Understanding Medicare: The ABCD's Explained

When it comes to Medicare, the alphabet matters. Parts A, B, C, and D each cover different areas of your healthcare needs — and understanding the difference between them is the first step to choosing coverage that actually works for you.

Part A — Hospital Insurance

Medicare Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health services. Most people get Part A premium-free if they (or their spouse) paid Medicare taxes for at least 10 years while working.

Part A doesn't cover everything about a hospital stay, though. It has a deductible per benefit period and coinsurance for longer stays. Understanding these cost-sharing rules matters when you're comparing Medicare options.

Part B — Medical Insurance

Medicare Part B covers outpatient services: doctor visits, preventive care, lab tests, durable medical equipment, some home health services, and certain medications administered in a clinical setting. Part B has a standard monthly premium (set annually by CMS) and an annual deductible, after which Medicare pays 80% of approved costs.

That 20% coinsurance with no annual cap is one of the biggest gaps in Original Medicare — it's the main reason people look at Medigap (supplement) coverage.

Part C — Medicare Advantage

Medicare Part C, known as Medicare Advantage, is an alternative way to receive your Medicare benefits. Instead of getting Part A and Part B coverage through the federal government, you enroll in a private plan approved by Medicare. Most Advantage plans also include Part D drug coverage, plus extras like dental, vision, hearing, and fitness benefits.

Medicare Advantage plans have annual out-of-pocket maximums — something Original Medicare doesn't have. However, they use provider networks (HMO or PPO), so you need to confirm your doctors are covered.

In the La Crosse area, confirming that your providers at Gundersen Health System or Mayo Clinic Health System are in-network is an important step before enrolling in any Advantage plan.

Part D — Prescription Drug Coverage

Medicare Part D covers prescription drugs. You can get it as a standalone plan alongside Original Medicare and Medigap, or it's often bundled into a Medicare Advantage plan. Part D plans have formularies (lists of covered drugs), and the cost of your medications depends on which tier each drug falls on.

For 2026, there is an annual out-of-pocket cap for covered drugs — once you hit it, covered drugs cost you nothing for the rest of the year. This is a significant protection for people who take expensive medications.

Enrolling late in Part D when you're first eligible — without other creditable drug coverage — triggers a permanent monthly penalty. It's one of the most common and costly mistakes we see.

Putting It All Together

There are two main paths in Medicare:

1. Original Medicare (Part A + Part B) + a Medigap policy + a standalone Part D plan — Maximum flexibility (any provider that accepts Medicare, nationwide), higher monthly cost, no network restrictions.
2. Medicare Advantage (Part C) — Often lower or $0 premium, includes drug coverage and extras, but uses a provider network. Total cost depends heavily on how much care you use.

Neither path is right for everyone. The best choice depends on your doctors, your prescriptions, your health, and your budget.