Medicare Fee-for-Service is the Original Medicare Plan
Medicare Fee-for-Service (often called Original Medicare) is the way Medicare has worked since 1965. You go to any doctor or hospital that accepts Medicare, they provide care, and Medicare pays them a set fee for that service. You are not locked into a network, you do not need permission from an insurance company before visiting a specialist, and you do not choose a single primary care doctor who manages all your care.
This is different from Medicare Advantage plans, which are run by private insurance companies and work more like the health insurance many people had before turning 65. Fee-for-Service is run directly by the federal government through Medicare.
About 7 in 10 people on Medicare use Fee-for-Service. The other 3 in 10 choose Medicare Advantage instead. Both are real Medicare — the difference is how the money flows and what you have to do to get care.
Key Takeaways
- Medicare Fee-for-Service lets you see any doctor or hospital that accepts Medicare without needing a referral or permission first.
- You pay a monthly premium for Part B (doctor visits), a deductible each year, and coinsurance (a percentage of the cost) after the deductible is met.
- Medicare pays the provider directly for each service, and you are responsible for your share of the bill.
- Most people on Fee-for-Service also buy a Medigap policy to cover the costs Medicare does not pay, which adds another monthly premium.
- You must have both Part A (hospital insurance) and Part B (medical insurance) to use Fee-for-Service, and enrollment happens at 65 or when you first become may be able to access.
How the Money Works: What Medicare Pays and What You Pay
Medicare sets a fee for each service — a doctor visit, a blood test, an X-ray, surgery. When you see a provider, Medicare pays its share of that fee, and you pay your share. Your share is made up of two things: the annual deductible and coinsurance.
For 2024, the Part B deductible is $240 per year. That means you pay the first $240 of your doctor and outpatient costs out of your own pocket. After you have paid $240, Medicare starts paying its share, and you pay coinsurance — usually 20 percent of the Medicare-approved amount. So if a doctor visit costs $100 and Medicare approves $80, you pay $16 (20 percent of $80) and Medicare pays $64.
Hospital care (Part A) works differently. You pay a deductible for each hospital stay (not each year), and then Medicare covers most of the cost. The Part A deductible for 2024 is $1,632 per stay. After that, you pay coinsurance only if you stay longer than 60 days.
These dollar amounts change each year. The Social Security Administration announces the new amounts in October for the year ahead.
Why Most People Add a Medigap Policy
Fee-for-Service leaves you responsible for deductibles and coinsurance. A $240 deductible and 20 percent coinsurance do not sound like much, but they add up if you see doctors often or need surgery. That is why about 7 in 10 people on Fee-for-Service also buy a Medigap policy (also called Supplemental Insurance).
A Medigap policy is sold by private insurance companies and covers some or all of the costs that Medicare does not. For example, a Medigap Plan G covers your Part B deductible, your coinsurance, and some other out-of-pocket costs. You pay a monthly premium to the Medigap company on top of your Medicare premium, but then your out-of-pocket costs are much lower and more predictable.
Medigap is optional — you do not have to buy it. But if you do not, you need to be ready to pay deductibles and coinsurance yourself. Some people skip Medigap if they are healthy and do not see doctors often, or if they cannot afford the extra premium.
No Network, No Referrals, No Permission Slips
With Fee-for-Service, you can see any doctor, specialist, or hospital that accepts Medicare. You do not have to pick a primary care doctor. You do not need a referral to see a cardiologist or dermatologist. You do not have to call an insurance company and ask permission before a procedure.
This freedom is one reason many people prefer Fee-for-Service. If your doctor retires and you want to switch, you just find a new one. If you want a second opinion, you can see another doctor without asking anyone's permission.
The catch is that you have to do the work. You have to find doctors who accept Medicare, call to make appointments, and keep track of your own care. Medicare does not manage your care the way a Medicare Advantage plan does.
What Providers Can and Cannot Charge You
Medicare sets an approved amount for each service. Most providers accept this amount as payment in full — they bill Medicare their fee, Medicare pays its share, you pay your share, and that is the end of it.
However, some doctors do not accept Medicare assignment. They can charge you more than the Medicare-approved amount. You are still responsible for your coinsurance, but you also have to pay the difference between what they charge and what Medicare approves. This is called balance billing, and it can be expensive.
Before you see a provider, ask whether they accept Medicare assignment. If they do not, ask what they will charge you out of pocket. Some providers who do not accept assignment will still limit what they charge you — they can charge no more than 15 percent above the Medicare-approved amount. But it is worth asking first.
Enrollment and When You Can Sign Up
Most people become may be able to access for Medicare at 65. Your enrollment window opens three months before the month you turn 65 and closes three months after. If you sign up during this window, your coverage starts the month you turn 65.
If you miss this window, you can still sign up later, but you may have to pay a penalty. The penalty is 10 percent of your Part B premium for each year you delayed, and it stays on your premium for life. So it is worth signing up on time even if you are still working.
You sign up through Medicare.gov, by phone at 1-800-MEDICARE, or in person at your local Social Security office. You will need your Social Security number and proof of citizenship or legal residency.
Fee-for-Service Versus Medicare Advantage: The Main Differences
| Feature | Fee-for-Service | Medicare Advantage |
|---|---|---|
| Network | No network — see any provider that accepts Medicare | Network — must use in-network providers except emergencies |
| Referrals | Not required | Usually required to see specialists |
| Deductible and coinsurance | Yes — you pay these unless you have Medigap | Yes — varies by plan |
| Extra benefits | None — only what Medicare covers | Often includes dental, vision, hearing, gym membership |
| Monthly premium | Part B premium only (unless you buy Medigap) | Part B premium plus plan premium (often $0) |
| Who runs it | Federal government | Private insurance company |
Frequently Asked Questions
Do I have to use Fee-for-Service, or can I choose Medicare Advantage instead?
You can choose either one. When you turn 65, you decide whether to enroll in Fee-for-Service or pick a Medicare Advantage plan. You can switch between them once a year during the Annual Enrollment Period (October 15 to December 7). Both are real Medicare — the difference is how your coverage works.
What if my doctor does not accept Medicare?
You can still see them, but you will pay the full bill yourself — Medicare will not pay anything. Before you see a doctor, call their office and ask if they accept Medicare. If they do not, ask whether they will give you a discount for paying out of pocket, or whether you should see a different provider instead.
Do I need Medigap if I am healthy and do not see doctors often?
Medigap is optional. If you are young and healthy, you might skip it and save the monthly premium. But if you need surgery or a hospital stay, your out-of-pocket costs could be thousands of dollars. Many people buy Medigap for peace of mind, even if they do not use it much.
Can I see a specialist without a referral?
Yes. With Fee-for-Service, you do not need a referral to see any specialist. You can call a cardiologist, dermatologist, or any other specialist directly and make an appointment. Medicare will pay its share as long as the specialist accepts Medicare.
What happens if I turn 65 but I am still working and have health insurance through my job?
You can delay signing up for Medicare without penalty if your employer has 20 or more employees and you are covered under their plan. But once you leave that job or lose that coverage, you have a limited time to sign up for Medicare. Talk to your employer's benefits office about your options before you turn 65.