How Medicare works for aging parents What caregivers actually need to know

Medicare covers hospital stays, doctor visits, outpatient care, and prescription drugs through four parts (A, B, C, and D). It does not pay for custodial care, meaning help with bathing, dressing, meals, or daily supervision, even when that care is delivered inside a nursing home. Most families learn this distinction when a discharge planner delivers the news. This guide explains each part, what it covers, and the decisions caregivers need to make before a health crisis forces them.

When a parent gets a serious diagnosis or lands in the hospital, Medicare suddenly stops being background noise and becomes the most important financial system in your life. Most adult children have a general sense that their parent "has Medicare," but very few know what it actually covers until a bill arrives. The confusion is understandable: the program has four distinct parts, two delivery tracks (original Medicare and Medicare Advantage), and a set of rules that interact with each other in non-obvious ways. This article lays it out plainly so you can make informed decisions instead of reactive ones.

The four parts of Medicare

Medicare is organized into four lettered parts. Each covers a different category of care. Understanding where one ends and another begins prevents the most common and costly misunderstandings.

Part A: Hospital coverage

Part A covers inpatient hospital stays, care in a skilled nursing facility after a qualifying hospital stay, some home health care, and hospice. Most people pay no monthly premium for Part A, as long as the beneficiary (or their spouse) worked and paid Medicare taxes for at least 10 years (40 quarters). If your parent worked a standard career, Part A is essentially free.

What Part A does NOT cover is equally important. It does not cover the full cost of a hospital stay beyond the deductible and coinsurance. For 2024, the Part A deductible is $1,632 per benefit period. For long hospital stays, additional daily coinsurance applies starting on day 61. Part A also does not cover most long-term care, which is a point families get wrong constantly.

The skilled nursing facility coverage under Part A deserves its own paragraph. After a qualifying inpatient hospital stay of at least three days, Medicare covers SNF care as follows:

• Days 1-20: Medicare pays 100%. Your parent owes nothing.
• Days 21-100: Medicare pays a portion. Your parent pays approximately $204 per day (2024 rate). Medigap plans often cover this coinsurance.
• Day 101 and beyond: Medicare pays nothing. All costs fall to the family, long-term care insurance, or Medicaid.

Coverage can end before day 100 if skilled care is no longer medically necessary, which happens more often than reaching the 100-day limit. For a deeper explanation of how SNF coverage works in practice, see our guide on skilled nursing care vs. nursing home care.

Part B: Outpatient and doctor coverage

Part B covers the medical care that happens outside a hospital: doctor visits, outpatient surgery, lab tests, imaging (X-rays, MRIs, CT scans), physical and occupational therapy in an outpatient setting, mental health services, durable medical equipment (walkers, hospital beds, wheelchairs, oxygen equipment), and a broad range of preventive services.

Part B has a monthly premium. The standard amount in 2024 is $174.70 per month. Higher-income beneficiaries pay more through a surcharge called IRMAA (Income-Related Monthly Adjustment Amount), covered in more detail below. Part B also has an annual deductible ($240 in 2024), after which Medicare pays 80% of approved costs and the beneficiary pays 20%. That 20% has no cap, which is why Medigap coverage matters for families facing serious illness.

One area families overlook: Part B covers certain home health services, including intermittent skilled nursing visits, physical therapy, occupational therapy, and speech therapy ordered by a physician, when the beneficiary is homebound. This is not the same as around-the-clock home care, but it provides real support during recovery periods.

Part C: Medicare Advantage

Part C is not additional coverage. It is an alternative delivery track for Parts A and B. Instead of receiving Medicare benefits directly through the federal government, a beneficiary enrolls in a private Medicare Advantage plan (offered by insurers like Humana, UnitedHealthcare, Aetna, and others). The private plan receives a fixed payment from Medicare to cover the enrollee's care.

Medicare Advantage plans bundle Parts A and B and usually Part D into a single plan. They often have lower monthly premiums than original Medicare plus a Medigap plan. Many include extra benefits original Medicare does not cover, such as dental, vision, hearing, and fitness memberships.

The tradeoff is network restrictions. Medicare Advantage plans use HMO or PPO network structures, meaning your parent may need referrals to see specialists, and out-of-network care may cost significantly more or not be covered at all. For a parent with straightforward health needs who primarily sees primary care and a few specialists all within a local area, Medicare Advantage can work well. For a parent with complex medical needs, multiple specialists, or who travels frequently and may need care in different regions, original Medicare (which is accepted almost everywhere) combined with a Medigap supplement generally provides more flexibility.

Part D: Prescription drug coverage

Part D covers prescription drugs. It is offered through private insurance companies approved by Medicare. If your parent has original Medicare (Parts A and B), they enroll in a standalone Part D plan. If they have Medicare Advantage, drug coverage is usually included in the plan.

Each Part D plan has a formulary, which is the list of drugs the plan covers and at what cost tier. Before your parent chooses a plan, verify that their specific medications are on the formulary at a cost tier they can afford. Medicare's Plan Finder tool at Medicare.gov allows you to enter all current medications and compare plans by total annual cost.

A critical rule: enroll in Part D when first eligible or face a permanent late enrollment penalty. The penalty is 1% of the national base premium for every month your parent went without creditable drug coverage. It is added to the monthly Part D premium indefinitely. Many people skip Part D enrollment because their parent takes no prescriptions. This is a costly mistake. Enroll, pay the low premium, and avoid the penalty.

The biggest Medicare myth: it does not cover custodial care

This is the fact that shocks most families, and understanding it changes how you plan for your parent's future.

Medicare does not pay for custodial care. Custodial care means help with the basic activities of daily living: bathing, dressing, grooming, eating, using the toilet, and getting in and out of bed. It also includes supervision for safety, medication reminders, and the around-the-clock oversight that someone with severe dementia requires.

This is not a gap in the rules. It is a deliberate design of the program. Medicare is health insurance. It pays for medical care. Custodial care is not medical care under Medicare's definition, regardless of how severe a person's condition is, and regardless of where that care is delivered.

That last part is what catches families off guard. A parent with advanced dementia who cannot dress, feed, or bathe herself, living in a nursing home, is not covered by Medicare for any of those services. Even if she is in the same building that previously provided covered skilled nursing care. Even if her condition is medically complex. The help with daily activities is custodial, not skilled, and Medicare does not pay for it.

Long-term custodial care is paid through one of four sources: private pay (personal savings, retirement assets, family contributions), long-term care insurance if the parent purchased it years earlier, Medicaid after assets have been spent down to program eligibility levels, or a combination. The financial navigation for this is complex and covered separately in the Financial Navigation pillar.

Medigap: filling the gaps in original Medicare

Original Medicare's cost-sharing structure, deductibles, coinsurance, and the 20% Part B cost without an out-of-pocket cap, creates real financial exposure for families dealing with serious illness. Medigap (also called Medicare Supplement Insurance) is private insurance designed to cover those gaps.

Medigap plans are standardized and lettered (Plan G, Plan N, and others). Each letter represents the same set of covered benefits regardless of which insurer sells it, so families can compare plans solely on price and insurer reputation. Plan G is currently the most comprehensive plan available to new Medicare enrollees. It covers most of what original Medicare does not pay, including the Part A daily coinsurance for SNF stays (days 21-100), the Part A hospital deductible, and all Part B coinsurance after the annual deductible.

Medigap premiums vary by plan, age, and location. A reasonable range for Plan G in 2024 is $100-300 per month depending on the beneficiary's age and state. The monthly cost is predictable, which many families prefer to the uncertainty of 20% coinsurance during a major illness.

The enrollment timing matters. The six-month window starting when your parent turns 65 and enrolls in Part B is the guaranteed issue period. During this window, insurers cannot deny coverage or charge higher premiums based on health conditions. After this window closes, insurers in most states can use medical underwriting, meaning they can decline to sell a Medigap policy or charge significantly more if your parent has pre-existing conditions. Missing the window can be financially significant.

Open enrollment and special enrollment periods

Once enrolled in Medicare, your parent can change their Part C and Part D plan choices during specific windows.

Annual Enrollment Period (AEP): October 15 through December 7 each year. During this window, beneficiaries can switch between original Medicare and Medicare Advantage, change Medicare Advantage plans, and change Part D plans. Changes take effect January 1.

Medicare Advantage Open Enrollment Period: January 1 through March 31. Beneficiaries already enrolled in Medicare Advantage can switch to a different MA plan or return to original Medicare during this window.

Outside these windows, changes are generally not permitted unless a Special Enrollment Period (SEP) applies. SEP triggers caregivers should know:

• Losing employer or union coverage: A parent who retires and loses employer health insurance has a Special Enrollment Period to sign up for Parts A and B without penalty.
• Moving to a new service area: If a parent moves and their current Medicare Advantage plan does not serve the new area, they can switch plans.
• Moving into or out of a nursing home or care facility: Triggers an SEP for plan changes.
• Loss of Medicaid eligibility: Also triggers a Special Enrollment Period.

IRMAA: when higher income means higher premiums

Most beneficiaries pay the standard Part B premium ($174.70/month in 2024). But Medicare uses a two-year look-back at income to assess an Income-Related Monthly Adjustment Amount (IRMAA) surcharge for higher-income beneficiaries. The surcharge applies to both Part B and Part D premiums.

In 2024, IRMAA begins for individuals with modified adjusted gross income above $103,000 (or above $206,000 for couples filing jointly). At the highest income tier, the Part B premium can reach $594 per month per person.

This becomes relevant for caregivers when a parent sells a home, takes a large retirement account distribution, or has significant investment income. The income used to calculate IRMAA is from two years prior, so a large income event in 2024 affects premiums in 2026. If your parent experiences a significant income reduction (retirement, loss of spouse's income, one-time capital gain), they can appeal the IRMAA determination using Form SSA-44 based on a life-changing event.

What caregivers should do now

Most of these tasks take less than an hour and prevent significant problems later.

• Locate the Medicare card. Know the Medicare Beneficiary Identifier (MBI) number. This is needed for every healthcare interaction.
• Set up a MyMedicare.gov account. This gives online access to Medicare Summary Notices, current coverage details, and a medication history.
• Add yourself as an authorized representative. Complete Form CMS-10106 to gain the legal ability to call Medicare on your parent's behalf, appeal coverage decisions, and manage plan changes. Keep a copy in the family care file.
• Confirm all doctors accept Medicare. Most physicians accept original Medicare. For parents on Medicare Advantage, confirm their doctors are in-network. Out-of-network costs can be substantial.
• Review Part D coverage annually. Drug formularies and premiums change each year. During each AEP (October 15 to December 7), run the medications through Medicare's Plan Finder to confirm the current plan is still the best option or whether a switch makes sense.
• Understand the Medigap enrollment window. If your parent is approaching 65, the six-month guaranteed issue window after Part B enrollment is the single most important Medicare timing decision they will make.

The Centers for Medicare and Medicaid Services (CMS) publishes all current figures and plan comparison tools at Medicare.gov. The Kaiser Family Foundation also publishes annually updated Medicare research and explainers that are useful for families navigating complex decisions.