Medicare isn't a single one-size-fits-all plan. It is built out of four distinct parts (A, B, C, and D). When setting up your coverage, you choose between two foundational paths:

1. Original Medicare (Parts A & B): Administered directly by the federal government. You can visit any doctor or hospital nationwide that takes Medicare. Most people pair this with a Medigap policy (to pay leftover cost shares) and a standalone Part D plan (for retail prescriptions).
2. Medicare Advantage (Part C): Offered by private, Medicare-approved insurance companies. It rolls Parts A, B, and usually D into an all-in-one plan with local provider networks (like HMOs and PPOs) and extra perks like dental and vision.

Think of Part A as coverage for when you are admitted to a facility bed.

• What It Covers: Inpatient hospital stays, inpatient skilled nursing facility care (short-term rehabilitation following a qualifying hospital stay), hospice care, and limited home healthcare.
• What It Costs:
  • Monthly Premium: $0 for most people (if you or your spouse worked and paid Medicare taxes for at least 10 years / 40 quarters).
  • Out-of-Pocket Costs: Part A uses a benefit-period deductible for hospital admissions rather than a standard annual deductible. Daily coinsurance begins if a stay exceeds 60 consecutive days.
• Key Takeaway: Part A covers room and board while admitted, but it does not cover long-term custodial care (such as standard assisted living or long-term nursing home residency).

Think of Part B as coverage for everything that happens outside an inpatient hospital room—from routine wellness visits to major medical procedures.

• What It Covers: Primary care and specialist visits, outpatient surgery, lab tests, X-rays, MRI scans, emergency room care, ambulance services, mental health care, and durable medical equipment (like wheelchairs or oxygen).
• What It Costs:
  • Monthly Premium: You pay a standard monthly premium set by the federal government (which may be higher if your income exceeds federal IRMAA thresholds).
  • Out-of-Pocket Costs: An annual deductible applies. Once met, you generally pay 20% coinsurance for all covered services with no annual out-of-pocket cap under Original Medicare.
• Key Takeaway: Because that 20% coinsurance has no ceiling, most beneficiaries enroll in a Medigap plan to eliminate catastrophic financial risk.

Part C isn't a separate benefit category; it is a private alternative way to receive your Part A and Part B coverage.

• How It Works: A private insurer contracts with Medicare to provide your Part A and Part B benefits. By law, the plan must provide at least the same coverage as Original Medicare, but it sets its own copays, deductibles, and network restrictions.
• What It Adds: Most Medicare Advantage plans bundle Part D prescription coverage directly into the plan (MAPD) and offer routine allowances for dental, vision, hearing aids, and fitness programs.
• The Trade-Off: You must usually use the plan's network of local doctors and hospitals (HMO or PPO) and may need prior authorizations or referrals for specialists.
• Key Takeaway: Every Medicare Advantage plan has an annual Maximum Out-of-Pocket (MOOP) limit, giving you a legal financial safety net that Original Medicare alone lacks.

Part D covers outpatient medications you pick up at the retail pharmacy counter or order through mail delivery.

• How It Works: Administered exclusively through private insurers either as a standalone Prescription Drug Plan (PDP) alongside Original Medicare, or built into a Medicare Advantage plan (MAPD).
• Formularies & Tiers: Every plan organizes covered drugs into tiers ranging from Tier 1 (low-cost generic) to Tier 5 (specialty drugs), determining your copay or coinsurance.
• Out-of-Pocket Cap: Under federal reforms, Part D features an annual out-of-pocket spending cap ($2,100). Once your covered prescription spending reaches this limit, your copay is $0 for the remainder of the calendar year.
• Key Takeaway: Enrolling when first eligible prevents a permanent, cumulative late enrollment penalty if you don't already have creditable employer drug coverage.