Medicare categorizes its insurance coverage into four distinct "parts":
- Part A: Hospital Insurance helps cover inpatient, hospice, skilled nursing facility services and certain home health care services. Those who are eligible due to age or disability, and thus receive a Social Security cash benefit, are automatically enrolled. Most beneficiaries do not pay a premium for Part A.
- Part B: Medical Insurance helps cover outpatient services, doctor services and other medical services. Enrollment in Part B is voluntary, and approximately 93 percent of those eligible do enroll. Most beneficiaries pay a set monthly premium for Part B.
- Part C: Medicare Advantage (MA); private health plans administer parts A and B, usually in addition to other benefits, including Part D. Enrollment in Medicare Advantage plans is voluntary and approximately 25 percent of Medicare beneficiaries choose to enroll in a MA plan. Costs vary by plan.
- Part D: Prescription Drugs covers prescription drugs. Individuals eligible for Part A or enrolled in Part B may voluntarily enroll in Part D. Costs vary by plan and income level.