Free Guide to Understanding Medicare Part A and Part B

What Medicare Part A and Part B Cover

Medicare Part A and Part B are two separate parts of Original Medicare that cover different types of health care services. Understanding what each part covers helps you see how Medicare works and what costs you might pay out of your own pocket.

Part A primarily covers hospital services. This includes inpatient hospital stays (when you stay overnight in a hospital for treatment), skilled nursing facility care (temporary care in a nursing facility after a hospital stay), hospice care (comfort care for people with terminal illnesses), and limited home health care services. If you have a heart attack and need to stay in the hospital for three days, Part A would help cover those hospital costs. If you need rehabilitation in a skilled nursing facility after hip replacement surgery, Part A would also cover some of that care, though you would pay a daily copayment after day 20.

Part B covers outpatient services and medical care you receive outside a hospital setting. This includes visits to your doctor's office, laboratory tests, X-rays and diagnostic imaging, outpatient surgery, mental health services, and durable medical equipment like wheelchairs or oxygen tanks. When you visit your primary care doctor for a regular checkup or see a specialist about arthritis, Part B helps cover those costs. Part B also covers preventive services designed to stop illness before it starts, such as cancer screenings, heart disease screenings, and diabetes testing.

One key difference: Part A covers services when you are admitted to a facility or receive care in that setting, while Part B covers services from individual doctors and outpatient settings. Another difference involves costs. Part A has a deductible you pay once per benefit period (a period that starts when you enter a hospital). Part B has its own separate yearly deductible. After you pay these deductibles, you typically pay coinsurance (a percentage of the cost) rather than a flat copayment for Part A services.

Practical Takeaway: Create a simple two-column chart. List hospital-related services in one column (Part A) and doctor/outpatient services in the other (Part B). When you receive health care, identify which column it falls under to understand what Medicare might cover.

How Part A Works: Hospital and Facility Coverage

Part A functions as your hospital insurance within Medicare. Most people do not pay a monthly premium for Part A if they or their spouse paid Medicare payroll taxes while working for at least 10 years. The program operates on what is called a "benefit period," which is different from a calendar year and affects how much you pay.

A benefit period for Part A begins the day you enter a hospital and ends after you have been out of the hospital or skilled nursing facility for 60 consecutive days. This is important because it affects your out-of-pocket costs. When you enter the hospital, you pay a deductible (in 2024, this amount is $1,632 for each benefit period). After you pay this deductible, Part A covers 100% of your hospital stay for days 1 through 60 of your benefit period. You pay nothing additional during this time for room, board, meals, and standard hospital services.

If your hospital stay extends beyond 60 days within the same benefit period, your costs increase. For days 61 through 90, you pay a daily coinsurance amount ($408 per day in 2024). If you need to stay longer than 90 days, Part A provides a "lifetime reserve" of 60 additional days that you can use across your entire lifetime. For these reserve days (days 91 through 150 of your benefit period), you pay a higher daily coinsurance amount ($816 per day in 2024). Once you use your 60 lifetime reserve days, Part A stops covering hospital care, and you pay all costs yourself.

Skilled nursing facility care works similarly but with different terms. Part A covers skilled nursing facility stays only if you were in a hospital for at least three consecutive days first, and then need continued skilled care. Part A covers all costs for the first 20 days of skilled nursing facility care per benefit period. For days 21 through 100, you pay a daily coinsurance amount ($204 per day in 2024). After day 100 in the same benefit period, you pay all skilled nursing facility costs yourself. Custodial care (help with daily activities like bathing or dressing when skilled nursing is not needed) is not covered by Part A.

Practical Takeaway: Save the current year's Part A deductible and coinsurance amounts in your phone's notes or a document. When you or a family member enters a hospital, you will know immediately what your initial out-of-pocket cost will be. Remember that once you have been out of the hospital for 60 consecutive days, a new benefit period begins and a new deductible applies.

How Part B Works: Doctor Visits and Outpatient Services

Part B is your outpatient and physician coverage. Unlike Part A, virtually everyone who has Part B pays a monthly premium. The standard Part B premium in 2024 is $164.90 per month, though higher-income individuals pay more. Part B also has an annual deductible separate from Part A's deductible; in 2024, this amount is $240 per year.

Once you pay your yearly Part B deductible, the program typically covers 80% of approved charges for services provided by doctors and other medical professionals who accept Medicare assignment. This means you pay 20% coinsurance for most Part B services. For example, if your doctor visit has an approved charge of $100, Medicare pays $80 and you pay $20. This 20% coinsurance applies to office visits, specialist consultations, laboratory tests, imaging services like CT scans or MRIs, and procedures like colonoscopies performed in outpatient settings.

Part B covers hundreds of services beyond basic doctor visits. These include mental health treatment (both therapy and psychiatric services), physical therapy and occupational therapy, speech-language pathology services, home health services when medically necessary, ambulance services when other transportation is not safe, and certain medical equipment. Part B also covers preventive services with no coinsurance or copayment, meaning you pay nothing for services like annual wellness visits, cancer screenings, cardiovascular screening, and diabetes testing.

An important distinction in Part B is between doctors who "accept Medicare assignment" and those who do not. A doctor who accepts assignment has agreed to charge only what Medicare approves and accepts Medicare's payment as payment in full. If a doctor does not accept assignment, they can charge you more than Medicare approves, though there are limits on how much extra they can charge (called balance billing limits). Understanding this difference helps you control your out-of-pocket costs. You can search for doctors who accept Medicare assignment on Medicare.gov's provider search tool.

Part B also includes an important protection called the "Part B deductible applies once per year." This means that after you pay $240 in 2024 toward covered services, your coinsurance begins applying. If you receive many services early in the year and meet your deductible quickly, you will pay only coinsurance for the rest of the year. However, the coinsurance continues throughout the year; there is no limit to how much you might pay in coinsurance under Original Medicare alone.

Practical Takeaway: When you receive a bill from a doctor's office, verify that your deductible has been met for the year. If it has not, your bill will reflect the full deductible amount (or what remains of it). Once the deductible is met, you should see 20% coinsurance charges on your bills. Keep a running total of deductible amounts paid to know when it is met.

Costs You Pay Under Original Medicare

Understanding Medicare costs requires learning several different payment types. Original Medicare (Part A and Part B) asks you to pay through premiums, deductibles, coinsurance, and copayments depending on the service type.

Premiums are monthly payments you make to have coverage. Most people pay no monthly premium for Part A, but those who did not work long enough under Medicare taxes may pay a Part A premium between $278 and $557 per month in 2024 depending on their work history. For Part B, the standard premium is $164.90 per month in 2024, but it increases based on income. Higher earners pay additional monthly amounts called Income-Related Monthly Adjustment Amounts (IRMAA). If you earned over $97,000 as a single person in 2022 (the