What does Medicare cover annually? Your guide to yearly benefits

According to the Centers for Medicare & Medicaid Services, millions of Americans depend on Medicare for their healthcare needs. Understanding what does Medicare cover annually is crucial for managing your health and finances, as coverage and costs can shift each calendar year.

Quick Summary

Annually, Medicare provides coverage that varies based on the plan type, generally including inpatient hospital care (Part A), outpatient services and yearly preventive care (Part B), and often prescription drugs (Part D). Private plans, known as Medicare Advantage (Part C), bundle these benefits with extras like dental and vision.

Key Points

• Annual Deductibles Vary: Original Medicare Part B has an annual deductible that resets each calendar year, while Part A's deductible resets per benefit period.

• No OOP Max in Original Medicare: Original Medicare does not have an annual out-of-pocket maximum, meaning there is no cap on how much you can spend on covered services.

• MA Plans Have OOP Max: Private Medicare Advantage plans offer an annual out-of-pocket maximum for covered Parts A and B services, protecting against unlimited costs.

• Yearly Wellness Visit: Medicare covers one Annual Wellness Visit (AWV) per year to develop a personalized prevention plan, which is not the same as a comprehensive physical exam.

• Part D Out-of-Pocket Cap: As of 2025, there is an annual cap on out-of-pocket spending for covered prescription drugs under Medicare Part D, providing significant financial relief for those with high medication costs.

• Review Annually: The Medicare Annual Enrollment Period is the best time to review your coverage options, compare plans, and make changes to suit your health needs for the coming year.

The Annual Scope of Original Medicare

Original Medicare is the federal government's health insurance program, comprising Part A and Part B. Understanding the annual rhythms of this coverage is essential, as some costs reset annually while others operate on a benefit period cycle.

What Part A Covers Each Year

Medicare Part A, or hospital insurance, primarily covers inpatient care. The annual aspect of Part A is tied to the “benefit period,” not the calendar year. A benefit period starts the day you are admitted as an inpatient in a hospital or skilled nursing facility (SNF) and ends when you have not received inpatient hospital or SNF care for 60 consecutive days. This means you could potentially have multiple Part A deductibles in a single calendar year if you have separate benefit periods.

Key areas covered annually include:

• Inpatient Hospital Care: Pays for a semi-private room, meals, and nursing services. Covered for up to 90 days per benefit period, plus 60 lifetime reserve days.
• Skilled Nursing Facility Care: Covers services like skilled nursing care and physical therapy for a short-term stay following a qualifying hospital stay. Covered for up to 100 days per benefit period.
• Home Health Services: Pays for medically necessary part-time skilled nursing care, physical therapy, and other services for homebound individuals.
• Hospice Care: Covers care for terminally ill patients, provided by a Medicare-approved hospice provider.

What Part B Covers Each Year

Medicare Part B, or medical insurance, operates on a true calendar year basis. This means your annual deductible and other cost-sharing amounts reset every January 1st. Part B covers a wide range of services and supplies, including many essential preventive services.

• Medically Necessary Services: Annually covers a variety of medically necessary doctor services, outpatient hospital services, and durable medical equipment (DME). After you meet your annual deductible, you typically pay a 20% coinsurance for most services.
• Preventive Services: A core annual benefit of Medicare is access to preventive care to help you stay healthy and catch problems early. These services are often covered with no coinsurance or deductible when you see a provider who accepts assignment. Common annual preventive services include:
  • Annual Wellness Visit (AWV)
  • Flu shots and other vaccinations
  • Mammograms (screening)
  • Prostate cancer screenings
  • Colorectal cancer screenings
  • Depression screenings
  • Cardiovascular disease screenings
• Annual Wellness Visit: Unlike a routine physical, the Annual Wellness Visit (AWV) focuses on creating or updating a personalized prevention plan. It is covered once every 12 months, with no cost to you, and includes a health risk assessment and cognitive screening.

The Annual Benefits of Medicare Advantage (Part C)

For many, Medicare Advantage (MA) plans offer an alternative way to receive Medicare benefits. These plans are offered by private insurance companies approved by Medicare and must cover all medically necessary services included in Original Medicare (Parts A and B). However, their annual coverage structure differs significantly.

• Annual Out-of-Pocket Maximum: A major difference is the annual out-of-pocket (OOP) maximum for covered Part A and Part B services. Unlike Original Medicare, which has no cap, MA plans set a limit on what you will pay out of pocket each calendar year for covered services. This offers a significant layer of financial protection.
• Extra Annual Benefits: MA plans often provide extra benefits that Original Medicare does not cover, and these reset or are available annually. Common annual extras include:
  • Routine dental, vision, and hearing exams
  • Fitness memberships, such as SilverSneakers®
  • Over-the-counter (OTC) item allowances
• Prescription Drug Coverage (Part D): Most MA plans include prescription drug coverage (MAPD), rolling all your benefits into one plan.

Your Yearly Prescription Drug Coverage (Part D)

Medicare Part D, whether a standalone plan or included in an MA plan, helps cover prescription drug costs. Significant changes have occurred, offering more financial predictability.

• Annual Out-of-Pocket Cap: The Inflation Reduction Act eliminated the coverage gap (or “donut hole”) and added an annual cap on out-of-pocket costs for covered Part D drugs. In 2025, this cap is $2,000, and it will increase to $2,100 in 2026. After hitting this cap, you pay nothing for covered prescription drugs for the rest of the calendar year.
• Annual Deductible: Your Part D plan may have an annual deductible, which you must meet before the plan begins covering your drug costs. This deductible resets annually.

Original Medicare vs. Medicare Advantage: Annual Coverage Comparison

To highlight the annual differences, consider this comparison:

Aspect	Original Medicare	Medicare Advantage (Part C)
Deductibles	Part A is per benefit period; Part B is annual (resets Jan 1).	Annual deductibles for Parts A and B vary by plan; may also include a separate drug deductible.
Annual Out-of-Pocket Maximum	No annual maximum. Costs continue indefinitely.	An annual out-of-pocket maximum is required, protecting you from unlimited costs.
Preventive Services	Part B covers one Annual Wellness Visit and many screenings with no cost-sharing annually.	Covers all Original Medicare preventive services. May have different network rules but must offer the same coverage.
Extra Benefits	Does not cover routine dental, vision, or hearing.	Often includes yearly allowances or coverage for routine dental, vision, hearing, and fitness programs.
Prescription Drugs (Part D)	Requires enrollment in a separate Part D plan.	Typically included in the plan (MAPD). Annual out-of-pocket cap applies in 2025/2026.
Flexibility	Visit any doctor or hospital nationwide that accepts Medicare.	Often uses a specific provider network (HMO or PPO), though urgent/emergency care is covered outside the network.

Your Annual Review

Each fall, during the Medicare Annual Enrollment Period (October 15 to December 7), you have the opportunity to review and change your coverage. This is the ideal time to assess your health needs and compare plans for the coming year. You can use the official tools on the Medicare website, Medicare.gov, to compare your options and ensure your annual coverage aligns with your needs.

By understanding the unique annual benefits and resets of Original Medicare and Medicare Advantage, you can make informed decisions to maximize your coverage and minimize your yearly out-of-pocket expenses.

Conclusion

While many services reset or are renewed annually, Medicare is not a “one-size-fits-all” program. Original Medicare provides consistent, baseline annual benefits for hospital and medical care, while Medicare Advantage offers more robust annual benefits and cost protection through out-of-pocket caps and extra services. Ultimately, staying informed about your yearly coverage options and reviewing them during the Annual Enrollment Period is the best way to ensure your plan meets your needs and budget for the year ahead.

Frequently Asked Questions

What is the difference between an Annual Wellness Visit and a yearly physical?

The Annual Wellness Visit (AWV) is covered by Medicare and focuses on creating a personalized prevention plan based on a health risk assessment. A routine physical is not covered by Medicare; it typically involves a hands-on exam and routine tests.

Does Original Medicare cover dental exams annually?

No, Original Medicare (Parts A and B) generally does not cover routine dental exams, cleanings, or other dental procedures. Some private Medicare Advantage (Part C) plans, however, may offer annual dental coverage as an extra benefit.

How do I know what my annual out-of-pocket maximum is?

Original Medicare does not have an out-of-pocket maximum. If you have a Medicare Advantage plan, you can find your annual out-of-pocket maximum in your plan's Summary of Benefits, or by contacting your insurance provider directly.

When does my Medicare coverage renew each year?

Most of your Medicare benefits and associated costs, such as the Part B deductible, renew on a calendar year basis (January 1st). However, Medicare Part A costs are based on 'benefit periods' which can reset more than once per year.

What happens if I have high prescription drug costs during the year?

Under Medicare Part D, there is an annual out-of-pocket cap on covered drug costs. For 2025, this cap is $2,000. Once you meet this limit, you will pay nothing for covered drugs for the remainder of the calendar year.

Are preventive screenings covered every year?

Many preventive services, including flu shots, certain cancer screenings, and the Annual Wellness Visit, are covered annually by Medicare Part B at no cost. The frequency for each specific screening is determined by Medicare guidelines.

Can I change my Medicare plan every year?

Yes, you can make changes to your Medicare plan each fall during the Annual Enrollment Period (October 15–December 7). This allows you to review your current coverage and switch to a different plan that better fits your needs for the upcoming year.