Fee-for-Service Medicare is the original Medicare plan run directly by the federal government

Fee-for-Service Medicare (often called Original Medicare or Traditional Medicare) is the standard Medicare program that has existed since 1965. Under this plan, you go to any doctor, hospital, or specialist who accepts Medicare — there is no network, no gatekeeper, and no requirement to pick a primary care doctor. Medicare pays the provider directly for each service you receive, which is why it is called "fee-for-service": a fee is paid for each service rendered.

This is different from Medicare Advantage (Part C), which is a private insurance alternative that bundles your coverage into one plan with networks and different cost rules. With Original Medicare, you hold a red, white, and blue Medicare card, and that card works at most hospitals and doctor's offices across the country.

Original Medicare has two main parts: Part A covers hospital stays, skilled nursing care, hospice, and home health services. Part B covers doctor visits, outpatient care, lab tests, imaging, and preventive services. Together, they form the foundation of what most people think of as "Medicare."

Key Takeaways

  • Fee-for-Service Medicare is run by the federal government and lets you see any doctor or hospital that accepts Medicare without needing to join a network.
  • You pay a monthly premium for Part B, a deductible when you use hospital or doctor services, and coinsurance (a percentage of the cost) after the deductible is met.
  • Original Medicare does not cover dental, vision, hearing aids, or prescription drugs unless you add a separate Part D plan for drugs.
  • You can add a Medigap (supplemental insurance) plan to reduce your out-of-pocket costs, or a Part D plan to cover prescription medications.
  • Roughly 70 percent of Medicare beneficiaries stay in Original Medicare rather than switching to Medicare Advantage.

How much you pay under Fee-for-Service Medicare

Your costs break into four pieces: the monthly premium for Part B, the Part A deductible (which applies once per benefit period), the Part B deductible, and coinsurance.

The Part B premium is deducted from your Social Security check each month. The amount depends on your income from two years ago — higher earners pay more. Part A is usually free if you or your spouse paid Medicare taxes for at least 10 years while working.

When you use a service, you pay the Part A deductible once per benefit period (a benefit period starts when you enter the hospital and ends 60 days after you leave). After that deductible is met, you pay coinsurance — typically 20 percent of the Medicare-approved amount for most services. There is no annual out-of-pocket maximum under Original Medicare, which means your costs can grow very high if you have a serious illness or injury. This is why many people add a Medigap plan.

What Original Medicare covers and what it does not

Part A covers inpatient hospital care, up to 100 days in a skilled nursing facility per benefit period (you pay coinsurance for days 21 to 100), home health services, and hospice. Part B covers doctor office visits, preventive care (like annual wellness visits and cancer screenings), lab work, X-rays, and outpatient surgery.

Original Medicare does not cover dental work, vision care, hearing aids, or long-term custodial care in a nursing home. Prescription drugs are not covered unless you add Part D, a separate plan you purchase from a private insurance company. Many people add both a Medigap plan (to cover the gaps in Original Medicare) and a Part D plan (to cover drugs).

The difference between Fee-for-Service and Medicare Advantage

Medicare Advantage (Part C) is a private insurance alternative to Original Medicare. With Advantage, you join a specific plan (usually an HMO or PPO) and must use doctors and hospitals in that plan's network. You typically have a lower or zero monthly premium, but your out-of-pocket costs per visit are often higher. Advantage plans usually include prescription drug coverage built in, and many add dental or vision benefits.

Original Medicare has no network — you can see any provider who accepts Medicare. Your monthly premium is higher than most Advantage plans, but you have more freedom. If you travel or move, Original Medicare works the same way everywhere. Advantage plans are tied to a specific geographic area, and coverage changes if you move out of the service area.

About 30 percent of Medicare beneficiaries choose Advantage; about 70 percent stay with Original Medicare, often because they value the freedom to choose their doctors or because they have established relationships with providers outside a network.

Adding coverage to reduce your out-of-pocket costs

A Medigap plan (also called supplemental insurance) is sold by private insurance companies and is designed to pay the costs that Original Medicare does not — the deductibles, coinsurance, and copays. There are 10 standardized Medigap plans (labeled A through N), and each covers a different combination of gaps. For example, Plan G covers the Part B deductible and 80 percent of coinsurance after Medicare pays its share.

Medigap plans have their own monthly premiums, which vary by age, location, and the plan you choose. They are separate from your Medicare premium. If you add Medigap, you do not need Medicare Advantage.

A Part D plan covers prescription drugs. You choose a Part D plan from a private insurer during the annual enrollment period (October 15 to December 7). If you do not sign up when you first become may be able to access and you go without drug coverage, you may pay a penalty for as long as you have Medicare. Part D plans have monthly premiums, annual deductibles, and copays or coinsurance for each drug.

How to enroll in Original Medicare

If you are turning 65, you become may be able to access for Medicare three months before your birthday month, during your birthday month, and three months after. This is your Initial Enrollment Period. You can sign up online at Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office.

If you are already receiving Social Security, Medicare enrollment happens automatically the month you turn 65. You will receive your Medicare card in the mail. If you are not yet receiving Social Security, you must sign up yourself during your Initial Enrollment Period.

If you miss your Initial Enrollment Period and you do not have other health coverage (like employer coverage), you may face a permanent penalty on your Part B and Part D premiums. The penalty is 10 percent of the Part B premium for each 12-month period you were may be able to access but did not sign up.

When to switch from Original Medicare to Medicare Advantage or back

You can switch plans during the Annual Enrollment Period (October 15 to December 7 each year). During this window, you can drop Original Medicare and join an Advantage plan, or drop an Advantage plan and return to Original Medicare. Changes take effect January 1.

If you are in Original Medicare and want to add or switch a Medigap plan, you can do so any time, but your best window is within six months of first enrolling in Part B. During this period, insurers cannot deny you coverage or charge more based on pre-existing conditions. After that window closes, some insurers may deny you or charge higher premiums.

If you are in an Advantage plan and want to switch to Original Medicare, you can do so during the Annual Enrollment Period. If you switch, you can also sign up for a Medigap plan at the same time, and you will have the same six-month window to lock in the best rates.

Frequently Asked Questions

Can I see any doctor I want with Original Medicare?

Yes, as long as the doctor accepts Medicare. Most doctors and hospitals do, but you should always ask before your first visit. You do not need a referral to see a specialist, and you do not need to pick a primary care doctor.

Do I have to choose between Medigap and Medicare Advantage?

Yes. If you are in Original Medicare and you buy a Medigap plan, you cannot also be in Medicare Advantage. If you are in Medicare Advantage, you cannot buy a Medigap plan. You choose one path or the other.

What happens if I do not sign up for Part D when I first become may be able to access?

If you go without creditable drug coverage for more than 63 days, you will owe a permanent penalty on your Part D premium for as long as you have Medicare. The penalty is about 1 percent of the national average Part D premium for each month you were uninsured.

Does Original Medicare cover prescription drugs?

No. Part A and Part B do not cover outpatient prescription drugs. You must add a Part D plan, which is sold separately by private insurers. Part D is optional, but going without it triggers a penalty if you later sign up.

What is the difference between a deductible and coinsurance?

A deductible is a fixed amount you pay out of pocket before Medicare starts to pay. Coinsurance is a percentage of the cost you pay after the deductible is met. For example, under Part B, you pay a $240 deductible per year, then you pay 20 percent coinsurance for most services.