Medicare is the main health insurance program for people 65 and older, but it comes in different forms with different costs and coverage
When you turn 65, you become may be able to access for Medicare, the federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS). Medicare is not one plan — it is a structure with several paths you can choose from, each with different monthly premiums, deductibles, and rules about which doctors and hospitals you can use. Understanding the difference between Original Medicare, Medicare Advantage, and Medigap plans is the first step to picking what fits your health needs and budget.
You do not have to wait until you turn 65 to learn about these options. You can read about them now, and you should — the choices you make during your initial enrollment period (the three months before, the month of, and the three months after your 65th birthday) affect your costs for years to come. Missing this window can mean paying a permanent penalty on your premiums.
Key Takeaways
- Original Medicare (Parts A and B) is run directly by the federal government and lets you see any doctor who accepts Medicare, but you pay a deductible and coinsurance for each service.
- Medicare Advantage (Part C) is sold by private insurance companies and often includes prescription drug coverage and dental or vision benefits, but limits you to a network of doctors and hospitals.
- Medigap is a supplemental policy sold by private insurers that covers some of the costs Original Medicare does not pay, such as deductibles and coinsurance.
- Your initial enrollment period runs for seven months — three months before your 65th birthday, the month you turn 65, and three months after — and missing it can result in permanent premium increases.
- You can change plans once a year during the Annual Enrollment Period (October 15 to December 7), or when ready if you have a may have access to life event.
Original Medicare (Parts A and B) covers hospital and doctor visits but requires you to pay deductibles and coinsurance
Original Medicare Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes for at least 10 years while working. Part A does have a deductible — in 2024, you pay $1,632 for each benefit period of hospitalization — and you pay coinsurance (a percentage of costs) for stays longer than 60 days.
Original Medicare Part B covers doctor visits, outpatient services, medical equipment, and preventive care. Part B has a monthly premium that changes each year based on your income; in 2024, the standard premium is $164.90 per month, but higher-income beneficiaries pay more. Part B also has a yearly deductible ($240 in 2024) and you pay 20 percent coinsurance for most services after you meet the deductible.
With Original Medicare, you can see any doctor or hospital in the United States that accepts Medicare — there is no network restriction. This flexibility appeals to people who have established relationships with specific doctors or who travel frequently. However, because you pay a share of every service, costs can add up quickly if you need frequent care. Many people with Original Medicare buy a Medigap policy to cover the deductibles and coinsurance.
Medicare Advantage (Part C) bundles hospital, doctor, and often prescription drug coverage into one plan sold by private insurers
Medicare Advantage, also called Part C, is an alternative way to get your Medicare benefits. Instead of Original Medicare Parts A and B, you enroll in a plan offered by a private insurance company that has a contract with Medicare. The insurance company is responsible for covering everything Original Medicare covers, but the plan can organize that coverage however it wants — usually through a network of doctors and hospitals.
Most Medicare Advantage plans include prescription drug coverage (Part D) built in, so you do not have to buy it separately. Many plans also cover services Original Medicare does not, such as dental cleanings, vision exams, hearing aids, or fitness programs. Monthly premiums are often lower than Original Medicare plus Medigap, and many plans have a $0 premium.
The trade-off is that you must use doctors and hospitals in the plan's network, except in emergencies. If you see an out-of-network doctor, you pay more or the plan may not cover it at all. You also need prior approval from the plan before certain procedures. Plans vary widely in which doctors they include and how much you pay out of pocket, so comparing the specific plan in your area matters more than the plan name.
Medigap is a supplemental insurance policy that covers costs Original Medicare leaves you responsible for
Medigap, also called Supplemental Insurance, is a policy sold by private insurance companies that pays some or all of the costs Original Medicare does not cover — deductibles, coinsurance, and copayments. Medigap is only an option if you have Original Medicare (Parts A and B); you cannot use it with Medicare Advantage.
Medigap plans are standardized by the federal government and labeled with letters: Plan A, Plan B, Plan C, Plan D, and so on. Each letter represents the same set of benefits no matter which insurance company sells it, so Plan A from one company covers the same things as Plan A from another company. The only difference between companies is the monthly premium. This standardization makes it easier to compare plans — you can look at prices without worrying that the coverage is different.
The most comprehensive Medigap plans (Plan F and Plan G) cover the Part B deductible, coinsurance, and copayments, which means you have very predictable costs. Less comprehensive plans (Plan A and Plan B) cover some but not all of these costs and have lower premiums. You pay the Medigap premium on top of your Medicare Part B premium, so your total monthly cost is higher than Medicare Advantage, but you have more flexibility in choosing doctors.
Prescription drug coverage (Part D) is separate from hospital and doctor coverage and must be chosen during enrollment periods
If you have Original Medicare, you must enroll in a Part D prescription drug plan or pay a penalty if you go without coverage. Part D is sold by private insurance companies and covers the cost of prescription medications at pharmacies. If you choose a Medicare Advantage plan, most include Part D coverage already, so you do not need to buy it separately.
Part D plans vary in which drugs they cover, how much you pay for each drug, and which pharmacies you can use. Each plan publishes a formulary — a list of covered drugs — and you should check whether your current medications are on it before you enroll. Plans also have a coverage gap (sometimes called the "donut hole") where you pay more out of pocket once you and the plan have spent a certain amount on drugs in a year.
You can enroll in Part D during your initial enrollment period (the seven-month window around your 65th birthday) or during the Annual Enrollment Period. If you go without Part D coverage when you are first may be able to access, you pay a permanent penalty added to your premium for as long as you have Medicare.
Your enrollment window is seven months long and missing it can cost you permanently in higher premiums
Your Initial Enrollment Period is seven months: the three months before the month you turn 65, the month you turn 65, and the three months after. During this window, you can enroll in Medicare without penalty. If you miss this window, you pay a permanent penalty on your Part B and Part D premiums for as long as you have Medicare — even if you enroll later.
The Part B penalty is 10 percent of the standard premium for each full year you were may be able to access but did not enroll. The Part D penalty is 1 percent of the national average Part D premium for each month you were may be able to access but did not enroll. These penalties are permanent and do not go away if you enroll later, so it is worth enrolling on time even if you do not plan to use Medicare when ready.
After your initial enrollment period ends, you can change plans during the Annual Enrollment Period, which runs from October 15 to December 7 each year. Changes take effect January 1. You can also change plans when ready if you have a may have access to life event, such as moving out of your plan's service area, losing other health coverage, or getting married.
Comparing plans means looking at your doctors, your medications, and your expected out-of-pocket costs
Choosing between Original Medicare with Medigap, Medicare Advantage, and different Part D plans requires looking at three things: which doctors and hospitals are in each plan's network, whether your medications are covered, and what you will actually pay out of pocket based on your health needs.
Start by listing the doctors and hospitals you use or want to use. Call them or check their websites to see which Medicare plans they accept. If your main doctor is not in a Medicare Advantage plan's network, that plan may not be right for you. If you have Original Medicare, any doctor who accepts Medicare will see you, so network is not a concern.
Next, list your current medications and check the formulary for each plan you are considering. Some plans cover a drug with a low copayment, others cover it with a high copayment, and some do not cover it at all. If a plan does not cover a medication you need, it is usually not worth enrolling in, even if the premium is low.
Finally, estimate your out-of-pocket costs for the year. If you have Original Medicare with Medigap, your costs are mostly predictable — you pay the premiums and the deductibles, and Medigap covers the rest. If you choose Medicare Advantage, add up the premiums, copayments for your regular doctor visits, and any specialist visits you expect. The plan with the lowest premium is not always the plan with the lowest total cost.
Frequently Asked Questions
Can I switch from Original Medicare to Medicare Advantage or back again?
Yes. You can change plans during the Annual Enrollment Period (October 15 to December 7) each year, with changes taking effect January 1. You can also switch when ready if you have a may have access to life event, such as moving, losing coverage, or getting married. There is no limit to how many times you can switch.
What happens if I do not enroll in Medicare when I turn 65?
If you delay enrollment without a valid reason, you pay a permanent penalty on your Part B and Part D premiums for as long as you have Medicare. The penalty is 10 percent of the standard Part B premium for each year you were may be able to access but did not enroll, and 1 percent of the national average Part D premium for each month you were may be able to access but did not enroll. These penalties do not go away if you enroll later.
Do I need Medigap if I have Original Medicare?
Medigap is optional but recommended if you have Original Medicare. Without it, you pay deductibles and coinsurance for every service. With Medigap, you pay a higher monthly premium but have more predictable costs. Whether it makes sense depends on how much medical care you expect to use and your budget for premiums.
Can I use the same doctor with Medicare Advantage as I do with Original Medicare?
Only if your doctor is in the Medicare Advantage plan's network. Before you enroll in a Medicare Advantage plan, call your doctor's office or check the plan's website to confirm they accept that specific plan. If your doctor is not in the network, you will have to pay out of pocket to see them or switch to a different doctor.
What is the difference between a Medicare Advantage plan's premium and its out-of-pocket maximum?
The premium is what you pay each month to the insurance company. The out-of-pocket maximum is the most you will pay in copayments and coinsurance in a year; once you reach it, the plan covers 100 percent of covered services for the rest of the year. A plan with a low premium might have a high out-of-pocket maximum, so compare both when deciding.