Medicare is a federal insurance plan. Medicare Part C combines the benefits of Part A and Part B, while Medicare Part D covers prescription drugs.
Medicare Part A and Part B are known collectively as Original Medicare. Part A covers hospital costs, and Part B covers other medically necessary expenses.
Medicare Part C, also known as Medicare Advantage, was originally called Medicare+Choice. The United States Congress later added Medicare Part D to cover outpatient prescription medications.
For Part C, Medicare pays private companies a specific amount of money per person, and the companies bundle Original Medicare benefits. Many companies also include Medicare Part D in their Medicare Advantage plans.
This article discusses Medicare Part C and Part D, including their eligibility requirements, coverage, and costs.
All Medicare Part C (Advantage) plans must provide all the same benefits as Original Medicare (Parts A and B). Some policies even offer more coverage, such as for vision, dental, and hearing care.
Most Medicare Advantage plans work as a private insurance plan, and the options include:
Medicare usually sets the fee for both the healthcare professional and the individual enrolled in the plan. For a PFFS plan, the insurance company sets these fees.
Insurance companies must follow the Medicare rules, though each plan can have different rules for out-of-pocket costs and access to services. Insurance companies can also change the rules of Medicare Part C plans each year.
Learn more about Medicare Part C.
Medicare Part D is an outpatient prescription drug plan that Medicare-approved private insurance companies offer. People can choose to enroll in a stand-alone Medicare Part D plan if they have Original Medicare or obtain it bundled with Medicare Part C.
If a person enrolls in a stand-alone Part D plan, they pay a monthly premium based on the expected cost to the insurance company.
The individual pays approximately 25% of the cost of prescriptions once they enter the coverage gap (also called the donut hole), and Medicare Part D pays the remaining 75%, according to the nonprofit KFF.
If a person reaches the catastrophic coverage amount, they pay nothing for their covered prescriptions for the rest of the calendar year. This feature of the plan helps individuals with high out-of-pocket prescription expenses. For 2024, the out-of-pocket spending to reach catastrophic coverage is $8,000.
Learn more about Medicare Part D.
Medicare Part C and Part D offer different benefits to people eligible for Medicare. It is important that people consider the benefits they may need to cover their medical expenses.
Coverage
In general, Medicare Part A and Part B (Original Medicare) provide coverage as shown in the table below:
| Medicare Part A | Medicare Part B |
|---|---|
| inpatient hospital costs | medically necessary services to diagnose and treat medical conditions |
| hospice care | preventive services, such as flu shots and cancer screening |
| skilled nursing facilities, under certain conditions | ambulance services |
| nursing home care that is not custodial or long term | durable medical equipment |
| eligible home health services | mental health services |
Medicare Part C is an alternative to Original Medicare. It must offer the same basic benefits as Original Medicare, but some plans also offer additional benefits, such as vision and dental care.
Medicare Part D, on the other hand, is a plan that people can enroll in to receive prescription drug coverage. A person can get a Medicare Part D plan along with Original Medicare or bundled into their Medicare Part C plan.
Costs
The cost of a Medicare Part C plan varies depending on several factors, including the plan’s benefits and the person’s location, age, and sex. The premium for Medicare Part C is paid to the private insurance company, which then pays the premium for Medicare Part B to Medicare.
Medicare Advantage plans have a yearly out-of-pocket spending limit. If a person reaches the limit in a calendar year, the plan pays all medical expenses for the rest of the year. The insurance company determines the cap on out-of-pocket expenses.
Medicare Part D costs include a premium, a deductible, copayments, and any late enrollment penalties. The company can charge a penalty when a person is without Medicare Part D for 63 continuous days or longer after the initial enrollment period (IEP) ends. This rule applies to the stand-alone Medicare Part D plan or the prescription drug coverage that Medicare Part C includes.
The penalty depends on how long a person went without prescription coverage. When a person joins a prescription plan, the insurance company calculates the penalty and adds it to the premium. Generally, this penalty forms part of the premium for as long as the person has a Medicare prescription plan.
Here’s a look at Medicare Part C and Part D costs:
| Medicare Part C costs | Medicare Part D costs |
|---|---|
| Premiums & other costs: These vary by plan and change each year. | Premium: This varies by plan. A person may face penalties if their coverage lapses or they sign up outside of enrollment periods. |
| Out-of-pocket limit: This varies by plan. Once the limit is reached, then plan pays for 100% of covered services for the rest of the year. | Deductibles, coinsurance, and copayments: These vary by plan and pharmacy. Individuals can find drug plans in their areas and compare costs online. |
Eligibility and enrollment
In general, a person must meet two requirements to be eligible for Medicare Part C:
- They must be enrolled in Original Medicare.
- They must live in an area where an insurance company offers Medicare Part C.
During a person’s IEP, they are eligible for Medicare Part C. This 7-month window extends 3 months before and 3 months after the month in which the person turns 65 years old.
People can switch to Medicare Part C after enrolling in Medicare Part A and Part B. They can do this during the annual open enrollment period (OEP), which runs from October 15 to December 7 every year.
Medicare Part C also has its own OEP, which runs from January 1 to March 31 each year. During this time, a person with Medicare Part C can change policies. They can also leave the Medicare Part C plan and go back to Medicare Part A and Part B.
During this OEP for Part C, an individual cannot:
- switch from Medicare parts A and B to Medicare Part C
- join Medicare Part D if they are enrolled in Medicare Part C
- switch one Medicare Part D plan for another
However, these changes are possible during the annual OEP that runs from October 15 to December 7. Medicare Part D is available for everyone during their IEP for Original Medicare.
Private insurance companies sell Medicare Part C and Part D. A person can find a company that sells a policy in their area by setting up a free account and using the Medicare plan finder tool online. Once they have logged in, the tool will show the Part C and Part D policies available in their ZIP code.
Not all plans work the same way. It is important that people take the time to compare the available plans in their area and understand the costs and rules.
A person needs to fill out an application form for Medicare Part C or Part D. They also need to give the insurance company their Medicare number and the date on which coverage began for Part A, Part B, or both. This information is on their Medicare card.
Learn more about Medicare enrollment.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare Part C combines the benefits of Medicare Part A and Part B (Original Medicare) under one plan. These plans can also offer additional benefits.
Medicare Part D is a prescription drug plan that can be added to Original Medicare plans. In addition, some Medicare Part C plans include Part D.
Private insurance companies offer Medicare Part C and Part D, but they must follow Medicare rules. The insurance company charges a premium for Part C and Part D, which a person pays directly to the company. They then pay the premium for Medicare Part B to Medicare.