Medicare Parts A, B, C, and D

Medicare Parts A, B, C, and D

Medicare is the federal health insurance program created in 1965 under Title XVIII of the Social Security Act. It is administered by the Centers for Medicare & Medicaid Services (CMS), while enrollment and premium collection run through the Social Security Administration (SSA). Eligibility is the cornerstone exam fact: a person qualifies at age 65 (whether or not retired), or before 65 after receiving Social Security Disability Income (SSDI) benefits for 24 months, or immediately upon diagnosis of End-Stage Renal Disease (ESRD) or ALS (Lou Gehrig's disease).

Medicare has four parts. Parts A and B together are called Original Medicare. Parts C and D are delivered by private insurers under contract with CMS.

Part A — Hospital Insurance

Part A covers inpatient hospital, skilled nursing facility (SNF), home health, and hospice care. Most people pay no premium for Part A because they (or a spouse) paid Medicare payroll taxes for at least 40 quarters (10 years). Those with fewer quarters may buy in for a monthly premium.

Part A uses a benefit period measured from hospital admission and ending after the insured has been out of a hospital or SNF for 60 consecutive days. There is no limit on the number of benefit periods. Cost-sharing under Part A (representative 2026-style figures used for teaching) works like this:

Trap: SNF care requires a prior 3-day inpatient hospital stay and must be skilled (not custodial) care to qualify.

Part B — Medical Insurance

Part B is voluntary and covers physician services, outpatient care, diagnostic tests, durable medical equipment (DME), and preventive services. It requires a monthly premium (income-adjusted via IRMAA for high earners), an annual deductible, and then Medicare pays 80% of the Medicare-approved amount while the insured pays the remaining 20% coinsurance with no out-of-pocket maximum.

Worked example: An approved physician charge is $1,000. After the insured has met the Part B annual deductible, Medicare pays 80% = $800, and the insured owes the 20% coinsurance = $200. That uncapped 20% is exactly the gap Medigap is designed to fill.

Part C and Part D

Part C (Medicare Advantage) lets private insurers bundle Parts A and B (and usually D) into one plan, often an HMO or PPO. The insured still pays the Part B premium plus any plan premium; in exchange the plan must cover everything Original Medicare covers and typically adds an out-of-pocket maximum and extras like dental or vision.

Part D is prescription drug coverage sold by private insurers. Enrollment is voluntary, but a beneficiary who delays enrollment without creditable coverage pays a late enrollment penalty added permanently to the premium.

Enrollment windows (memorize)

• Initial Enrollment Period (IEP): 7 months — the month of turning 65 plus 3 months before and 3 months after.
• General Enrollment Period (GEP): January 1 - March 31 each year (for those who missed IEP; late Part B premium penalty applies).
• Annual Election Period (AEP): October 15 - December 7 (change Part C/D).

Cost-Sharing Mechanics You Must Memorize

Part A uses a benefit period model, not a calendar year. A benefit period begins on admission and ends after 60 consecutive days out of a hospital or skilled facility; a new period means a new deductible. Within a period, the inpatient hospital deductible covers days 1-60 in full; days 61-90 carry a daily coinsurance; days 91+ draw on 60 lifetime reserve days, after which the patient pays all costs.

Part B and Part D Details

Part B has an annual deductible, then pays 80% of approved charges with the patient owing the 20% coinsurance and any excess charge from a non-participating provider. There is no out-of-pocket maximum in Original Medicare — the gap that Medigap fills. Part D drug coverage uses a deductible, an initial coverage phase, and a catastrophic phase; late enrollment in B or D triggers a permanent premium penalty.

Worked Example: Part B Coinsurance

A beneficiary has met the Part B deductible and receives $1,000 of Medicare-approved services. Medicare pays 80% = $800; the beneficiary owes the 20% coinsurance = $200. If a non-participating provider adds a 15% excess charge, the patient also owes up to $1,000 x 15% = $150 more, unless a Medigap plan that covers excess charges is in force.

Trap: Part C (Medicare Advantage) replaces Original Medicare through a private plan and cannot be paired with a Medigap policy; Medigap only supplements Original Medicare.

Eligibility and Premium-Free Part A

Most people qualify for premium-free Part A at 65 if they or a spouse paid Medicare taxes for at least 10 years (40 quarters); others may buy in. Part B always charges a monthly premium, which rises for high earners under IRMAA (income-related monthly adjustment amount). People under 65 qualify for Medicare after 24 months of receiving SSDI, or immediately with ALS or end-stage renal disease. Tying enrollment timing to these eligibility rules — and the lifetime late-enrollment penalties for B and D — is a frequent exam target.