Understanding Medicare Parts A and B: What’s Covered, What’s Not, and How to Fill the Gaps

If you’re approaching 65 or helping a loved one navigate Medicare, you’ve probably realized just how confusing the whole system can be. Between enrollment periods, income-based premiums, and different types of coverage, it’s no wonder people feel overwhelmed.

Let’s simplify things. In this article, we’ll break down what Medicare Parts A and B actually cover, how premiums are calculated, and why many people choose to add a supplemental insurance plan like Plan G or Plan N.

Medicare Part A vs. Part B: What’s the Difference?

Medicare is divided into multiple parts. Here’s a quick breakdown:

• Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services.
• Part B covers outpatient services—everything from doctor visits and preventive care to outpatient surgeries, diagnostic testing (like MRIs), durable medical equipment, and even some home health care.

Think of Part A as hospital insurance, and Part B as medical insurance for anything that doesn’t require an overnight stay.

How Do You Qualify for Medicare?

You’re eligible for Medicare if you’ve worked and paid FICA or SECA taxes for at least 40 quarters (10 years). These payroll taxes—1.45% of your income, matched by your employer—fund the Medicare system. There’s no income cap, so even high earners pay in.

If you didn’t reach 40 quarters, you can still get Medicare Part A by paying a premium:

• $285/month if you worked 30–39 quarters
• $515/month if you worked less than 30 quarters

Part B is available to all Medicare-eligible individuals and carries a monthly premium, regardless of work history.

How Much Does Medicare Part B Cost in 2025?

The standard Part B premium in 2025 is $185/month, but this number can go up if your income is higher.

The amount you pay is based on your Modified Adjusted Gross Income (MAGI) from your tax return. It includes:

• Line 11: your total adjusted gross income
• Line 2a: your tax-exempt interest income

Here are the basics:

• Single filer earning under $106,000 or married couple earning under $212,000: standard premium
• Above those thresholds? You’ll pay an IRMAA surcharge (Income-Related Monthly Adjustment Amount), which increases your premium across five tiers

These thresholds are updated annually, and your premium may go up or down depending on changes in your income.

When Should You Enroll in Medicare?

There are three main enrollment windows:

• Initial Enrollment Period (IEP): The 7-month window around your 65th birthday
• Special Enrollment Period (SEP): If you delayed enrollment because you were covered by a large employer group health plan (20+ employees)
• General Enrollment Period (GEP): January 1 – March 31 each year for those who missed their IEP or SEP (this option may come with penalties)

If you’re receiving Social Security at 65, you’ll be enrolled automatically in Parts A and B. But if you’re still working and covered by employer insurance, you may want to opt out of Part B to avoid paying unnecessary premiums.

How Medigap Plans Work and Why They Matter

Medicare doesn’t cover everything. There are significant gaps, including:

• A $1,676 deductible per hospital stay under Part A
• Daily hospital co-pays starting in the third month
• $257 annual deductible for Part B
• 20% coinsurance for most outpatient services
• Up to 15% in excess charges if your doctor doesn’t accept Medicare assignment

That’s where Medigap policies come in. These are supplemental insurance plans designed to cover those gaps.

You can buy a Medigap plan during a six-month Open Enrollment Period, which starts the month your Part B coverage begins. During this time, you can get coverage without any medical underwriting—meaning you can’t be denied based on preexisting conditions.

What’s the Difference Between Plan G and Plan N?

Two of the most popular Medigap plans are Plan G and Plan N.

• Plan G: Covers everything Medicare doesn’t—except the $257 Part B deductible. It’s the most comprehensive coverage available to new enrollees.
• Plan N: Covers nearly everything that Plan G does, but with a few small differences:
  • $20 copay for doctor visits
  • $50 copay for ER visits (waived if admitted)
  • No coverage for excess charges (those up-to-15% add-ons from some doctors)

Plan N generally has lower premiums, making it a good fit for people who are healthy and don’t mind a little cost-sharing.

Out-of-Pocket Costs Add Up Fast Without a Medigap Plan

Without a supplemental plan, you could face thousands in unexpected bills:

• Extended hospital stays can cost $419 to $838 per day after the first 60 days
• Skilled nursing facilities charge $250 per day after 20 days
• All outpatient services require you to pay 20% of the cost

A Medigap policy can protect you from these bills and give you predictable costs in retirement.

Special Situations to Be Aware Of

• Already enrolled automatically in Part B? If you’re still working and have a good employer plan, you can opt out of Part B to avoid paying duplicate premiums.
• Still contributing to an HSA? You’ll want to delay all Medicare enrollment, including Part A, because once enrolled, you can’t contribute to your HSA anymore.
• Employer coverage not so great? You can transition to Medicare at 65—even if you’re still working. Employers are required to accommodate this switch.

Which Plan Should You Choose?

Choosing between Plan G and Plan N comes down to this:

• Plan G is for those who want simplicity and full coverage
• Plan N is for those who want to save a little money and don’t mind a few copays

Either way, you’ll be far better protected than with Medicare alone.