Medicare is easier to understand when you stop looking at Parts A, B, C and D as separate letters and start looking at the decisions they create. The first major choice is how you want to receive your Medicare benefits: through Original Medicare or through a Medicare Advantage plan.
This guide explains how the pieces fit together, what decisions may arise as you approach retirement, and which questions are worth answering before you compare individual insurance plans.
Medicare contains several parts, and private insurance can interact with those parts in different ways. Understanding the role of each piece makes the larger decision much easier.
Medicare Part A generally helps cover inpatient hospital care, skilled nursing facility care, hospice care and certain home health services.
Medicare Part B generally covers physician services, outpatient care, preventive services, durable medical equipment and other medically necessary services.
Part D is Medicare prescription drug coverage offered through Medicare-approved private insurers. With Original Medicare, it is generally purchased separately. Most Medicare Advantage plans include drug coverage.
Medicare Advantage is a private-plan alternative for receiving your Part A and Part B benefits. Plans may have provider networks, different cost-sharing arrangements and additional benefits.
Medigap is private supplemental insurance designed to help pay certain out-of-pocket costs left by Original Medicare. It is not another part of Medicare, and it is not used to supplement a Medicare Advantage plan.
This distinction matters: choosing Original Medicare may lead to a second decision about Medigap, while choosing Medicare Advantage sends you down a different coverage path.
Once you have Medicare Parts A and B, the next question is often whether to remain with Original Medicare or receive your Medicare benefits through a Medicare Advantage plan.
Original Medicare is administered by the federal government. For Medicare-covered services, you generally may use any doctor or hospital in the United States that accepts Medicare.
You may then decide whether to add:
This path may appeal to people who place a high value on broad provider access and who are willing to pay additional premiums for supplemental protection.
Medicare Advantage plans are offered by Medicare-approved private insurance companies and provide an alternative way to receive your Part A and Part B benefits.
This path may appeal to people who value an integrated plan design and are comfortable evaluating network, benefit and cost-sharing rules.
| Decision Area | Original Medicare | Medicare Advantage |
|---|---|---|
| How coverage is provided | Part A and Part B through Original Medicare. | Part A and Part B benefits received through a Medicare-approved private plan. |
| Provider access | Generally allows you to use any doctor or hospital in the U.S. that takes Medicare. | Many plans use networks and plan-specific rules. Review doctors, hospitals and referral requirements carefully. |
| Prescription drugs | You can add a separate Part D prescription drug plan. | Most plans include Part D coverage. |
| Supplemental coverage | You may be able to purchase Medigap to help cover certain Original Medicare out-of-pocket costs. | Medigap does not work with Medicare Advantage. |
| Out-of-pocket exposure | Original Medicare by itself does not have a yearly out-of-pocket maximum for Part A and Part B services. Other coverage, including Medigap, can change your exposure. | Medicare Advantage plans have an annual out-of-pocket limit for covered Part A and Part B services. |
| Additional benefits | Routine dental, vision and hearing services generally are not included simply because you have Original Medicare. | Many plans offer additional benefits, but benefits and limitations vary by plan and location. |
| Travel and multiple residences | Broad Medicare provider access can be valuable for people who travel or live in more than one area. | Review the plan's service area, network rules and coverage away from home before enrolling. |
A low premium does not automatically make a plan better, and a higher premium does not automatically make another option safer. The better comparison considers both what you pay and what flexibility, risk and restrictions you accept in return.
Original Medicare does not pay every covered medical expense. Medicare Supplement insurance may help fill certain gaps in what Original Medicare pays.
Medicare Supplement policies are sold by private insurance companies. Depending on the standardized plan you choose, the policy may help pay certain deductibles, coinsurance and copayments that would otherwise be your responsibility under Original Medicare.
Medigap usually does not replace Medicare. Instead, Medicare generally pays its share of an approved covered service first, and the Medigap policy may then pay its applicable share.
Medigap policies generally do not include outpatient prescription drug coverage, which is why people using Original Medicare often evaluate a separate Part D plan as well.
Under federal rules, your Medigap Open Enrollment Period generally lasts six months and begins the first month that you are both 65 or older and enrolled in Medicare Part B.
During that federal open enrollment period, insurers generally cannot deny you a Medigap policy because of health problems.
Outside protected enrollment or guaranteed-issue situations, your ability to purchase or change Medigap coverage later may depend on federal law, state law and medical underwriting.
That makes the initial decision more important than simply comparing this year's premium.
The lowest-premium prescription drug plan is not necessarily the lowest-cost plan for the medications you actually use.
Part D plans use formularies — lists of covered prescription drugs. Your specific prescriptions should be checked against the plan you are considering.
Plans may use pharmacy networks and may offer different pricing at different pharmacies. Your preferred pharmacy can therefore affect the comparison.
Compare more than the monthly premium. Deductibles, copayments, coinsurance, drug tiers and your own prescriptions can materially affect total spending.
Formularies, pharmacy arrangements, premiums and plan benefits can change. Reviewing your drug coverage periodically can help determine whether the plan still fits your medications and preferences.
Turning 65 is an important Medicare milestone, but employment, employer health coverage, Social Security timing and HSA contributions can change the order of your decisions.
For most people first becoming eligible based on age, the Medicare Initial Enrollment Period lasts seven months: it begins three months before the month you turn 65, includes the month you turn 65, and continues for three months afterward.
Enrollment timing can affect when coverage begins, so waiting until the last minute can create unnecessary problems.
People who remain covered by an employer group health plan based on current employment may have different Medicare enrollment options than someone who has already retired.
Employer size, whether coverage is based on current employment, how the employer plan coordinates with Medicare, and whether you contribute to an HSA can all matter.
Once you are enrolled in Medicare, you can no longer make or receive new tax-deductible contributions to a Health Savings Account. If you enroll in Medicare after age 65, Medicare Part A can sometimes begin retroactively. Medicare advises people with HSAs to plan contribution timing carefully before applying for Medicare or Social Security.
This is an area where coordinating with your employer benefits department and tax adviser can be particularly important.
Before comparing insurance companies, premiums or extra benefits, identify what you actually need your Medicare coverage to accomplish.
Decide how important it is to continue using specific physicians, specialists, hospitals and health systems.
Include medication names, dosages, frequency and preferred pharmacies before comparing prescription coverage.
Consider travel, multiple residences, provider networks and your willingness to obtain care within plan rules.
Look beyond premium. Consider deductibles, copayments, coinsurance, supplemental premiums and potential out-of-pocket exposure.
Ask what may happen if you later want to change coverage, especially when considering Original Medicare, Medicare Advantage and Medigap.
Once you know the coverage structure that deserves consideration, compare the actual plans available in your ZIP code.
Decision Tree Insurance is developing additional Medicare education and decision tools designed to help consumers work through the choices that occur before selecting a specific insurance plan.
Compare the tradeoffs involving provider flexibility, networks, premiums, cost sharing, travel and supplemental coverage.
Understand which Medicare questions become important when employer coverage, retirement timing and an HSA are involved.
Learn how standardized Medicare Supplement coverage, premiums and enrollment rights fit into the larger Original Medicare decision.
These resources are educational and are not intended to replace a review of the actual plans available in your area.
Decision Tree Insurance focuses on helping readers understand the decisions behind Medicare coverage. When you are ready to compare actual Medicare insurance options, a licensed Medicare specialist can help you review the plans available in your area.
Decision Tree currently refers Medicare plan-comparison and enrollment questions from Florida, New York, Ohio, Kansas and Maine to ACBS Insurance Services.
You will leave Decision Tree Insurance and continue to the ACBS Insurance Services website.
No. Medicare Advantage is an alternative way to receive your Medicare Part A and Part B benefits through a Medicare-approved private insurance plan. Medicare Supplement insurance, or Medigap, works with Original Medicare and helps pay certain costs Original Medicare leaves to you. You do not use a Medigap policy to supplement a Medicare Advantage plan.
You are not required to enroll in Medicare drug coverage simply because you become eligible for Medicare, but going without Part D or other creditable prescription coverage for too long can potentially result in a late-enrollment penalty if you enroll later. Before declining drug coverage, determine whether another prescription plan you have qualifies as creditable coverage.
Medigap is designed to supplement Original Medicare, not Medicare Advantage. A Medigap policy does not pay Medicare Advantage deductibles, copayments or coinsurance.
For Medicare-covered services, you generally may use any doctor or hospital in the United States that accepts Medicare. You should still verify that a provider accepts Medicare and is willing to treat you before receiving non-emergency care.
Many do. Network requirements and rules vary by plan type. Some Medicare Advantage plans may require you to use network providers for non-emergency care, while others provide some out-of-network benefits at a different cost. Verify your doctors and hospitals before enrolling.
Not necessarily. Your answer can depend on your employer health coverage, employer size, whether the coverage is based on current employment, your HSA status and other factors. Do not assume that turning 65 automatically means every part of Medicare should begin immediately.
No. Once Medicare coverage begins, you can no longer make or receive new HSA contributions. People enrolling after age 65 should also be aware that Medicare Part A can sometimes begin retroactively, which is why HSA contribution timing should be reviewed before applying.
Not necessarily. Premium is only one part of the comparison. Provider networks, prescription coverage, deductibles, copayments, coinsurance, maximum out-of-pocket exposure, travel needs and your ability to change coverage later may also matter.
Yes. Private Medicare Advantage and Part D plans can change premiums, cost sharing, formularies, pharmacy arrangements, provider networks and other plan features subject to Medicare rules. Reviewing your coverage periodically helps determine whether it continues to fit your needs.
Decision Tree Insurance currently uses its Medicare pages primarily for consumer education. For readers in Florida, New York, Ohio, Kansas and Maine who want help reviewing actual Medicare insurance plans, Decision Tree currently refers those inquiries to ACBS Insurance Services.
Medicare rules and private-plan offerings can change. For current government information and a comparison of all Medicare plans available in your area, use official Medicare resources.
Important Medicare disclosure: Decision Tree Insurance LLC is not connected with or endorsed by the United States Government or the federal Medicare program. This page is provided for general educational purposes and does not recommend a specific Medicare Advantage, Medicare Supplement or prescription drug plan.
Decision Tree Insurance currently refers certain Medicare inquiries to ACBS Insurance Services. ACBS Insurance Services may not offer every plan available in your area. For information about all Medicare options available to you, contact Medicare.gov or 1-800-MEDICARE.
Plan availability, benefits, premiums, provider networks, prescription formularies and enrollment rules may change. Verify current plan information before making an enrollment decision.