Medicare is a federal health insurance program designed for people aged 65 or older and some younger people with disabilities or specific illnesses. Coverage through Medicare is generally divided into four parts; A, B, C, and D.¹

Here we'll cover everything you need to know about Medicare and these different parts so you can make the best decisions about your coverage.

Social Security and Medicare

Social Security retirement benefits are available to people who have obtained a certain age and either themselves (or had their spouse) worked and paid Social Security taxes for a certain period of time. Generally, in order to receive your full benefits, you or your spouse must have worked and paid Social Security taxes of a total of 10 years or more.² If you enroll in Original Medicare, your monthly premiums for Part A (if any) and Part B will typically be deducted from your Social Security benefit check, meaning you won't need to pay it separately.

If you qualify for premium-free Part A and apply for Social Security benefits at least four months before you turn 65, you'll generally be automatically enrolled in Medicare parts A and B on your 65th birthday. You'll then have the option to add a Medicare Supplement plan and a stand-alone Medicare Prescription Drug Plan (“PDP), or opt for a Medicare Advantage plan (Part C), which “bundle” your Part A, Part B, and usually Part D together.³

If you do not apply for Social Security benefits before turning 65, you'll need to apply for Medicare separately. If you continue to work and are provided a qualified employer-sponsored health insurance, you can wait to sign up for Medicare until you're no longer covered without incurring any penalty.

Medicare Part A: Hospital insurance

Medicare Part A coverage

Your Medicare Part A (commonly referred to as “Hospital Insurance”) will cover:

• Inpatient hospital admissions, as long as the hospitalization is ordered by a doctor and the hospital accepts Medicare. This includes inpatient psychiatric care.
• Skilled nursing facility admissions that are necessary for rehabilitation or medical treatments after a hospitalization or serious illness or injury.
• Hospice care if your condition is considered terminal. Your hospice benefit will cover the care you require as determined by your Hospice provider. You can receive these services in your home, in a care facility, or a hospital.
• Home health care that is provided in your home on an intermittent basis. The benefit will not cover continuous care, and it must be determined that you are unable to leave your home or leaving is not recommended due to your condition.
• Mental Health and Substance Abuse Services, including admissions to a psychiatric hospital, partial hospitalization program, intensive outpatient program, outpatient mental health services, tobacco use counseling, opioid disorder treatments, and alcohol misuse screenings.

You can utilize your Medicare Part A benefit for services with any doctor or facility in the United States that accepts Medicare.

Part A coverage costs

If you or your spouse worked and paid Social Security taxes for a total of at least ten years, the government will provide Medicare Part A to you at no cost (commonly referred to as “premium-free Part A”). However, if you do not qualify for premium-free Part A Medicare, you can purchase it and pay a monthly fee. In this case, your cost will vary based on how long you or your spouse worked and paid taxes. For example, in 2025, if you or your spouse paid Medicare taxes for at least 30 quarters (7.5 years) you'll pay $285 per month for Part A, while individuals who have worked less than this will pay the full premium or $518 per month.⁴

If you must pay a premium for your Medicare Part A insurance, it's best to sign up it when you initially become eligible. If you delay your purchase, you may be subject to a premium penalty of 10% for twice the number of years that you delay your coverage. For instance, if you wait two years before purchasing your plan, you'll pay 10% higher premiums for the first four years after you make your purchase.⁵

Part A usage costs

Like other insurance policies, your Medicare Part A will include a deductible and coinsurance.

The deductible is the amount of money you must pay out-of-pocket per benefit period before your Part A coverage starts paying for your health care. With Medicare Part A, for 2025, this amount is $1,676 for each hospital or skilled nursing facility benefit period. This means that, unlike most deductibles, you may be required to pay this amount more than once yearly.

Your coinsurance amounts will vary depending on the service you're utilizing, and there is no out-of-pocket maximum with Part A coverage, so these costs can add up if you are subject to multiple benefit periods or have extended stays of inpatient care (i.e., greater than 61 days) or skilled nursing care (i.e., greater than 20 days).⁶ However, you typically pay nothing for hospice care as long as you get your care from a Medicare-approved hospice provider.⁷

Medicare Part B: Medical Insurance

Medicare Part B coverage

Medicare Part B (commonly referred to as “Medical Insurance”) covers outpatient health care services such as:

• Doctor visits
• Home health care
• Durable medical equipment (walkers, wheelchairs, etc.)
• Lab services
• Preventative services
• Hospital services provided on an outpatient basis
• Physician services during an inpatient stay
• Outpatient mental health services
• Partial hospitalization programs

Part B coverage costs

If you opt for Medicare Part B, you'll pay a premium that is typically automatically deducted from your monthly Social Security payment. The standard premium is set annually and tends to increase over time. In 2025, the monthly premium for most individuals is $185 but you may be subject to a higher premium based on your income.. For example, the premium is $185 in 2025 if you make less than or equal to $106,000 as an individual or $212,000 as a couple. However, it can go up to $628.90 per month if you make $500,000 or more as an individual or $750,000 or more as a couple.⁸

Like Medicare Part A, Part B is subject to a late enrollment penalty. If you choose to delay your enrollment in Part B, you'll generally be required to pay a 10% penalty for each year you have delayed. This additional premium cost typically will last for the life of your policy. For instance, if you wait three years after your eligibility date to sign up for Part B, your monthly premium will be 30% higher for the entirety of your coverage thereafter.⁹

Part B usage costs

Medicare Part B has a standard deductible, which for 2025 is $257. This is the amount of money you must pay out-of-pocket before your Part B coverage will start to pay for covered services. Unlike Medicare Part A, this deductible is only required annually.

In addition to a deductible, you'll sometimes be required to pay a coinsurance. This is a portion of the bill that you are required to pay. Medicare Part B will cover 80% of the costs of covered services, meaning you must pay the remaining 20% of the cost for each Medicare-covered service or item (and as long as your doctor or health care provider accepts the Medicare-approved amount as full payment – called “accepting assignment”).¹⁰ Since, like Part A, there is no out-of-pocket maximum for Part B, these costs could add up quickly.

If you are receiving outpatient hospital services, in addition to being responsible for the 20% of the Medicare-approved amount for doctor and other health care providers' services you may also be required to pay a copayment to the facility. This fee is paid directly to the hospital, and you might be required to pay it when you arrive for your appointment. While the cost can vary, it should not be more than your Part A deductible.¹¹

Medicare Part C: Medicare Advantage plans

Medicare Part C coverage

Medicare Part C, also called Medicare Advantage plans, are insurance policies offered by private insurance companies as another way to receive your Part A and Part B benefits instead of through Original Medicare. They often bundle your Part A, B, and usually Part D benefits. They also often include some additional benefits such as routine dental and vision, medical transportation, over-the-counter drug coverage, and other health and wellness services that Original Medicare does not cover.¹²

Keep in mind that while you can utilize Original Medicare with any doctor in the United States who accepts Original Medicare, Medicare Advantage plans may have limitations on which physicians and facilities they participate with. Be sure to ask your InsureMe licensed insurance agent if your plan participates with your preferred providers.

Medicare Part C costs

Each Medicare Advantage plan's cost will vary. You'll still be required to pay your monthly premium for Medicare Part B (and Part A premium if any) on top of any premium for the Medicare Advantage plan itself. Some Medicare Advantage plans offer what's called a Part B Giveback where a portion of, or even all of, your Part B premium is reimbursed.

Qualifying for Medicare Part C

You must have Medicare Parts A and B to enroll into a Medicare Part C plan. If you have coverage through your employer or union, speak with your InsureMe licensed insurance agent and your benefits coordinator before purchasing your Part C plan to ensure that your choice doesn't breach your current coverage.

Medicare Part D: prescription drug coverage

Medicare Part D coverage

Medicare Drug Coverage (Part D) helps pay for the brand-name and generic drugs you need. It's optional and offered to everyone with Medicare by insurance companies and other private companies approved by Medicare. This includes maintenance medications, curative treatments, and some preventative care such as vaccinations. Part D is provided through stand-alone Prescription Drug Plans (“PDP”) or through a Medicare Advantage plan with drug coverage.

Medicare Part D costs

Medicare Part D monthly premiums change annually, much like the other Medicare insurance plans. Additionally, your plan may include a deductible, an amount you must pay out-of-pocket before the insurance will begin covering your drugs.

Like Parts A and B, your Part D premium cost can be income-dependent.¹³

If you do not currently have prescription drug coverage that is equivalent to Medicare Part D (i.e., “creditable coverage”) but don't purchase Part D when you first get Medicare , you'll typically be required to pay a late enrollment penalty. The penalty will be added to your premium at a rate of 1% for every month you delay your purchase. Your fee may increase over time according to annual premium changes and will last for the life of your policy.¹⁴

Deductibles, copayments, and coinsurance costs will vary depending on the Part D plan that you choose. Your InsureMe licensed insurance agent can assist you in determining the plan that is best for you.

The donut hole

The Part D donut hole is a coverage gap that existed prior to year 2025, and affected Medicare beneficiaries who had spent a certain dollar amount on prescription drugs within the year. The Inflation Reduction Act (“IRA”) phased this out, with 2024 being the final year of its existence. As of 2025, there is no longer a donut hole coverage gap, and Part D coverage now has three simple phases:

• Deductible Phase: Below this amount, you generally pay 100% of the costs for covered drugs before your plan starts to pay. Your deductible will depend on which plan you choose. No Part D plan may have a deductible more than $590 in 2025, and some plans have no deductible.¹⁵
• Initial Coverage Phase: After deductible, you pay a portion of drug costs until out-of-pocket expenses reach $2,000 for the year.
• Catastrophic phase: Once you've met the $2,000 out-of-pocket Part D limit for the year, you'll no longer have to pay any cost toward covered drugs.

Qualifying for Medicare Part D

You must have either Medicare Part A or Medicare Part B) to enroll in a PDP. However, if you want to receive your drug coverage through a Medicare Advantage plan, you need to have both Part A and Part B.¹⁶

Medicare Supplement (Medigap)

Original Medicare doesn't pay all of the cost for covered health care services and supplies. Medicare Supplement Insurance (“Medigap”) policies sold by private insurance companies can help pay some of the remaining health care costs for covered services and supplies, like copayments, coinsurance, and deductibles.¹⁷ To inquire about the availability of a Medicare Supplement plan, consult your InsureMe licensed insurance agent.

How Medicare Parts A, B, C, and D work together

If you are automatically enrolled in Medicare, you'll generally start with Medicare parts A and B concurrently. You can choose to add a Medicare supplement and Part D prescription drug coverage for additional coverage options. You can alternatively enroll in a Part C Medicare Advantage plan as an alternative to Original Medicare and often include your Part D prescription drug coverage as part of that plan.

The benefit of staying with Original Medicare is that you can take your insurance to any doctor or hospital within the United States that accepts Medicare.

If you choose a Medicare Advantage plan (Medicare Part C), your policy will include Parts A and B coverage, and can also provide Part D coverage, and even include extra benefits not covered under Original Medicare. However, while these plans may offer comprehensive coverage, you'll often be limited to the doctors within the plan's network, have more limited drug formularies, and may be required to get pre-authorization for some services.

There are a wide range of options for you to receive your Medicare coverage. To fully understand what plan is best for your unique situation, contact your InsureMe licensed insurance agent for assistance.