How Medicare Works: Parts A, B, C, and D Explained

If you're going to help clients with Medicare, you need to understand how it actually works. Not the textbook version. The version that matters when you're sitting across from a sixty-five-year-old who's confused and wants someone to make it simple. That's your job. So let's break this down the way your clients need to hear it.

Medicare has four parts. Parts A, B, C, and D. Each one covers something different, and they work together. Here's how.

Part A is hospital insurance. Most people get it at sixty-five and pay zero in monthly premium because they or a spouse paid Medicare taxes for at least ten years while working. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. But it doesn't cover everything. In 2026, the Part A hospital deductible is $1,736 per benefit period. That means if your client gets admitted, they owe that before Medicare starts paying. These are real costs your clients need to understand, and most of them don't.

Part B is medical insurance. This covers doctor visits, outpatient care, lab work, preventive services, and durable medical equipment. Part B has a monthly premium that everyone pays. In 2026 the standard Part B premium is $202.90 per month, with an annual deductible of $283. After that, the client typically pays 20% of the Medicare-approved amount for most services. Here's what matters. Part B has no out-of-pocket maximum. That 20% coinsurance has no cap. If your client has major surgery or ongoing treatment, that 20% adds up fast with no ceiling. That's one of the biggest gaps in Original Medicare, and it's why supplemental coverage exists.

Now, Parts A and B together are called Original Medicare. That's the government program. It covers a lot, but it doesn't cover everything. It doesn't cover most dental, vision, or hearing. It doesn't cover long-term care. And as we just discussed, it has deductibles, coinsurance, and no out-of-pocket maximum on Part B services. That's where Parts C and D come in.

Part C is Medicare Advantage. These are plans offered by private insurance companies approved by Medicare. A Medicare Advantage plan replaces Original Medicare. The client still has Medicare, but they get their Part A and Part B benefits through the private plan instead of through the government. Most Medicare Advantage plans include Part D drug coverage, and many add dental, vision, hearing, and fitness benefits. The trade-off is that these plans typically use provider networks, meaning the client may need to use specific doctors and hospitals. They have copays and coinsurance, but they also have an out-of-pocket maximum, which Original Medicare does not. Many plans advertise zero-dollar monthly premiums, but the client still pays their Part B premium regardless.

Part D is prescription drug coverage. Original Medicare does not cover most prescription drugs. Part D fills that gap. Clients can get Part D coverage two ways: as a standalone prescription drug plan paired with Original Medicare, or built into a Medicare Advantage plan. Part D plans vary by carrier and by region. They each have their own formulary, which is the list of drugs they cover, and their own cost structure with tiers, copays, and deductibles. One major update your clients should know about: starting in 2025, the Inflation Reduction Act capped Part D out-of-pocket drug costs at $2,100 per year. That cap is still in place for 2026. For clients on expensive medications, this is significant.

So here's the simple framework. Part A covers hospital stays. Part B covers doctor visits and outpatient care. Together they're called Original Medicare. Part C, Medicare Advantage, is a private plan alternative that bundles A, B, and usually D together. Part D covers prescription drugs. Your clients will either be on Original Medicare with a separate drug plan, or on a Medicare Advantage plan that includes drug coverage. Almost every Medicare conversation you have will start with understanding which path the client is on or which path makes more sense for their situation.

Your action step is this. Memorize the four parts and what each one covers. Know the 2026 numbers: the Part B premium of $202.90, the Part A hospital deductible of $1,736, and the Part D out-of-pocket cap of $2,100. When you can explain Medicare in plain English with real numbers, your client trusts you immediately. That trust is the foundation of every sale you'll ever make.

Medicare has four parts. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Part B covers doctor visits, outpatient care, lab work, preventive services, and durable medical equipment. Part C, also called Medicare Advantage, is a private-plan alternative that bundles Parts A and B (and usually Part D) into a single plan. Part D covers prescription drugs as either a standalone plan or bundled inside a Medicare Advantage plan.

Original Medicare is Parts A and B — the federal government program. It lets clients see any provider that accepts Medicare and has no provider networks, but it has deductibles, a 20% coinsurance with no out-of-pocket maximum, and no built-in drug or dental coverage. Medicare Advantage (Part C) is offered by private carriers approved by Medicare. It replaces Original Medicare as the delivery mechanism, typically uses provider networks, often includes drug, dental, vision, and hearing benefits, and includes an annual out-of-pocket maximum that Original Medicare does not.

Most clients pay nothing for Part A. The standard Part B premium is $202.90 per month with a $283 annual deductible. After the deductible, clients pay 20% coinsurance for most services with no cap. The Part A hospital deductible is $1,736 per benefit period. Part D premiums vary by plan, but out-of-pocket drug costs are capped at $2,100 in 2026 thanks to the Inflation Reduction Act.

Usually no. Most Medicare Advantage plans include Part D prescription drug coverage built into the plan. A client who enrolls in a Medicare Advantage plan with drug coverage does not need — and typically cannot enroll in — a separate standalone Part D plan.

Original Medicare does not cover most dental care, vision exams or eyeglasses, hearing aids, long-term custodial care, or most prescription drugs. It also has no out-of-pocket maximum on Part B services, meaning the 20% coinsurance can add up indefinitely. Many of these gaps are why supplemental coverage (Medigap) and Medicare Advantage plans with added benefits exist.