Medicare Part A is hospital insurance, covering inpatient stays, skilled nursing, hospice, and some home health care. Part B is medical insurance, covering doctor visits, outpatient services, preventive care, and medical equipment. Together, they form “Original Medicare,” the federal health coverage most Americans become eligible for at age 65.
Understanding the split between A and B matters because it directly affects what you pay, how your hospital stay is billed, and whether certain services are covered at all.
What Part A Covers
Part A pays for care that happens inside a hospital or facility. This includes inpatient hospital stays, care in a skilled nursing facility, hospice care for terminal illness, and some home health services. If you’re formally admitted to a hospital with a doctor’s order, Part A kicks in.
Most people pay no monthly premium for Part A because they (or a spouse) paid Medicare taxes during their working years. You need roughly 10 years of work history to qualify for premium-free Part A. If you don’t have enough work credits, you can still buy into Part A, but you’ll pay a monthly premium.
Even with premium-free Part A, you still face out-of-pocket costs. Each time you’re admitted to the hospital, you pay a deductible for that “benefit period.” After the deductible, Part A covers the full cost for the first 60 days. Longer stays start adding daily copayments.
What Part B Covers
Part B covers nearly everything medical that happens outside of an inpatient admission: doctor visits, lab tests, outpatient surgery, diagnostic imaging, physical therapy, durable medical equipment like wheelchairs, and preventive services like flu shots and cancer screenings. If a doctor treats you in their office or you get outpatient services at a hospital, Part B is typically the payer.
Part B is not free. In 2025, the standard monthly premium is $185.00, and the annual deductible is $257. After meeting the deductible, you generally pay 20% of the Medicare-approved amount for most services. Higher-income enrollees pay more than the standard premium through an income-related surcharge.
The Inpatient vs. Outpatient Distinction
One of the most consequential and confusing parts of Medicare is the difference between inpatient and outpatient hospital status. You’re only considered an inpatient once a doctor writes a formal admission order. Everything else, including overnight stays for observation, emergency department visits, and outpatient surgery, is classified as outpatient care and billed under Part B.
This distinction has real financial consequences. As an inpatient, you pay the Part A deductible and your stay is fully covered for up to 60 days. As an outpatient, you may owe separate copayments for each service (lab work, imaging, medications), and those copayments can add up to more than the inpatient deductible would have been. Hospitals are required to give you a written notice called a Medicare Outpatient Observation Notice if you’re under observation status for more than 24 hours.
The general rule doctors use: if you’re expected to need two or more midnights of medically necessary hospital care, an inpatient admission is appropriate. But it’s the doctor’s call, not yours, and the classification isn’t always intuitive. You can spend two nights in a hospital bed and still be classified as an outpatient.
The Skilled Nursing Facility Rule
Part A covers care in a skilled nursing facility, but only after a qualifying hospital stay of at least three consecutive inpatient days. The day you’re admitted counts, but the day you’re discharged does not. And here’s the catch: time spent under observation status or in the emergency room before admission does not count toward those three days, even if you were physically in the hospital overnight.
After a qualifying stay, you must enter the skilled nursing facility within 30 days and need skilled care related to your hospital stay. If your stay doesn’t meet the three-day inpatient requirement, Part A won’t cover skilled nursing at all. Some Medicare Advantage plans and doctors participating in certain Medicare programs can waive this three-day rule, so it’s worth asking before discharge.
What Original Medicare Does Not Cover
Both Part A and Part B have significant gaps. Original Medicare does not cover routine dental care (cleanings, fillings, extractions, dentures), eye exams for prescription glasses, or hearing aids and the exams to fit them. There are narrow exceptions: Medicare may pay for dental services directly related to a covered procedure, such as a heart valve replacement, organ transplant, or cancer treatment that requires dental work first.
Long-term custodial care (help with bathing, dressing, or eating that isn’t skilled medical care) is also not covered. Many people are surprised by this gap, since it’s the type of care most commonly needed in nursing homes.
When and How to Enroll
Your Initial Enrollment Period is a seven-month window that starts three months before the month you turn 65 and ends three months after it. Signing up during the first three months means your coverage starts on the first day of your birthday month. Waiting until the later months of the window delays your coverage start date.
If you’re already receiving Social Security benefits when you turn 65, you’ll be enrolled in Part A and Part B automatically. If you’re not collecting Social Security yet, you need to sign up yourself through Social Security’s website or office.
If you’re still working at 65 and have employer-based insurance, you may not need to enroll in Part B right away. You’ll get a Special Enrollment Period when you or your spouse stop working or lose that employer coverage. But if you delay Part B without qualifying employer coverage, you’ll face a permanent penalty.
Late Enrollment Penalties
The Part B late enrollment penalty is 10% added to your monthly premium for every full 12-month period you were eligible but didn’t sign up. If you waited two years beyond your initial window without qualifying coverage, your premium increases by 20% for as long as you have Part B. That penalty never goes away.
For example, if you delayed enrollment by three full years, you’d pay 30% more than the standard premium every month for the rest of your time on Medicare. At 2025 rates, that’s roughly an extra $55.50 per month on top of the $185.00 standard premium, permanently.
Part A also carries a late enrollment penalty for people who have to pay a premium (those without enough work credits), though this applies to far fewer people. The penalty is 10% of the premium, lasting twice the number of years you delayed.
Part A and Part B Together
Part A and Part B work as complementary halves. A single hospital visit can involve both: Part A covers the inpatient room and nursing care, while Part B covers the doctors who treat you during that stay. If you have outpatient surgery, Part B pays for the procedure and related services, but if complications lead to a formal admission, Part A takes over.
Most people on Original Medicare also carry a Medigap (supplemental) policy or enroll in a Medicare Advantage plan (Part C) to help cover the 20% coinsurance, deductibles, and gaps that Parts A and B leave behind. Parts A and B set the foundation, but they were never designed to cover 100% of healthcare costs on their own.