Why Medicare has four parts
Medicare was originally created in 1965 with just Part A (hospital) and Part B (medical). Part D (prescription drugs) wasn't added until 2006. Part C (Medicare Advantage) is a private plan alternative that bundles A, B, and usually D together. Each part has its own premiums, deductibles, and rules.
Key principle: Original Medicare (Parts A + B) is the foundation. You then choose whether to add Part D separately, supplement with a Medigap plan — or instead switch to Medicare Advantage (Part C) which replaces Original Medicare entirely.
Part A — Hospital Insurance
Part A covers inpatient care. If you're admitted to a hospital, skilled nursing facility, or hospice — Part A pays. Most people pay $0 premium for Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters).
| What Part A covers | Your cost in 2026 |
|---|---|
| Hospital inpatient (days 1–60) | $1,676 deductible |
| Hospital inpatient (days 61–90) | $419/day coinsurance |
| Skilled nursing facility (days 1–20) | $0 |
| Skilled nursing facility (days 21–100) | $209.50/day |
| Hospice care | $0 for most services |
| Home health care (medically necessary) | $0 |
Part B — Medical Insurance
Part B covers outpatient care — doctor visits, lab tests, preventive screenings, medical equipment, mental health services, and most outpatient procedures. The standard Part B premium in 2026 is $185.00/month, though higher earners pay more (IRMAA surcharges).
| What Part B covers | Your cost in 2026 |
|---|---|
| Annual deductible | $257/year |
| Doctor visits & outpatient services | 20% after deductible |
| Preventive screenings (annual wellness, mammograms, etc.) | $0 |
| Mental health outpatient | 20% after deductible |
| Durable medical equipment | 20% after deductible |
| Ambulance services | 20% after deductible |
⚠️ The 20% adds up fast: Original Medicare has no out-of-pocket maximum on Part B costs. A serious illness could cost you tens of thousands in 20% coinsurance. This is why many people add a Medigap supplement plan or choose Medicare Advantage instead.
Part C — Medicare Advantage
Medicare Advantage plans are sold by private insurance companies approved by Medicare. They must cover everything Original Medicare covers, but they deliver it differently — often with lower out-of-pocket costs, extra benefits (dental, vision, hearing), and a network of providers you must use.
Part C is an alternative to Original Medicare — not an addition. If you enroll in Medicare Advantage, you still pay your Part B premium but you use the Advantage plan for your actual care instead of Original Medicare.
Read the full Medicare Advantage guide →Part D — Prescription Drug Coverage
Part D covers prescription drugs. It's offered by private insurers and each plan has its own formulary (list of covered drugs), premiums, and costs. In 2026, the out-of-pocket cap for Part D is $2,000 — a major improvement from previous years that protects people with high drug costs.
⚠️ Late enrollment penalty: If you don't enroll in Part D when you're first eligible and go without creditable drug coverage, you'll pay a permanent late enrollment penalty of 1% per month you were without coverage. This penalty never goes away.
How the parts work together
There are two main paths:
Path 1 — Original Medicare: Enroll in Part A + Part B. Add a standalone Part D drug plan. Optionally add a Medigap supplement to cover the 20% coinsurance and deductibles.
Path 2 — Medicare Advantage: Enroll in Part A + Part B, then enroll in a Medicare Advantage (Part C) plan which replaces Original Medicare. Most Advantage plans include drug coverage (MAPD) so you often don't need a separate Part D plan.