Options B and C: The preposition 'on' indicates the top or surface of something. Here, it refers to the surface of the bed.
'In' refers to being enclosed within or inside something.
When we use the expression 'on the bed', we simply refer to something that is kept on the bed (my phone's on the bed) or someone sitting or laying on the bed. It does not mean that someone is sleeping in bed.
When we use the expression 'in the bed', we mean that someone's sleeping in the bed, 'in' literally means that the person is within: in between the blanket and the bed.
The given sentence tells us that 'Bill' is still sleeping (never gets up before 9...it's 8:30 now). Hence option C is correct and B is incorrect.
Option A: 'At' refers to a place. It does not complete the sentence, as it refers to the side of the bed or 'at the corner of the bed'.
Option D: 'After' refers to time and does not express a relation between the person and the bed.
Hence options A and D are incorrect.