Here is a fact that surprises a lot of people shortly before they turn 65: Medicare is not a single insurance plan. It is a collection of separate parts that cover separate things, and the most important divide is between Part A and Part B. Miss that distinction and you can end up uninsured for an entire category of care — or paying penalties on premiums for years because you enrolled late.
This article maps exactly what Part A pays for, what Part B pays for, what each one costs you out of pocket, and where the two parts leave gaps you will need to fill another way. The details here are based on the official 2024 Medicare figures published by the Centers for Medicare and Medicaid Services (CMS). Premium and deductible amounts adjust annually, so check Medicare.gov or your Annual Notice of Change for the numbers in your specific year.
Part A: What Hospital Insurance Actually Covers
The shorthand for Part A is 'hospital insurance,' but that undersells it. Part A covers four distinct categories of care, and only one of them involves a traditional hospital stay.
Inpatient hospital care
This is the core. When a doctor formally admits you to a hospital — not just holds you for observation, which is a critical distinction covered below — Part A pays for your room, meals, nursing care, medications administered during the stay, and most other services delivered while you are admitted. This includes care in acute care hospitals, critical access hospitals, inpatient rehabilitation facilities, and inpatient psychiatric facilities (up to 190 days lifetime for psychiatric).
Skilled nursing facility (SNF) care
After a qualifying hospital stay of at least three consecutive inpatient days, Part A can cover care in a skilled nursing facility. 'Skilled' is the operative word: the coverage is for medically necessary skilled nursing or rehabilitation services — physical therapy after a hip replacement, for instance — not custodial care like help with bathing and dressing. Days 1–20 in the SNF are fully covered; days 21–100 require a daily coinsurance payment ($194.50 per day in 2024); after day 100, Part A pays nothing.
Hospice care
Part A covers hospice for people with a terminal illness and a life expectancy of six months or less (as certified by a physician). Coverage includes nursing care, pain management, counseling, and some caregiver support. There is no coinsurance for hospice services, though you may pay small cost-sharing for outpatient drugs. The six-month window can be renewed if you are still alive and still meet the criteria.
Home health care
Part A covers medically necessary home health services — skilled nursing, physical therapy, speech therapy — if you are homebound and a doctor certifies the need. Part B actually shares this coverage in some circumstances, which is one of several places where the two parts overlap in confusing ways. There is no cost to you for home health services covered by Medicare, as long as you use a Medicare-certified agency.
Part A Costs: Premiums, Deductibles, and Coinsurance
The most important number for most people: Part A has a $0 premium if you or your spouse worked and paid Medicare taxes for at least 40 quarters (10 years). About 99% of enrollees qualify on this basis.
Even with a $0 premium, you face cost-sharing when you actually use Part A benefits:
- Inpatient deductible: $1,632 per benefit period in 2024. Note that this is per benefit period, not per year. A benefit period begins when you are admitted and ends when you have been out of the hospital and not receiving skilled care for 60 consecutive days. If you are hospitalized, discharged, recover at home for 61 days, and then are hospitalized again, a new benefit period — and a new $1,632 deductible — starts.
- Days 1–60: After you meet the deductible, Part A pays everything for the first 60 days of an inpatient stay.
- Days 61–90: You pay $408 per day in coinsurance (2024 figure).
- Lifetime reserve days (days 91–150): Each Medicare enrollee gets 60 lifetime reserve days. In 2024, these cost $816 per day. Once used, they are gone permanently.
- Beyond day 150: Part A pays nothing. This is one of the most important gaps in original Medicare and why many people buy a Medigap (Medicare Supplement) policy.
The per-benefit-period structure can be brutal for people with serious chronic illness. Someone hospitalized three times in a year, with each stay separated by more than 60 days, pays the $1,632 deductible three times — $4,896 total before any daily coinsurance kicks in.
Part B: What Medical Insurance Actually Covers
Part B covers the outpatient world: everything that happens in a doctor's office, an outpatient clinic, a lab, an imaging center, or during an emergency room visit where you are not formally admitted. It also covers services delivered in your home that do not qualify as Part A home health, as well as an increasingly large slice of preventive care.
Physician and outpatient services
Any medically necessary service or supply provided or ordered by a physician is generally covered under Part B. That includes office visits, specialist consultations, surgical procedures performed in an outpatient setting, second opinions, and most diagnostic tests. The phrase 'medically necessary' matters here — Medicare defines it as services needed to diagnose or treat a medical condition, not services you want for convenience or cosmetic purposes.
Preventive services
This is where Part B has expanded significantly over the past two decades. The list now includes: an annual wellness visit, cardiovascular disease screenings, colorectal cancer screenings (colonoscopy, stool-based tests), mammograms (annual for women over 40), bone density scans, diabetes screenings and diabetes self-management training, HIV screenings, depression screenings, obesity counseling, and the 'Welcome to Medicare' preventive visit in your first year of enrollment. Most of these are free to you when provided by a participating provider.
Outpatient mental health
Part B covers outpatient mental health services including individual and group therapy, psychiatric evaluation, and medication management visits. Since 2023, the coinsurance for outpatient mental health has equalized with other Part B services at 20% — previously it was higher, a disparity that persisted for decades and created real access barriers.
Durable medical equipment (DME)
Wheelchairs, walkers, hospital beds for home use, continuous positive airway pressure (CPAP) devices, blood glucose monitors — these fall under Part B, provided they are prescribed and medically necessary. You typically pay 20% of the Medicare-approved amount after meeting the Part B deductible.
Some home health care
Part B shares coverage of home health services with Part A in cases where you did not have a qualifying three-day inpatient stay but still need skilled care at home. The clinical coverage rules are the same; the funding mechanism differs behind the scenes.
What Part B does not cover
Most prescription drugs taken at home are not covered by Part B — that is Part D's job. Routine dental, vision, and hearing care are not covered. Long-term custodial care is not covered. Acupuncture is covered only for chronic low back pain (added in 2020), and most other complementary or alternative treatments are excluded.
Part B Costs: The Premium Everyone Pays, and the Surcharge Fewer Expect
Unlike Part A, almost nobody gets Part B for free. The standard monthly premium in 2024 is $174.70. If you receive Social Security benefits, this is deducted directly from your monthly payment.
The Part B deductible in 2024 is $240 per year — a calendar-year deductible, not a per-benefit-period deductible. After you meet it, you generally pay 20% of the Medicare-approved amount for covered services, and Medicare pays 80%. That 20% has no out-of-pocket maximum in original Medicare. A catastrophic illness with heavy outpatient costs can therefore generate very large bills under Part B alone.
IRMAA: the high-income surcharge most people have not heard of
If your modified adjusted gross income (MAGI) from two years prior exceeds certain thresholds, you pay more. This surcharge is called the Income-Related Monthly Adjustment Amount, or IRMAA. In 2024, the brackets work like this:
- Individual income up to $103,000 / joint up to $206,000: standard $174.70 premium <<<<<
IRMAA uses your tax return from two years earlier. If you retired and your income dropped significantly, you can appeal using Form SSA-44 and provide evidence of the income change.
The same IRMAA brackets apply to Part D premiums, though the dollar amounts differ.
The late enrollment penalty
If you do not sign up for Part B when you are first eligible and you do not have other creditable coverage (through an employer plan, for instance), you face a permanent 10% premium increase for every 12-month period you were eligible but not enrolled. 'Permanent' means it follows you for as long as you have Medicare. Someone who delays enrollment by three years pays 30% more than the standard premium every month for the rest of their life. This is arguably the most consequential mistake people make with Medicare enrollment.
How Parts A and B Work Together — and Where They Leave You Exposed
Original Medicare (Parts A and B combined) is genuinely good insurance for many types of care. But it has structural gaps that are large enough to cause serious financial harm, and understanding them is not optional if you are planning for retirement health costs.
The 20% coinsurance problem
Part B's 20% coinsurance has no cap. If you have a serious cancer and receive expensive outpatient chemotherapy, 20% of those costs — which can run into the hundreds of thousands of dollars — is your responsibility. Original Medicare has no out-of-pocket maximum, unlike most private insurance. This is the primary reason about 80% of traditional Medicare enrollees purchase a supplemental policy.
Prescription drugs
Parts A and B together cover almost no medications you take at home. Part A covers drugs administered during an inpatient stay; Part B covers drugs administered in a clinical setting (chemotherapy infusions, for example). Everything else requires Part D (a standalone drug plan) or a Medicare Advantage plan that includes drug coverage.
Dental, vision, and hearing
These are genuinely absent from original Medicare. A full set of dentures can cost $2,000–$6,000. Hearing aids average around $4,700 per pair without insurance. Annual eye exams and glasses are not covered. Some Medicare Advantage plans include these benefits; original Medicare does not.
Long-term custodial care
Perhaps the biggest gap: Medicare does not pay for nursing home care if the only care you need is help with daily activities. Once a patient no longer requires skilled nursing or rehabilitation, Medicare stops paying. Medicaid fills this role for people who spend down their assets — but that is a different program with its own eligibility rules.
How most people fill the gaps
There are three main approaches: a Medigap (Medicare Supplement) policy paired with standalone Part D drug coverage; a Medicare Advantage (Part C) plan that bundles Parts A, B, and usually D together under a private insurer; or, for low-income enrollees, dual eligibility for both Medicare and Medicaid. Each approach involves real trade-offs in cost, provider access, and coverage rules that deserve their own detailed examination before you choose.
Enrollment Rules: When to Sign Up and What Happens If You Miss the Window
Getting the coverage right does not matter if you miss the enrollment window and trigger a penalty or a gap in coverage. The rules here are specific and unforgiving.
Initial Enrollment Period (IEP)
Your IEP is a seven-month window: the three months before the month you turn 65, your birthday month, and the three months after. If you sign up during the three months before your birthday month, coverage starts the first day of your birthday month. If you wait until your birthday month or the months after, your start date is delayed — up to three months. Earlier is almost always better.
Special Enrollment Period (SEP) for employer coverage
If you or your spouse is still working at 65 and covered by an employer group health plan based on active employment, you can delay Part B without penalty. You have eight months from when that employment or coverage ends to enroll under a Special Enrollment Period. 'Active employment' is the key phrase — COBRA and retiree coverage do not count as creditable coverage for this purpose. Many people get this wrong and face the late enrollment penalty as a result.
General Enrollment Period (GEP)
If you miss your IEP and do not qualify for an SEP, you can sign up during the General Enrollment Period: January 1 through March 31 each year, with coverage starting July 1. The late enrollment penalty applies, and you will go without coverage for months while you wait.
Part A enrollment, for most people, is straightforward and penalty-free since there is no premium. The urgency around enrollment is primarily about Part B — and, separately, Part D, which has its own late enrollment penalty if you go without creditable drug coverage for 63 or more consecutive days after your IEP.
Frequently Asked Questions
Do I need both Medicare Part A and Part B?
You need both for full basic coverage. Part A alone leaves you without coverage for doctor visits, outpatient surgery, lab tests, and preventive care. Part B alone leaves you without hospital insurance. Most people enroll in both simultaneously at 65, and if you want a Medicare Advantage plan, you are required to have both Parts A and B to enroll.
Is Medicare Part A really free?
For most people, yes — the monthly premium is $0 if you or your spouse paid Medicare taxes for at least 40 quarters (10 years) of work. 'Free' refers only to the premium, though. You still pay a $1,632 deductible per benefit period when you use it, plus daily coinsurance for hospital stays longer than 60 days.
What does Medicare not cover at all?
Original Medicare (Parts A and B) does not cover most prescription drugs taken at home, routine dental care, routine vision exams and glasses, hearing aids, long-term custodial care in a nursing home, and most care received outside the United States. These gaps are significant, and most enrollees address them with a Medigap policy, Medicare Advantage plan, or standalone Part D coverage.
What is the Medicare Part B deductible and how does it work?
The Part B deductible is $240 per year in 2024 — a calendar-year amount you pay once before Medicare starts sharing costs. After you meet it, Medicare typically pays 80% of the approved amount for covered services and you pay 20%. There is no annual cap on your 20% share in original Medicare, which is why many people buy supplemental coverage.
Can I get Medicare Part A without Part B?
Yes, you can enroll in Part A without Part B. Some people do this if they are still working and covered by an employer plan — they take the premium-free Part A as secondary coverage but delay Part B to avoid the premium. However, if you eventually want Part B, you must enroll during a Special Enrollment Period or the General Enrollment Period, and missing those windows triggers a permanent late enrollment penalty.
What is the difference between Medicare Part B and Medicare Part D?
Part B covers outpatient medical services and a limited set of drugs administered in a clinical setting (such as chemotherapy infusions or injectable biologics given in a doctor's office). Part D covers prescription drugs you pick up at a pharmacy and take at home. They are entirely separate parts with separate premiums, formularies, and enrollment rules. You need Part D — or a Medicare Advantage plan with drug coverage — to have meaningful pharmacy benefits.
What is the Medicare Part A benefit period, and why does it matter?
A benefit period begins the day you are admitted as an inpatient and ends after you have been out of the hospital and not receiving skilled nursing care for 60 consecutive days. The $1,632 Part A deductible applies once per benefit period, not once per year. If you have multiple hospitalizations with more than 60-day gaps between them, you pay the full deductible each time — potentially multiple times in a single calendar year.
Does Medicare Part B cover mental health services?
Yes. Part B covers outpatient mental health care including therapy, psychiatric evaluations, and medication management visits with a psychiatrist or other mental health professional. Since 2023, the cost-sharing for outpatient mental health has been equalized with other Part B services at 20% after the deductible — a significant improvement over the higher rates that applied for decades. Inpatient psychiatric care falls under Part A, with a 190-day lifetime limit for stays in a freestanding psychiatric facility.