Understanding the Cost of Healthcare as We Age: A Guide to Medicare’s Four Parts
I send in prescriptions everyday, and everyday it is a surprise to me what is covered by a patient’s drug plan and what isn't. It is one of the most frustrating parts of being a provider, and hopefully this post helps demystify some of the shroud of insurance. Healthcare needs often increase with age—and so can the costs. From hospital stays to prescription medications, navigating the financial side of aging can feel overwhelming. That’s where Medicare comes in.
Medicare is the federal health insurance program for adults aged 65 and older (and some younger individuals with disabilities). But it’s not a one-size-fits-all plan—Medicare is divided into four parts, each covering different aspects of care. Understanding these parts is key to planning for healthcare expenses in later life.
Medicare Part A: Hospital Insurance
Part A helps cover:
Inpatient hospital stays
Skilled nursing facility care (short-term, after a qualifying hospital stay)
Hospice care
Some home health services
Cost: Most people don’t pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. However, there are deductibles and coinsurance for hospital stays and other services.
Medicare Part B: Medical Insurance
Part B covers:
Doctor visits and outpatient care
Preventive services (like screenings and vaccines)
Durable medical equipment (e.g., walkers, oxygen)
Mental health services
Some home health care
Cost: Most people pay a monthly premium for Part B, which varies based on income. There’s also an annual deductible and typically 20% coinsurance for most services.
Medicare Part C: Medicare Advantage
Part C (also called Medicare Advantage) is an alternative to Original Medicare (Parts A and B). These plans are offered by private insurance companies and often include:
All benefits from Parts A and B
Prescription drug coverage (usually)
Extra benefits like vision, dental, hearing, and fitness programs
Cost: Premiums and out-of-pocket costs vary by plan. Some offer $0 premiums, but copays and provider networks differ.
Medicare Part D: Prescription Drug Coverage
Part D helps cover the cost of outpatient prescription medications. Plans are offered by private insurers and vary in:
Covered drugs (formulary)
Pharmacy networks
Monthly premiums, deductibles, and copays
Cost: Premiums vary by plan and income. Late enrollment may result in a penalty.
Planning Ahead: Why It Matters
Even with Medicare, older adults often face out-of-pocket costs—including premiums, deductibles, coinsurance, and services not covered (like long-term care, dental, or hearing aids). Understanding what each part of Medicare covers can help you:
Choose the right plan
Budget for future healthcare needs
Avoid late enrollment penalties
Explore supplemental coverage (like Medigap or employer-sponsored plans)
Healthcare costs are a major part of aging—but with the right knowledge, they don’t have to be a surprise.
