3 Major Differences Between Medicare A and B (That Matter to Your Wallet)

Medicare is a federal health insurance program primarily for people 65+, as well as certain younger people with disabilities or specific conditions. It's primarily intended to help retired individuals maximize retirement savings by providing them with affordable health care after they leave the workforce.

Traditional Medicare includes Part A (hospital insurance) and Part B (medical insurance). Many people also add Part D, which provides prescription drug coverage.

Below, we compare the costs and services included with Part A and Part B so you can prepare for retirement by making informed decisions about Medicare.

Medicare Part A is insurance specific to hospital stays and other types of inpatient medical care.

This type of insurance kicks in if a doctor assesses you after an injury or illness and refers you to a hospital (including psychiatric hospitals) for an inpatient stay.

It can also apply to temporary stays in skilled nursing facilities (SNFs), short-term respite care, and certain home health care services.

Crucially, Medicare Part A is intended for temporary, short-term, or intermittent services. Additionally, it will only help pay for hospital stays if you're referred based on a doctor's official medical order and if you stay at a hospital, hospice, or SNF that accepts Medicare insurance.

Most people don't have to pay a premium for Medicare Part A once they retire (the Medicare taxes you paid during your career helped preemptively cover this cost for you).

Instead, you pay a certain amount out of pocket depending on how long your inpatient hospital stay lasts once you meet your Medicare Part A deductible of $1,736 in 2026.

After meeting your deductible, you pay $0 in hospital costs for the first 60 days of your stay. If your stay lasts between 61 and 90 days, you'll start paying an additional out-of-pocket fee of $434 per day.

For each day you stay over 90 days, your out-of-pocket costs will increase to $868.

However, Medicare Part A will only help pay for 60 total days of inpatient hospital stays lasting over 90 days. Those 60 days are called "lifetime reserve days." They do not reset with each benefit period but accumulate throughout your lifetime.

For instance, let's say you're admitted to inpatient care for 92 days in 2026, then 95 days in 2027. That's a total of five days exceeding your 90-day hospital stay period, which means you now have 55 days over the rest of your lifetime, where Medicare will help cover the costs of inpatient care beyond 90 days.

Once you use up your 60 lifetime reserve days, you'll cover the entire cost of any inpatient hospital stay lasting more than 90 days.

Other forms of care besides hospital stays incur different fees:

• Stays at Skilled Nursing Facilities cost $0 for the first 20 days and $217 between days 21 and 100. After day 100, you pay all costs out of pocket.
• Home health care services and short-term hospice stays cost $0 per day, though you may pay a $5 copay for medications prescribed by your hospice team.

Medicare Part A doesn't cover long-term health care costs, including long-term hospice care or full-time home health care.

Additionally, Part A only covers 190 days of care in a psychiatric-specific hospital throughout your lifetime (this limit doesn't apply to stays in psychiatric wings of general hospitals).

Medicare Part B helps cover most services unrelated to inpatient hospital stays, including general medical services and preventative health care.

For example, Medicare Part B can help you pay for ambulance rides, certain types of durable medical equipment (such as some insulin pumps), preventative screenings (such as colonoscopies), vaccines, and yearly wellness visits.

Medicare Part B costs a premium of $202.90 per month. Individuals who report more than $109,000 in income and couples who report more than $218,000 may be subject to a higher premium.

Additionally, if you waited to sign up for Medicare Part B instead of signing up once you turned 65, you'll pay an extra 10% of the premium each month for the rest of your life.

Medicare Part B also has a deductible of $283 per year, so coverage will kick in once you meet that yearly amount.

Medicare Part B doesn't cover eye exams, hearing aid fittings, or dental care. Additionally, Part B doesn't pay for anything it doesn't consider "medically necessary," such as cosmetic or other elective surgeries.

However, if a cosmetic procedure is related to another Medicare-covered health condition, such as breast reconstruction after a cancer-related mastectomy, it will be covered by Part B.

Having both Medicare Part A and Part B helps cover most hospital and medical services, helping you stretch your retirement dollars further. However, many people add supplemental coverage to help pay remaining costs.

Considering you likely won't have a monthly premium for Part A and will pay less than $210 per month for Part B, it's not a bad price to pay for peace of mind during your golden years.