How to Understand Medicare Parts

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The original Medicare program provides coverage for medical care and hospitalization, but leaves people with few choices. Over time, Medicare has added options to purchase Medicare coverage and prescription drug plans through private insurers. Taken together, the Medicare parts allow consumers to tailor Medicare coverage to fit their circumstances. Individuals can begin Medicare at age 65 or two years after becoming eligible for Social Security Disability Insurance benefits.

Hospitalization -- Part A

Medicare Part A pays much of the cost of hospitalization and may pay for follow-up skilled nursing and home health care. Stays in long-term care facilities and cosmetic surgery aren't covered Part A pays about 80 percent of hospital costs for the first 60 days and smaller percentages thereafter. People get Part A coverage automatically, and it's free if they're eligible for Social Security retirement benefits, SSDI or paid Medicare tax as a government employee. If you don’t qualify for free Medicare Part A based on your work history or through a spouse, you can buy Part A coverage. Maximum monthly premiums were $407 in 2015.

Medical Care -- Part B

Part B Medicare covers medical care other than hospitalization, including doctor’s fees, outpatient care and lab tests. Some things are not covered, such as prescription drugs, dental care and eyeglasses. As of 2015, the annual deductible was $147 and the monthly premium was $104.90. The premium increased when modified adjusted gross income exceeded $170,000 for married couples or $85,000 for single individuals. The government expects people to start taking Parts A & B when they're first eligible unless they have credible coverage that's better than Medicare.

Medicare Advantage -- Part C

Medicare Advantage, or Medicare Part C, is a combination of A and B available to people who get their health coverage plan from a private insurer approved by Medicare. Typically, these insurers are health maintenance or patient provider organizations. Part C patients usually pay an additional premium to that insurer. In return, Medicare Part C plans frequently additional include health care coverage. For example, a plan might pay for dental and vision care and often prescription drugs. Some plans will have its users pay extra if they go to health care providers outside of its network.

Prescription Medicines -- Part D

Part D is optional prescription drug coverage. As with Medicare Advantage, it calls for premiums. The user chooses from plans offered by Medicare-approved private organizations. Some Part D plans are offered as a package deal with Medicare Advantage. The base monthly premium for Part D was $31.80 in 2015, although a late enrollment penalty applies for people who you don’t sign up when they first become eligible. A separate premium for the prescription coverage plan can also apply.

Medigap Supplemental Insurance

The term "Medigap" refers to supplemental insurance from private insurers. Medigap kicks in after Medicare Parts A and B have paid their share of health care costs and covers expenses like co-payments and deductibles. Medigap supplemental insurance usually doesn't cover things like long-term care, vision care or prescription drugs.