The government divides coverage into parts, labeling them A, B, C, and D. Generally, Part A applies to inpatient treatment, while Part B covers visits to a doctor and some other elements of outpatient care.
Medicare is the government-funded insurance program for people aged 65 and over. It is also available to younger people with certain conditions and disabilities.
In this article, we explain the key differences between Medicare parts A and B.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Each part of Medicare is designed to help pay for different aspects of treatment.
Part A applies to many costs of inpatient care. Part B primarily helps cover costs of outpatient treatment and preventive care, such as visits to a doctor, medical equipment, and some prescriptions.
The two parts have different out-of-pocket costs, including deductibles and coinsurance.
Medicare Part A is designed to help cover inpatient care, such as:
- a hospital stay of longer than 2 days
- hospice care
- care at a skilled nursing facility
To qualify for Part A coverage, a service must involve active treatment that improves a person’s overall health. In addition, Part A covers hospice care.
It is important to note that Medicare does not cover supportive services, such as long-term care at a nursing home, if healthcare professionals do not expect the person’s condition to improve.
Likewise, Medicare does not cover care at home, such as help with eating, bathing, and dressing.
Though these supportive services can be crucial, Medicare is only designed to cover active medical treatment and hospice care.
Part B covers medically necessary services — those needed to support the diagnosis or treatment of a health problem. It also covers preventive services, such as regular checkups.
Examples of eligible services include:
- most visits to a doctor
- mental health treatments — inpatient or outpatient
- ambulance transportation
- clinical research
- durable medical equipment, such as crutches
- some outpatient prescription medications
Medicare has a search function that allows a person to check whether a specific service, treatment, or device is covered — and, if so, by which Medicare part.
Medicare parts A and B have different premiums and out-of-pocket costs.
Part A premium
The Medicare Part A premium is usually free for people who have worked for at least 40 quarters while paying Medicare taxes, as well as their spouses.
However, even for those who do not pay this premium, other out-of-pocket costs apply.
For people who do need to pay a Part A premium, the amount varies, depending on the number of quarters in which the person has paid Medicare taxes:
- If a person has paid Medicare taxes for 40 or more quarters, they do not pay a premium.
- If a person has paid Medicare taxes for 30–39 quarters, their premium is $252.
- If they have paid Medicare taxes for fewer than 30 quarters, their premium for 2020 is $458.
These premiums are subject to change every year.
Part B premium
A premium also applies for Medicare Part B. For 2020, the monthly premium is $144.60.
If a person has an annual income of more than $87,000 as an individual or $174,000 alongside their spouse, they may be subject to an income-related adjustment. This adds a fee to the monthly premium.
The maximum Part B monthly premium is $491.60.
Parts A and B cost comparison for 2020
The following table breaks down the costs of Medicare parts A and B.
|Often free, but based on Medicare tax history
|$144.60 or higher after income-related adjustments
|$1,408 for each benefit period, which starts on admission as an inpatient and finishes once a person has not received care for 60 days
|$0 for inpatient days 1–60, $352 for days 61–90, and $704 for days 91 and beyond, for up to 60 additional days
|After meeting the deductible, 20% of the Medicare-approved cost of a treatment
The Social Security Administration (SSA) or Railroad Retirement Board (RRB) automatically enroll some people in Medicare parts A and B.
If a person already receives benefits from either of these administrations, they will receive a Medicare card in the mail about 3 months before their 65th birthday. The benefits usually begin on the first day of the month that they turn 65.
If a person does not get benefits from the SSA or RRB, they will have to sign up for Medicare. There are several ways to do this:
- Apply online at the SSA’s website.
- Call the SSA, at 1-800-772-1213 (TTY: 1-800-325-0778).
- Sign up in person at a social security office.
A person can enroll in Medicare during the “initial enrollment period.” This extends from 3 months before the month of the person’s birthday to 3 months after it.
It is possible to enroll outside of this period, but there may be a late enrollment penalty fee.
Medicare Part D provides prescription drug coverage. The government requires that a person has creditable drug coverage from either a private insurance policy or Medicare.
A person must have Medicare parts A or B to purchase a Part D plan. Or, they may purchase a Part D plan if they have a bundled policy called Medicare Advantage, as long as this policy does not already cover prescription medications.
A person can sign up for a Medicare Part D plan online. Medicare’s website provides a search function that helps with understanding coverage.
When choosing a plan, it is important to ensure that it covers any existing medications.
Medicare parts A and B cover different types of health services. Generally, Part A covers inpatient treatments, and Part B covers visits to doctors, some medical supplies, and some devices.
A person qualifies for premium-free Part A if they have paid Medicare taxes through employment for at least 10 years. Part B has a premium that is based on a person’s income.
Both parts require a person to pay out-of-pocket costs, including deductibles and coinsurance.
The SSA and RRB automatically enroll some people in these aspects of Medicare once they reach 65 years of age. Other people must sign up on their own.
To enroll in a Part D plan, a person must have Part A, Part B, both, or a Medicare Advantage plan that does not cover costs of prescriptions.