The Four Main Types of Medicare Coverage
Medicare comes in four distinct structures, and which one you choose changes what you pay, where you can go for care, and what happens when you need expensive treatment. Original Medicare (Part A and Part B) is run directly by the federal government. Medicare Advantage (Part C) is a private insurance alternative to Original Medicare. Medigap (supplement insurance) wraps around Original Medicare to cover costs it leaves behind. Medicare Part D is prescription drug coverage, which you add to either Original Medicare or Advantage plans.
The choice between them is not about which is "better" — it depends on your doctors, your prescriptions, how much you travel, and how much risk you want to carry. Most people pick one structure and stay with it, but you can switch during the annual open enrollment period from October 15 to December 7.
Key Takeaways
- Original Medicare (Part A and B) has no network limits, but you pay a deductible and coinsurance for each service, and prescription drugs cost extra unless you add Part D.
- Medicare Advantage bundles hospital, doctor, and often drug coverage into one plan with a network, a yearly out-of-pocket cap, and usually lower monthly premiums than Original Medicare plus Medigap.
- Medigap supplements fill the gaps in Original Medicare (deductibles, coinsurance, copays) but only work with Original Medicare, not Advantage plans.
- Part D prescription drug plans are separate from all other coverage and must be added within three months of turning 65 or you face a permanent penalty.
- Switching plans is only possible during open enrollment (October 15 to December 7) or if you have a may have access to life event like moving or losing other coverage.
Original Medicare: How It Works and What You Pay
Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient care, lab tests, and durable medical equipment. You pay a Part B monthly premium (the standard amount in 2024 is $164.90, but it varies by income). Part A is free for most people at 65 because they or a spouse paid Medicare taxes for at least 10 years.
With Original Medicare, you pay a deductible before coverage kicks in, then you pay coinsurance (a percentage of the cost) for most services. For a hospital stay in 2024, the Part A deductible is $1,632 for the first 60 days. For doctor visits and outpatient care under Part B, the deductible is $240 per year, and then you pay 20 percent coinsurance. You can see any doctor or hospital in the country that accepts Medicare — there is no network.
Original Medicare does not cover prescription drugs. You must add Part D separately, choosing from dozens of plans offered by private insurers. Part D plans vary widely in cost and which drugs they cover, so the plan that costs $15 a month for one person might cost $60 for another, depending on their prescriptions.
Medicare Advantage: All-in-One Coverage With a Network
Medicare Advantage is a single plan sold by a private insurance company (like UnitedHealth, Humana, or Anthem) that bundles Part A, Part B, and usually Part D into one package. You still pay the Part B premium to Medicare, but you also pay the Advantage plan's monthly premium, which is often lower than Original Medicare's premium alone.
The trade-off is that Advantage plans use a network. You must see doctors and hospitals within that network, except in emergencies. If you go out of network, you pay much more or the plan does not cover it at all. Many Advantage plans also require you to pick a primary care doctor who must refer you to specialists.
Advantage plans have an annual out-of-pocket maximum — in 2024, the legal limit is $8,000. Once you hit that number, the plan covers everything else for the rest of the year. Original Medicare has no such cap, which means your costs can be unlimited. Advantage plans often include dental, vision, and hearing coverage, which Original Medicare does not. However, if you travel frequently or move often, the network restrictions can be a real problem.
Medigap: Filling the Gaps in Original Medicare
Medigap (also called Supplemental Insurance) is sold by private insurers and designed to pay the deductibles, coinsurance, and copays that Original Medicare leaves you responsible for. It only works with Original Medicare — you cannot use Medigap with an Advantage plan.
Medigap comes in ten standardized plans labeled A through N. Plan A is the most basic and cheapest; Plan G and Plan N are the most comprehensive. What each plan covers is the same no matter which insurance company sells it — the only difference is the price. A Plan G from Humana covers the same things as a Plan G from AARP, but the monthly premium may differ by $20 or $30.
The cost of Medigap varies by age, location, and which plan you choose. A 65-year-old in a low-cost area might pay $100 to $150 a month for Plan G; someone in a high-cost area might pay $250 or more. If you buy Medigap within six months of turning 65 and enrolling in Part B, insurers cannot deny you or charge more based on health problems — this is called may provide issue. If you wait longer, they can.
Part D Prescription Drug Coverage
Part D is separate from all other Medicare coverage. If you have Original Medicare, you must choose and enroll in a Part D plan yourself — it does not happen automatically. If you have an Advantage plan, prescription drug coverage is usually included, but you should check the plan's formulary (the list of covered drugs) to make sure your medications are on it.
Part D plans are offered by private insurers and change every year. The drugs they cover, the copays, and the premiums all shift annually. You can switch Part D plans during open enrollment without switching your other coverage. If you do not enroll in Part D when you first become may be able to access at 65, you pay a permanent penalty of about 1 percent of the national average Part D premium for every month you were not covered — that penalty stays with you for life.
Comparing Monthly Costs and Out-of-Pocket Risk
The real cost of each plan type depends on how much medical care you actually use. Someone who sees a doctor twice a year and takes one cheap medication might pay less with Original Medicare plus Medigap than with an Advantage plan. Someone with multiple chronic conditions and many prescriptions might hit the Advantage plan's out-of-pocket cap and pay less overall.
| Plan Type | Monthly Premium | Deductible | Out-of-Pocket Cap | Network Required |
|---|---|---|---|---|
| Original Medicare + Part D | Part B: $164.90 (2024) + Part D varies | Part A: $1,632; Part B: $240 | None | No |
| Original Medicare + Medigap + Part D | Part B: $164.90 + Medigap: $100–$300+ + Part D varies | Depends on Medigap plan chosen | None | No |
| Medicare Advantage | $0–$200+ (varies widely) | $0–$500 (varies by plan) | $8,000 maximum (2024) | Yes |
The numbers above are 2024 figures and change yearly. Your actual costs depend on the specific plan you choose, your location, and your health needs. The best way to compare is to enter your doctors and prescriptions into the Medicare Plan Finder tool on Medicare.gov during open enrollment.
When to Switch Plans and What Happens If You Miss the Window
You can change Medicare plans only during the annual open enrollment period from October 15 to December 7. Changes take effect January 1. If you miss this window, you are locked into your current plan for the whole year — with one exception.
A may have access to life event lets you switch outside the normal window. These include moving to a new state or county, losing other health coverage, getting married or divorced, or having a significant change in income. You have 60 days from the event to make a change. If you turn 65 and enroll in Medicare for the first time, you have a seven-month window centered on your birthday month to choose your plan without penalty.
If you do not enroll in Part D when you first become may be able to access, or if you go more than 63 days without creditable drug coverage, you owe a permanent late-enrollment penalty. This penalty is added to your Part D premium for as long as you have Medicare, even if you switch plans later.
Frequently Asked Questions
Can I switch from Original Medicare to Advantage or back again?
Yes, but only during open enrollment (October 15 to December 7) or if you have a may have access to life event. If you switch from Advantage to Original Medicare, you should enroll in Medigap within 63 days to avoid higher premiums based on health conditions. If you switch from Original Medicare to Advantage, you lose Medigap coverage and cannot get it back at the same price.
Do I have to choose a plan at 65, or can I wait?
You should enroll in Part A and Part B when you turn 65. If you delay Part B without a valid reason (like active employer coverage), you pay a permanent 10 percent premium increase for every year you waited. Part D has the same penalty rule. If you have health coverage through an employer, you may be able to delay without penalty — ask your employer's benefits office.
What happens if my doctor is not in my Advantage plan's network?
You can see the doctor, but you pay out of network, which usually means much higher costs or no coverage at all. Some Advantage plans allow out-of-network care in emergencies. Before enrolling in an Advantage plan, check whether your current doctors are in the network. If not, you may want to choose Original Medicare instead.
Is Medigap worth the extra cost?
That depends on your health and how much you use medical services. Medigap eliminates deductibles and coinsurance, so your costs are more predictable. If you rarely see a doctor, the monthly Medigap premium might not be worth it. If you have chronic conditions and see specialists regularly, Medigap can save you thousands per year.
Can I have both an Advantage plan and Medigap?
No. Medigap only works with Original Medicare. If you enroll in an Advantage plan, your Medigap coverage ends. If you later switch back to Original Medicare, you can re-enroll in Medigap, but you may pay higher premiums if you do not do it within 63 days of leaving Advantage.