Understanding Medicare Parts A, B, C, and D
Medicare is divided into four parts, each covering different healthcare services. Part A (Hospital Insurance) covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people pay no premium for Part A because they or their spouse paid Medicare taxes for at least 40 quarters (10 years) of employment. Those who didn\'t work long enough can buy Part A for $278 or $505 per month in 2025. Part A comes with a $1,676 deductible per benefit period in 2025, with no coinsurance for the first 60 days of hospitalization.
Part B (Medical Insurance) covers outpatient care, doctor visits, preventive services, and durable medical equipment. The 2025 standard Part B premium is $185.00 per month, but higher-income beneficiaries pay more through the Income-Related Monthly Adjustment Amount (IRMAA). IRMAA is based on your MAGI from two years prior — so your 2025 premium is based on your 2023 income. The Part B deductible is $257 in 2025, after which Medicare covers 80% of approved costs and you\'re responsible for the remaining 20% with no out-of-pocket maximum in Original Medicare alone.
IRMAA Surcharges: How Income Affects Your Part B and D Premiums
IRMAA surcharges are tiered income adjustments applied to both Part B and Part D premiums for higher-income Medicare beneficiaries. For 2025, single filers with MAGI above $106,000 (and married joint filers above $212,000) begin paying IRMAA surcharges. At the highest income tier — over $500,000 for single filers — Part B premium reaches $628.90 per month, more than three times the standard rate. These surcharges are in addition to any Part D drug plan premiums.
IRMAA adjustments use a two-year lookback, which can create unexpected cost increases. If your income drops significantly due to retirement, a life-changing event (divorce, death of spouse, job loss), you can appeal your IRMAA determination to Social Security using Form SSA-44. Successful appeals adjust your premium to reflect your current lower income. Medicare planning strategies — like Roth conversions before Medicare eligibility, managing capital gains realizations, and coordinating retirement account withdrawals — can help keep MAGI below IRMAA thresholds.
Medigap vs. Medicare Advantage: Choosing Your Coverage Strategy
Original Medicare (Parts A and B) leaves significant coverage gaps — particularly the 20% coinsurance with no out-of-pocket maximum, which can be financially catastrophic for a serious illness. Two approaches fill these gaps. Medigap (Medicare Supplement Insurance) plans — particularly Plans G and N — are the most comprehensive. Plan G covers virtually everything Original Medicare doesn\'t (except the Part B deductible), with predictable monthly premiums and the freedom to see any Medicare-accepting provider nationwide. Plan N has lower premiums but adds copays for some office visits and emergency room visits.
Medicare Advantage (Part C) plans are offered by private insurers and replace Original Medicare. They typically have $0 or low monthly premiums but include copays, prior authorization requirements, and network restrictions. Many include prescription drug coverage and extras like dental, vision, and hearing benefits not covered by Original Medicare. Medicare Advantage works best for healthy individuals in areas with robust plan networks who want lower premiums and additional benefits. Medigap with a standalone Part D drug plan typically offers lower total cost risk for those with serious or chronic health conditions, where unlimited access to specialists and hospitals is most valuable.