Medicare Explained: Parts A, B, C, D (2025 Guide)

My dad turned 65 last year and called me panicking about Medicare. “There’s like four different parts? And supplemental stuff? And advantage plans? What is any of this?”

He’d run a business for 40 years and Medicare paperwork still confused him. The system is genuinely confusing and I’m half-convinced it’s designed that way.

So here’s my attempt to explain it without making your head explode.

Part A: Hospital stuff

Part A covers inpatient hospital care. You get admitted to the hospital, stay overnight, that kind of thing. Also covers skilled nursing facility care (but not long-term/custodial care), hospice care, and some home health care.

Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. It’s “premium-free.” But there are still deductibles and coinsurance when you actually use it.

Hospital deductible in 2024 is $1,632 per benefit period. That’s not per year—it’s per “benefit period” which starts when you’re admitted and ends 60 days after you’re discharged. Get admitted twice with more than 60 days between? Pay the deductible twice.

Part B: Doctor stuff

Part B covers outpatient care. Doctor visits, preventive services, lab tests, x-rays, ambulance services, durable medical equipment, mental health services. Basically non-hospital medical care.

Part B has a monthly premium. Standard in 2024 is $174.70/month. Higher income people pay more—there’s an income-related surcharge.

Also has deductible ($240 in 2024) and then you typically pay 20% coinsurance after that. The 20% with no cap can be scary for expensive care, which is why people get supplemental coverage.

Part D: Prescription drugs

Part A and B don’t cover prescription drugs except in very limited circumstances. Part D does. It’s separate coverage you buy from private insurers approved by Medicare.

Every Part D plan has a formulary—list of drugs they cover. Different plans cover different drugs at different prices. If you take specific medications, check the formulary before picking a plan.

Part D has premiums, deductibles, copays—the whole deal. Varies by plan. There’s also this weird “donut hole” coverage gap thing where you pay more after hitting a certain spending threshold until you hit catastrophic coverage. It’s complicated and I’m not going to fully explain it because I don’t want to write 3,000 more words.

Part C: Medicare Advantage (the alternative)

Okay so Parts A, B, and D are “Original Medicare” run by the government. Part C—Medicare Advantage—is an alternative way to get your Medicare benefits through private insurance companies.

Medicare Advantage plans combine A and B (and usually D) into one plan. Often include extras Original Medicare doesn’t—dental, vision, hearing, gym memberships. Sometimes have lower out-of-pocket costs.

Trade-off is networks. Medicare Advantage plans have networks like regular health insurance terms. HMO and PPO plans, PPO, etc. You might be restricted to certain doctors and hospitals. Original Medicare lets you see any provider that accepts Medicare.

About half of Medicare beneficiaries are now on Advantage plans. Whether it’s better depends on your situation, health needs, and preferences.

Medigap (supplemental insurance)

If you have Original Medicare (A and B), you might want Medigap—supplemental insurance that helps pay what Medicare doesn’t. Deductibles, coinsurance, copays.

Medigap plans are standardized and labeled with letters (Plan G, Plan N, etc). Same letter means same coverage regardless of which company sells it. Prices vary though so shop around.

Can’t have Medigap and Medicare Advantage at same time. It’s one or the other approach.

The actual decision

When you turn 65 you’re basically choosing:

Option 1: Original Medicare (A + B) plus Part D for drugs plus possibly Medigap for supplemental coverage

Option 2: Medicare Advantage plan that bundles everything

Original Medicare = more flexibility, see any doctor, but potentially higher costs without supplemental coverage.

Medicare Advantage = potentially lower costs, extra benefits, but network restrictions.

What my dad did

He went with Original Medicare plus a Medigap Plan G plus a Part D plan. More expensive monthly but he has doctors he’s been seeing for 20 years and didn’t want to deal with networks.

His neighbor did Medicare Advantage because she’s healthy, doesn’t see specialists, and liked the $0 premium plan with dental coverage.

Both valid choices. Depends on your situation.

Comprehensive escaped and is currently in the neighbor’s yard eating something—I should probably deal with that—but the main thing with Medicare is don’t just pick randomly. Look at your health needs, your doctors, your medications. Check if your doctors accept Medicare or are in the Advantage plan network. Do the math on total costs including premiums, deductibles, and potential out-of-pocket. Medicare.gov has a plan finder tool that helps.