Medicare has four parts — and the names don’t make it obvious what each one does. Here’s a plain-English breakdown of what Parts A, B, C, and D cover, what they cost, and how they fit together.
Part A: Hospital Insurance
Part A covers inpatient hospital stays, skilled nursing facility care, some home health services, and hospice care. Most people don’t pay a premium for Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters).
Part A does have cost-sharing. In 2026, the inpatient hospital deductible is $1,676 per benefit period — not per year. If you’re hospitalized twice in the same year with a gap between stays, you could pay that deductible twice. After 60 days in the hospital, daily coinsurance kicks in.
Part B: Medical Insurance
Part B covers outpatient care — doctor visits, lab tests, imaging, preventive services, durable medical equipment, and most outpatient procedures. Unlike Part A, Part B requires a monthly premium. The standard 2026 premium is $185.00 per month, though higher earners pay more due to IRMAA surcharges.
Part B also has a deductible ($257 in 2026), and after that, you typically pay 20% of covered services with no out-of-pocket maximum unless you have a Supplement plan.
Part C: Medicare Advantage
Part C isn’t a separate coverage type — it’s a delivery system. Medicare Advantage plans are sold by private insurance companies and must cover everything Parts A and B cover. Many also include dental, vision, hearing, and Part D drug coverage bundled in.
In exchange for potentially lower premiums, Medicare Advantage plans use networks (HMO or PPO), require referrals in some cases, and set their own cost-sharing rules. Your out-of-pocket exposure is capped each year — a major difference from Original Medicare alone.
Part D: Prescription Drug Coverage
Part D is optional prescription drug coverage. It’s offered through private insurers and covers outpatient medications. If you have Original Medicare (Parts A and B), you need to buy a standalone Part D plan. If you have Medicare Advantage, drug coverage is often built in.
Each Part D plan has a formulary — a list of covered drugs — and organizes them into cost tiers. Lower tiers mean lower copays. The 2026 out-of-pocket cap for Part D is $2,000, a significant improvement from prior years.
How the Parts Fit Together
Most people choose one of two paths. The first is Original Medicare (Parts A + B) paired with a Medigap Supplement plan and a standalone Part D drug plan. This gives broad access to any Medicare-accepting provider nationwide.
The second path is Medicare Advantage (Part C), which bundles hospital, medical, and often drug coverage in one plan. This path tends to have lower premiums but narrower networks and more cost-sharing at the point of care.
Which Path Is Right for You?
The answer depends on your health, your doctors, your prescriptions, and how you use healthcare. That’s exactly what our Path Finder is designed to help you think through.
Ready to find your path? Start the Path Finder →