If you're new to Medicare, the letters can feel overwhelming fast. Part A, Part B, Part C, Part D — and then people start talking about Medigap and drug formularies. Suddenly the whole thing feels like alphabet soup.
Let's slow down. Medicare is organized into four parts, each designed to cover a different piece of your healthcare. Once you understand what each part does — and which ones you actually need — the whole system starts to make sense.
Part A — Hospital Insurance
Part A is your hospital coverage. It kicks in when you need serious, inpatient care — the kind that requires an overnight stay or longer.
| What It Covers | 2026 Costs |
|---|---|
| Inpatient hospital stays · Skilled nursing facility care (short-term, after a qualifying hospital stay) · Hospice care · Some home health services | Premium: $0 for most (up to $565/mo if not fully qualified) · Deductible: $1,736 per benefit period · Days 1–60: $0 · Days 61–90: $434/day · Day 91+: $868/day |
One thing to know about the Part A deductible: it's charged per benefit period, not per calendar year. A benefit period starts when you're admitted and ends when you've been out for 60 consecutive days. You could face this deductible more than once in a single year.
Part B — Medical Insurance
Part B covers the care you use most frequently — your regular doctors, your annual checkups, outpatient procedures, and the preventive services that help catch problems early.
| What It Covers | 2026 Costs |
|---|---|
| Doctor visits · Outpatient services (labs, X-rays, imaging) · Preventive care (flu shots, screenings, annual wellness) · Durable medical equipment · Some home health services | Premium: starts at $202.90/mo (more with IRMAA) · Deductible: $283/year · Your share after: 20% of approved costs with no cap |
That last point deserves attention: Original Medicare has no annual out-of-pocket maximum. The 20% you owe on Part B services has no ceiling. This is the primary reason many people add a Medigap Supplement plan or choose Medicare Advantage.
Part C — Medicare Advantage
Part C isn't a separate benefit — it's an alternative way to receive your Medicare coverage. Instead of going through Original Medicare directly, you enroll in a private plan that bundles Parts A and B, usually includes Part D drug coverage, and often adds extras Original Medicare doesn't offer.
| What It Covers | 2026 Costs |
|---|---|
| Everything in Parts A and B · Usually includes Part D drug coverage · Often includes extras: dental, vision, hearing, fitness, OTC allowances | Many plans at $0 premium (you still pay Part B) · Average ~$14/month · OOP max required: avg $5,320 in-network, capped at $9,250 in-network / $13,900 out-of-network |
Medicare Advantage plans use provider networks — HMO or PPO — so your doctors and hospitals need to be in-network for the best pricing. That's the key trade-off: more benefits and a built-in cost ceiling, less flexibility to see any provider anywhere.
Part D — Prescription Drug Coverage
Original Medicare doesn't cover your prescriptions. Part D is how you fill that gap. It's offered through private insurance companies as a standalone plan on top of Original Medicare, or bundled into a Medicare Advantage plan.
| What It Covers | 2026 Costs |
|---|---|
| Prescription medications listed on the plan's formulary · Drugs organized into tiers (generics cost less, specialty drugs cost more) · Coverage at in-network pharmacies | Premium varies by plan and ZIP · Deductible up to $615 · Copays/coinsurance based on drug tier · NEW for 2026: $2,100 annual out-of-pocket cap |
The new $2,100 out-of-pocket cap is a significant change in 2026. For anyone managing ongoing prescriptions — especially specialty medications — this provides a meaningful financial safety net that didn't exist in prior years.
How All Four Parts Work Together
| Part | What It Covers | Provided By | Drugs? | 2026 Premium |
|---|---|---|---|---|
| A | Hospital stays, skilled nursing, hospice | Federal government | No | $0 for most |
| B | Doctor visits, outpatient, preventive | Federal government | No | Starts at $202.90 |
| C | Bundles A & B, usually D, often extras | Private insurers | Usually yes | Varies; many $0 |
| D | Prescription drugs only | Private insurers | Yes | Varies by plan and ZIP |
Do You Need All Four Parts?
Not necessarily. Here's a framework:
- Parts A and B (Original Medicare) give you the foundation. Most people start here.
- Part D adds prescription coverage. If you take regular medications, skipping it means paying full price and risking a permanent late penalty later.
- Part C (Medicare Advantage) is an alternative to A and B — not an add-on. Choose it and it replaces your Original Medicare coverage.
- Medigap is an add-on to Original Medicare — not one of the numbered parts, but an important fifth piece many people use to cover the uncapped 20%.
Not sure which parts you need?
Understanding the four parts is the first step. Choosing the right combination for your doctors, your prescriptions, and your budget is where it gets personal.
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