Happy New Year!
If you’re turning 65 this year, understanding Medicare Parts A and B is the foundation of making confident healthcare and retirement decisions.
As estate planning attorneys, we often see health care costs create stress for families. Medicare choices can affect how long retirement savings last — and what may be left for loved ones later. If Medicare already feels confusing, you’re not alone. Many people assume they will “figure it out later,” only to discover that small decisions made at 65 can have long-term financial and healthcare consequences. That’s why understanding Medicare Parts A and B early matters more than most people realize.
This is Part 1 of a 4-part Medicare series.
We explain Medicare in simple terms and show why it matters for retirement and estate planning. We find that Medicare feels far less intimidating when it’s broken down into simple concepts. You don’t need to memorize every rule or exception. You just need a clear foundation, and that starts with understanding what Parts A and B actually do.
The Easiest Way to Understand Medicare Parts A and B
Here’s the simplest way to think about it:
- Part A pays for where you stay
- Part B pays for who treats you
Most people need both.
Medicare Part A: Hospital Insurance Explained
Part A helps pay for inpatient care, meaning care when you are formally admitted to a facility. It generally covers:
- Hospital stays
- Skilled nursing facility care (after a hospital stay)
- Hospice care
- Limited home health care
Many people do not pay a monthly premium for Part A because they paid Medicare taxes while working.
But Part A is not free. Part A usually includes a large deductible for each hospital stay, and costs can increase during longer stays.
Common Surprise:
Even with Medicare, hospital deductibles and daily charges can be expensive. Hospital stays tend to get most of the attention, but they’re only one part of the picture. Many of the medical costs people face in retirement come from everyday care. That’s where Medicare Part B plays a much bigger role than most people expect.
Medicare Part B: Medical Insurance Explained
Part B covers routine and outpatient medical care, such as:
- Doctor visits
- Outpatient care
- Lab tests and X-rays
- Preventive services
- Medical equipment
Part B has a monthly premium, plus:
- a small annual deductible, and
- usually 20% of approved costs
There is no annual out-of-pocket limit.
In Simple Terms:
If you have a year with lots of medical care, your Part B costs can add up quickly. One of the most common points of confusion we see is assuming that Medicare works in neat, separate boxes. In reality, Parts A and B are closely connected, and understanding how they overlap can help you avoid surprises when medical bills arrive.
How Medicare Parts A and B Work Together
Example: A hospital stay is usually Part A, but the doctors and tests are often billed under Part B.
That’s why most people enroll in both. Even when Parts A and B are working exactly as designed, there are still important gaps in coverage. These gaps often catch families off guard, especially when planning for long-term care or ongoing medical needs.
What Traditional Medicare Does Not Cover
Traditional Medicare does not cover most:
- dental
- vision
- hearing aids
- long-term nursing home care
- prescription drugs
Because of these gaps, many people add Medigap insurance and Part D drug coverage.
Medicare decisions don’t exist in isolation. They affect retirement income, long-term care planning, and ultimately what you’re able to preserve for the people you care about. Taking the time to understand the basics now can reduce stress later and help you make more confident decisions as your needs change.
Coming Up Next
Part 2: Medicare Part D — prescription drugs and why waiting can be costly. In the next part of this series, we’ll continue breaking Medicare down into plain language, one step at a time, so you can move forward with clarity instead of uncertainty.