MilesToPass

Medicare Parts A, B, C, and D

Lesson 48 of 92 · All lessons · Up next: Medicaid →

What Medicare is

Medicare is the federal health insurance program under Title XVIII of the Social Security Act. It is social insurance: people qualify mainly through their own (or a spouse's) work history, not through financial need. That is the key contrast with Medicaid, which is need-based.

Three groups are eligible:

  1. People age 65 or older who are entitled to Social Security or railroad retirement

benefits (or would be, if they applied).

  1. People under 65 who have been entitled to Social Security or railroad retirement

disability benefits for at least 24 months.

  1. People of any age with end-stage renal disease (ESRD), meaning permanent kidney failure

requiring dialysis or a transplant.

Medicare is organized into four "parts." Two of them are benefits (A and B), one is a different way to receive those benefits (C), and one is a drug benefit (D).

The diagram is titled Medicare: four parts, two routes. It shows two side-by-side boxes. The left box is Route 1, Original Medicare, the government's fee-for-service program. Inside it sit two blocks: Part A, hospital insurance, covering inpatient hospital care, skilled nursing care, home health, and hospice; and Part B, medical insurance, covering doctors, outpatient care, and medical equipment, with a premium and eighty-twenty cost sharing after a deductible. Below them, a green block adds Part D through a standalone private prescription drug plan. The right box is Route 2, Part C, Medicare Advantage, a private plan. Its main block says the plan delivers Part A and Part B benefits through an HMO, a PPO, a special needs plan, a private fee-for-service plan, or a medical savings account plan, and that the enrollee must have both Part A and Part B and live in the plan's service area. Below it, a green block shows Part D built into the plan, called M A P D, usually with no separate drug plan allowed. A footer box lists who is eligible for Medicare: people age sixty-five entitled to Social Security or railroad retirement, people under sixty-five after twenty-four months of disability benefits, and people of any age with end-stage renal disease.
Parts A and B form Original Medicare; Part C replaces them with a private plan; Part D adds drugs to either route.

Part A: hospital insurance

Part A is hospital insurance. It covers:

  • Inpatient hospital care
  • Skilled nursing facility care after a qualifying hospital stay (related post-hospital

care, not long-term custodial care)

  • Home health services
  • Hospice care

Most people pay no premium for Part A because they, or a spouse, paid Medicare payroll taxes for at least 40 quarters (about 10 years). Those without enough work credits can buy Part A for a monthly premium. Part A still has cost sharing, such as a deductible for each benefit period.

Part B: medical insurance

Part B is supplementary medical insurance. It is voluntary: the person must elect to enroll, and it is financed by enrollee premiums together with federal funds. Part B covers:

  • Physician and surgeon services, in or out of the hospital
  • Outpatient care, lab tests, and X-rays
  • Durable medical equipment, such as wheelchairs and oxygen equipment
  • Many preventive services

After an annual deductible, Part B typically pays 80 percent of the approved amount and the beneficiary pays 20 percent coinsurance, with no annual out-of-pocket cap.

Parts A and B together are called Original Medicare, the government's fee-for-service program. The gaps it leaves (deductibles, coinsurance) are what Medicare supplement (Medigap) policies are designed to fill.

Part C: Medicare Advantage

Part C, Medicare Advantage (originally called Medicare+Choice), is not a new set of benefits. It lets a beneficiary receive Part A and Part B benefits through a private plan instead of through Original Medicare. The government pays the plan, and those payments replace what Original Medicare would have paid for that person's care.

  • Eligibility: the person must be entitled to Part A and enrolled in Part B, and must

live in the plan's service area.

  • Plan types: coordinated care plans (such as HMOs, PPOs, provider-sponsored

organizations, and special needs plans), private fee-for-service plans, and medical savings account (MSA) plans.

  • Many plans add extra benefits and bundle drug coverage; a plan with drug coverage is an

MA-PD plan.

  • The enrollee keeps paying the Part B premium.
  • A plan may end someone's enrollment only for unpaid premiums, **disruptive

behavior, or the plan leaving the area**.

Medicare Advantage sales are tightly regulated. Plans may use only state-licensed agents (and must follow state appointment laws), and marketing may not include unsolicited contact such as door-to-door or cold-call telemarketing, cross-selling unrelated products like annuities or life insurance, or providing meals to prospects.

Part D: prescription drugs

Part D is the voluntary outpatient prescription drug benefit, which began on January 1, 2006. It is delivered only through private plans:

  • A person in Original Medicare gets Part D by joining a standalone **prescription drug

plan (PDP)**.

  • A person in Medicare Advantage gets drugs through an MA-PD plan, and generally

cannot add a separate PDP. The exceptions are MA private fee-for-service plans without drug coverage and MA MSA plans.

To be eligible, a person must be entitled to Part A or enrolled in Part B, either one.

Enrollment timing

  • Initial enrollment period: seven months, the three months before the month a person

turns 65, that month, and the three months after.

  • General enrollment period: January 1 through March 31 each year, for those who missed

Part B.

  • Annual election period: October 15 through December 7, when beneficiaries can switch

between Original Medicare and Medicare Advantage or change drug plans.

  • Late-enrollment penalties: delaying Part B or Part D without other qualifying

(creditable) coverage adds a permanent surcharge to the premium.

Exam tip: A = hospital, B = doctors and outpatient, C = private plan that replaces A and B, D = drugs. Part C requires A and B; Part D requires A or B.

Key terms

Sample questions

Medicare is established under which title of the Social Security Act?

  • Title II
  • Title XVIII
  • Title XIX
  • Title XXI
Reveal answer

Correct answer: Title XVIII

Medicare is the health insurance program created by Title XVIII of the Social Security Act. Title XIX is Medicaid, and Title II is the Social Security cash-benefit program.

Which statement best describes how a person generally qualifies for Medicare?

  • By showing income and assets below a federal poverty threshold
  • By buying an individual policy from a private insurer at age 65
  • Through their own or a spouse's work history in Social Security- or railroad-covered employment
  • By being employed full time by a Medicare-certified employer
Reveal answer

Correct answer: Through their own or a spouse's work history in Social Security- or railroad-covered employment

Medicare is social insurance. Part A entitlement at 65 follows from being entitled (or able to become entitled) to Social Security or railroad retirement benefits, which in turn rests on a work record, the person's own or a spouse's. It has no income or asset test; that is Medicaid.

How long must a person under age 65 have been entitled to Social Security disability benefits before becoming entitled to Medicare Part A on that basis?

  • 6 months
  • 12 months
  • 36 months
  • 24 months
Reveal answer

Correct answer: 24 months

A person under 65 becomes entitled to Part A after having been entitled to Social Security (or railroad retirement) disability benefits for 24 calendar months.

Practice all 40 with answers →

See where this fits: Florida exam outline and topic weights.