How does Medicare work?

Medicare has four parts, Parts A, B, C and D and one additional type of plan called Medicare Supplement (Medigap):

  • Part A: Sometimes referred to as hospital insurance, Part A helps pay for overnight hospital stays including your room, tests, and doctor fees. For most people (i.e. as long as you have paid into social security for 10 years), when they turn 65, they are enrolled into Part A automatically and there is no cost. All the other Medicare Parts have costs.
  • Part B: Helps pay for outpatient care such as doctor visits, tests and screenings. Parts A and B together are often referred to as Original Medicare.
  • Part C: An alternative to Original Medicare that is also known as Medicare Advantage. Part C is administered by private insurance companies and can include for one premium other benefits not included in Medicare Part B like vision, dental, hearing, prescription drug coverage. Please note that even if you choose a Medicare Advantage Plan, Part B premiums still apply.
  • Part D: Optional Prescription Drug coverage that can be added to Parts A or B or may be included in a Medicare Advantage Plan.
  • Medicare Supplement (Medigap): Optional coverage that covers some of costs not covered in Parts A or B.

Keep in mind that Medicare does not pay for 100% of costs that come with your Part A and B benefits. You may have to pay a deductible, co-pay or co-insurance for the costs not covered.