Understanding Medicare: Parts A, B, C, D, and the Gaps Between Them
Medicare is not one program — it's four overlapping programs with different rules, different costs, and different gaps. Most people approaching 65 don't know which parts they're automatically enrolled in, which ones they have to sign up for, or what happens if they miss a deadline. This guide walks through all of it.
TL;DR — Jump to what matters to you
- The four parts explained — A (hospital), B (outpatient), C (Advantage), D (drugs)
- Traditional Medicare vs. Medicare Advantage — the core trade-off
- Advantage plan types — HMO vs. PPO vs. PFFS — they're not the same
- Hospitals dropping Advantage plans — a growing trend that affects your access
- What Medicare doesn't cover — long-term care costs and your real options
- Medigap: Plan F vs. G vs. N — the three-way comparison and which fits your situation
- Enrollment windows — when to sign up and what triggers your window
- Late enrollment penalties — the math on what procrastination actually costs
- Not sure which path fits you? — use the decision tool below
The Four Parts — What Each One Actually Does
When people say "Medicare," they usually mean a specific slice of it. Here's how the parts fit together:
Covers inpatient hospital stays, skilled nursing facility care after a hospitalization (up to 100 days), hospice, and some home health. Most people pay no premium for Part A if they or their spouse worked and paid Medicare taxes for at least 10 years.
Covers outpatient care — doctor visits, labs, imaging, preventive services, durable medical equipment, and some medications administered in a clinic. Has a monthly premium (standard is $202.90/month in 2026; higher earners pay more via IRMAA surcharges, which can push the premium to nearly $690/month at the top bracket).
A private insurance alternative to traditional Medicare that bundles Parts A and B — and usually Part D — into a single plan. Sold by private insurers under Medicare contract. Covered separately below.
Standalone drug coverage added to traditional Medicare. Also included in most Advantage plans. Premiums, deductibles, and formularies vary by plan. You still pay the Part B premium separately.
Two important things that confuse nearly everyone: Part A and Part B are separate — you can have one without the other. And "Medicare" alone (Parts A + B) does not cover drugs, dental, vision, or hearing aids.
Traditional Medicare (Parts A + B) covers roughly 80% of approved costs. The remaining 20% is on you — with no out-of-pocket maximum. A single serious hospitalization can generate tens of thousands of dollars in cost-sharing. This is why supplemental coverage (Medigap or Advantage) matters so much.
Traditional Medicare vs. Medicare Advantage
This is the most consequential decision most people face at 65 — and it's not a permanent one, though switching back is harder than switching in. Here's the honest trade-off:
Traditional Medicare (Parts A + B + Medigap + D)
- Any provider in the country who accepts Medicare — no network, no referrals
- Predictable costs if you have a good Medigap plan — most bills are small or zero
- No prior authorization for most services
- Higher monthly premium (Part B + Medigap + Part D stacked)
- No dental, vision, or hearing coverage included
- Medigap is medically underwritten if you don't enroll at 65 in most states — meaning insurers can charge you more or refuse to cover you based on your health conditions
Medicare Advantage (Part C)
- Lower or $0 monthly premium in many areas — but cost-sharing at the point of care
- Out-of-pocket maximum (capped at $9,350/year in-network for 2025; varies by plan — check your specific plan's terms)
- Often includes dental, vision, hearing, fitness benefits
- Restricted to plan's provider network in most plan types
- Prior authorization required for many services and hospitalizations
- Plans can change their formularies and networks year to year
The pitch for Advantage — low premiums, extra benefits, capped out-of-pocket — is genuinely attractive, especially for patients who are healthy and budget-conscious. But I have a real concern with it for patients with complex chronic illness: prior authorization friction is significant, networks narrow, and the math gets worse fast when you're hospitalized frequently. The patients I worry about most are the ones who switched to Advantage at 65 because the premium was $0, developed serious illness at 70, and now can't get back onto traditional Medicare without passing medical underwriting — meaning insurers can look at their health conditions and either charge a much higher premium or refuse to sell them a Medigap plan at all. If you're choosing at 65 and you have meaningful chronic conditions, I think the long-term flexibility of traditional Medicare is usually worth the higher monthly cost — if it's affordable for you. That's a genuine if.
Medicare Advantage Plan Types: HMO, PPO, PFFS
Not all Advantage plans work the same way. The plan type determines how much flexibility you have and what it costs to use it.
HMO (Health Maintenance Organization)
You must use in-network providers except in emergencies. You choose a primary care physician who coordinates your care. Referrals are generally required to see a specialist. The most restrictive type — and often the lowest premium.
PPO (Preferred Provider Organization)
You can see out-of-network providers, but you pay more. No referral required for specialists. More flexibility than an HMO but higher premiums and larger cost-sharing outside the network. This is the closest Advantage gets to traditional Medicare's freedom — but still not the same.
PFFS (Private Fee-for-Service)
The plan sets its own payment terms. Providers can see you as long as they agree to the plan's terms — but they're not required to. Less common than HMO or PPO. Network availability varies significantly by geography.
SNP (Special Needs Plan)
Designed for people with specific conditions (dual Medicare/Medicaid eligibility, chronic illness, or institutional placement). More tailored benefits and care coordination. Not available to everyone — you must qualify based on your situation.
Prior authorization denials in Medicare Advantage are well-documented. A 2022 HHS Office of Inspector General report found that 13% of prior authorization denials in Medicare Advantage plans were for services that met Medicare coverage criteria — meaning the care was appropriate but still got denied. An additional 18% of payment denials were for care that also should have been covered. These are not small numbers.
Hospitals Are Dropping Medicare Advantage — and It's Accelerating
There's a structural problem with Medicare Advantage that most people shopping for plans don't know about: hospitals and health systems are walking away from it in growing numbers, and the pace is speeding up.
Becker's Hospital Review has tracked these contract terminations since 2023. The trend has been steep: 13 systems dropped MA contracts in 2023, 32 in 2024, at least 40 in 2025, with more already announced for 2026. The list includes major names — Mayo Clinic, Vanderbilt Health, Johns Hopkins Medicine, NewYork-Presbyterian, Moffitt Cancer Center, Baylor Scott & White, Mass General Brigham. These aren't small rural hospitals struggling to stay open. These are flagship academic medical centers.
Medicare Advantage plans reimbursed hospitals about 9.4% less than traditional Medicare in 2023, according to American Hospital Association analysis. A 2024 survey of 135 health system CFOs by the Healthcare Financial Management Association found that 62% said collecting from MA plans is "significantly more difficult" than it was two years prior. Sixteen percent said they planned to stop accepting one or more MA plans within two years; another 45% said they were considering it. Medicare Advantage plans denied about 17% of initial claims in 2019, according to a 2025 Health Affairs study — and even when denials are eventually overturned on appeal, provider payouts drop 7% on average due to the administrative cost of fighting them.
The reasons hospitals cite are consistent: prior authorization denial rates they describe as excessive, slow or below-cost reimbursement, and the administrative overhead of fighting for payment on care they've already delivered. As one hospital CEO put it to Becker's: "It's become a game of delay, deny and not pay."
What this means for you as a patient is concrete. If you enroll in a Medicare Advantage plan today, and your hospital or specialty practice drops that plan next year, you either pay out-of-network rates or find new providers. For someone managing a serious illness with established specialist relationships, that's not a theoretical inconvenience — it's a real disruption to care. The KFF Health News documented patients facing exactly this situation: people who had seen the same specialists for years, suddenly forced to choose between their doctors and their insurance plan.
Network and formulary stability is not guaranteed year to year. Before enrolling in any MA plan, and again every Annual Enrollment Period (Oct 15–Dec 7):
- Verify your doctors are in-network — call the office directly, don't rely on the plan's online directory alone (it's often outdated)
- Verify your hospital is in-network — including any specialty hospitals or cancer centers you might need
- Check the formulary for every medication you take — Part D formularies differ significantly between plans; a drug covered on one plan may be excluded or on a higher tier on another
- Confirm what requires prior authorization — some plans require it for imaging, specialist visits, and hospitalizations
- Re-verify every year — networks and formularies are renegotiated annually; what's true in October may not be true in January
The financial math from the hospital side matters because it predicts behavior. When hospitals lose money on Medicare Advantage patients, eventually they stop accepting Medicare Advantage patients. That's not a failure of the hospital — it's a rational response to a payment model that was never going to be sustainable at current rates. I tell patients this not to scare them away from Advantage categorically, but because most people enrolling at 65 don't know the network they're joining can change significantly by the time they actually need it. A plan that covers your current doctors today may not cover the specialist you need at 72. If you're choosing Advantage, choose it with eyes open — and verify the network with a phone call, not just a website lookup.
Medigap: Plan F vs. Plan G vs. Plan N
Medigap (also called Medicare Supplement) is private insurance that fills the gaps in traditional Medicare — the 20% cost-sharing, Part A deductible, and other out-of-pocket costs. There are standardized plan types labeled by letter (Plan A, B, C, D, F, G, K, L, M, N). The three you'll hear most about are Plan F, Plan G, and Plan N.
All three cover the same core benefits — Part A coinsurance and hospital costs, Part B coinsurance (the 20%), the Part A deductible, and foreign travel emergency care. Where they differ is in three specific items: the Part B deductible, Part B excess charges, and office visit copays.
| Benefit | Plan F | Plan G | Plan N |
|---|---|---|---|
| Part A coinsurance & hospital costs | ✓ Covered | ✓ Covered | ✓ Covered |
| Part B coinsurance (the 20%) | ✓ Covered | ✓ Covered | ✓ Covered* |
| Part A deductible ($1,736 in 2026) | ✓ Covered | ✓ Covered | ✓ Covered |
| Part B deductible ($283 in 2026) | ✓ Covered | ✗ You pay | ✗ You pay |
| Part B excess charges | ✓ Covered | ✓ Covered | ✗ You pay |
| Doctor office visit copay | ✓ None | ✓ None | ✗ Up to $20 |
| ER visit copay (if not admitted) | ✓ None | ✓ None | ✗ Up to $50 |
| Foreign travel emergency | ✓ Up to limits | ✓ Up to limits | ✓ Up to limits |
| Available to new enrollees after Jan 1, 2020? | ✗ No | ✓ Yes | ✓ Yes |
* Plan N covers the Part B 20% coinsurance, but replaces it with fixed copays (up to $20 for office visits, up to $50 for ER visits not resulting in admission) after you've met the Part B deductible.
Plan F is the only plan that covers everything — including the Part B deductible — but it was closed to new enrollees on January 1, 2020. If you were already enrolled before that date, you can keep it. If you're enrolling now, it's not available to you.
Plan G is the most comprehensive plan available to new enrollees. The only gap is the Part B deductible ($283/year in 2026) — you pay that once a year before coverage kicks in, then essentially nothing else for covered Medicare services. Higher monthly premium than Plan N, but the most predictable total cost.
Plan N is a lower-premium alternative that trades predictability for some cost-sharing. In exchange for lower monthly premiums, you pay the Part B deductible, up to $20 per office visit, up to $50 per ER visit that doesn't result in an inpatient admission, and any Part B excess charges from providers who don't accept Medicare assignment. For people who rarely visit the doctor, the premium savings can more than offset those costs.
For most of my patients, the choice comes down to G vs. N. Plan G wins if you see doctors frequently, have chronic conditions requiring regular specialist visits, or simply value not thinking about copays. Plan N can work well if you're healthy, see your doctor a few times a year, and are willing to confirm in advance that your providers accept Medicare assignment — which eliminates the excess charge risk. The excess charge concern is smaller than it sounds: the vast majority of providers who accept Medicare do accept Medicare's approved rates. And if you live in one of the states that doesn't allow excess charges at all (CT, MA, MN, NY, OH, PA, RI, VT), Plan N's only downside over G is the copays and deductible — making the math tilt more clearly toward N if the premium difference is meaningful to you.
In most states, insurers must sell you any Medigap plan at standard rates during your 6-month Medigap Open Enrollment Period, which starts the month you turn 65 and are enrolled in Part B. After that window closes, Medigap plans are medically underwritten — meaning the insurer reviews your health history and can charge you a higher premium based on your conditions, or decline to sell you coverage altogether. A handful of states (CT, MA, NY) have continuous open enrollment and prohibit medical underwriting — but most don't. This is not something to procrastinate on.
Enrollment Windows — When You Need to Act
Initial Enrollment Period (IEP)
A 7-month window: 3 months before the month you turn 65, your birthday month, and 3 months after. This is your first and most important window. Enroll in Part B during the 3 months before your birthday month to avoid a gap in coverage on day one.
Special Enrollment Period (SEP)
If you're still working at 65 and covered by employer insurance (or your spouse's), you can delay Part B without penalty — but you must enroll within 8 months of losing that coverage. "COBRA isn't employer coverage" for this purpose — the SEP clock starts when the job-based coverage ends, not when COBRA ends.
General Enrollment Period (GEP)
January 1 – March 31 each year. For people who missed their IEP and don't qualify for an SEP. Coverage starts July 1. This is the delay that triggers the late penalty.
Annual Enrollment Period (AEP)
October 15 – December 7 each year. This is when you can switch between traditional Medicare and Advantage, change Advantage plans, or change Part D plans. Changes take effect January 1. This window is for changing coverage, not for your initial enrollment.
Medicare Advantage Open Enrollment Period (OEP)
January 1 – March 31. If you're already in a Medicare Advantage plan, you can switch to a different Advantage plan or switch back to traditional Medicare during this window. You can't use it to enroll in Medicare Advantage for the first time.
Late Enrollment Penalties — What Waiting Actually Costs
Medicare penalizes late enrollment to discourage people from waiting until they're sick to sign up. The penalties are permanent — they follow you for life — and they're calculated differently for Part B and Part D.
Part B late enrollment penalty: 10% added to your Part B premium for each full 12-month period you were eligible but didn't enroll (and didn't have qualifying employer coverage). The penalty is recalculated each year as the standard premium changes.
Part B Penalty — Example
Say you were eligible at 65 but didn't enroll until 69 — a 4-year delay (48 months = 4 full 12-month periods).
Penalty = 4 × 10% = 40% 2026 standard premium: $202.90/month Your premium: $202.90 × 1.40 = $284.06/monthThat's an extra $81/month — $972/year — permanently. If the base premium rises over time, your penalty-inflated premium rises with it.
Part D late enrollment penalty: 1% of the "national base beneficiary premium" ($38.99 in 2026) for each month you went without creditable drug coverage. Also permanent.
Part D Penalty — Example
You skipped Part D for 26 months after becoming eligible and didn't have creditable coverage elsewhere.
Penalty = 26 × 1% × $38.99 = $10.14/monthThat's rounded to the nearest $0.10 ($10.10/month) added to your Part D premium — forever. Modest by itself, but it compounds over decades and rises slightly as the base premium adjusts annually. More importantly, it's entirely avoidable.
You can delay Part D enrollment without penalty if you have "creditable" drug coverage elsewhere — meaning coverage at least as good as Medicare's standard. Employer insurance usually qualifies. Your employer is required to tell you in writing each year whether your coverage is creditable. Keep that notice. You'll need it to prove you had creditable coverage if you enroll in Part D later.
The Gap Nobody Talks About: Long-Term Care
Medicare covers a lot. But there is one enormous category of care it does not cover, and most people don't find out until they or a family member needs it: long-term custodial care.
This means nursing home care when you can no longer care for yourself. It means a home health aide who comes daily to help with bathing, dressing, and meals. It means assisted living. Medicare will pay for a skilled nursing facility after a qualifying hospitalization — but only for up to 100 days, and only for skilled rehabilitation (physical therapy, wound care, IV medications). The moment care shifts from "skilled rehabilitation" to "help with daily living," Medicare stops paying. That transition can happen in weeks.
The median annual cost of a private room in a nursing home in the U.S. was approximately $108,000 in 2023, according to Genworth's Cost of Care Survey — roughly $9,000/month. A home health aide visiting for 44 hours per week ran about $75,000/year nationally. About 70% of people turning 65 today will need some form of long-term care during their lifetime, according to the U.S. Department of Health and Human Services. The average duration of need is about three years; about 20% will need care for more than five years.
So what are the options if you don't have long-term care insurance or personal assets to cover these costs? Realistically, there are two:
Move in with family. For many people this is the path — and for some it works well. But it requires family members willing and able to provide or coordinate care, often for years. It's worth having that conversation before a crisis makes it urgent.
Medicaid. Medicaid, the joint federal-state program for low-income Americans, does cover long-term care — including nursing home stays. But to qualify, you generally must have very limited assets (the rules vary by state, but typically $2,000 in countable assets for an individual). If you have savings, a home, or retirement accounts, you may need to spend those down before Medicaid will pay. "Medicaid planning" — legally restructuring assets ahead of time to qualify — is a real field of elder law, but it requires years of advance planning and carries its own complexities and ethical considerations.
Long-term care insurance, if you're going to get it, is most affordable in your 50s. By your late 60s, premiums are substantially higher and some people are no longer insurable due to health conditions. It is not the right choice for everyone — premiums are significant and policies vary widely in what they cover. But it is worth understanding your options before the decision is made for you. I'll cover this in detail in a future post on long-term care planning.
Which Path Fits Your Situation?
There's no universal right answer between traditional Medicare and Advantage — it depends on your health, your finances, your geography, and what matters most to you. Use this tool to think it through:
The enrollment complexity here is genuinely unfair. People are expected to navigate a multi-part system with different windows, different penalties, and decisions that lock in for years — often during the same period they're retiring and processing a dozen other major life changes. My honest advice: don't try to figure this out alone. The State Health Insurance Assistance Program (SHIP) — shiphelp.org — provides free, unbiased counseling in every state. Not a broker, not a salesperson, just someone who helps you understand your options. Use them. It's free and it's exactly what they're for.
Sources
- Centers for Medicare & Medicaid Services. Medicare & You 2026. CMS Publication 10050. medicare.gov
- HHS Office of Inspector General. Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Denials of Care. OEI-09-16-00410. September 2022.
- CMS. 2026 Medicare Costs. CMS Product No. 11579, December 2025. medicare.gov/publications/11579-medicare-costs.pdf
- CMS. 2026 Medicare Part D National Base Beneficiary Premium ($38.99). CMS.gov, 2025.
- CMS. Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare. Publication 02110.
- Medicare Rights Center. Medicare Enrollment Periods. medicarerights.org, 2025.
- CMS. Medicare Advantage Out-of-Pocket Limits. CMS.gov, updated annually — verify current year limits at medicare.gov/plan-compare.
- Becker's Hospital Review. 40 Health Systems Dropping Medicare Advantage Plans. Updated 2025. beckershospitalreview.com
- Becker's Hospital Review. Health Systems Dropping Medicare Advantage Plans: 2026. beckershospitalreview.com
- Healthcare Financial Management Association / Eliciting Insights. Survey of Health System CFOs on Medicare Advantage Contracting. January 2024.
- American Hospital Association. Medicare Advantage Hospital Reimbursement Analysis. 2023 industry benchmark data.
- Amin K, et al. Medicare Advantage Denies 17 Percent of Initial Claims; Most Denials Are Reversed, But Provider Payouts Dip 7 Percent. Health Affairs, 2025.
- KFF Health News. When Hospitals Ditch Medicare Advantage Plans, Thousands of Members Get to Leave, Too. April 2025. kffhealthnews.org
- Genworth Financial. Cost of Care Survey 2023. genworth.com
- U.S. Department of Health and Human Services. How Much Care Will You Need? longtermcare.acl.gov, 2020.