible per benefit period, full coverage for days 1-60, daily coinsurance for days 61-90, then lifetime reserve days. Part B carries a monthly premium, an annual deductible, and 20% coinsurance with no out-of-pocket cap — the gap that Medigap fills.

The Four Parts at a Glance

Trap: Part C (Medicare Advantage) is an alternative delivery of Parts A and B through a private plan with networks and an out-of-pocket cap — it does not combine with a Medigap policy. Part D is standalone or bundled drug coverage. Original Medicare (A+B) plus a Medigap policy is the other path, and you cannot use both Advantage and Medigap simultaneously.