Medicare, Part by Part: What A, B, C, and D Actually Cover

Medicare By the RetiPilot Editorial Team · Jun 22, 2026 · 6 min read

Medicare’s alphabet confuses almost everyone at first. Here’s what each part actually does, what it costs, and the one thing Original Medicare surprisingly doesn’t include: a limit on what you can spend.

Part A: hospital coverage

Part A is the hospital side of Medicare — inpatient care, skilled nursing care after a hospital stay, hospice, and short-term post-hospital home health care. For most people it’s premium-free, earned through payroll taxes over a working career. You can use it at any facility in the U.S. that accepts Medicare.

Part B: medical coverage

Part B covers the outpatient world: doctor visits, outpatient care, durable medical equipment, home health, and preventive services like screenings and annual wellness visits. It carries a monthly premium (typically deducted from Social Security) that rises with your income through IRMAA surcharges — and it pays roughly 80% of approved costs. The other 20% is yours, and a small share of providers can charge up to 15% above the Medicare-approved amount.

Part D: prescription drugs

Part D is optional drug coverage sold by private insurers. Skip it when you’re first eligible without other qualifying drug coverage, and you can face a late-enrollment penalty for life if you join later. Like Part B, its premium is income-adjusted.

The gap in the middle: no out-of-pocket cap

Here’s the part that surprises people: Original Medicare has no annual limit on your out-of-pocket costs, and it doesn’t cover dental, vision, hearing, care outside the U.S., or long-term care. A serious illness under Parts A and B alone can be financially open-ended. That’s why nearly everyone adds one of two things.

Part C and Medigap: the two ways to cap the risk

Medicare Advantage (Part C) replaces the delivery of your A and B benefits with a private bundled plan — usually with drug coverage, extras like dental or vision, low premiums, and an annual out-of-pocket maximum, in exchange for networks and prior authorizations. Medigap keeps Original Medicare and adds a standardized supplement that pays the gaps, preserving any-doctor freedom for a higher premium. Choosing between them is its own decision, and the enrollment windows around 65 are the most protected time to make it.