Medicare comes in four main types, and which one you choose affects your costs, your doctors, and how you pay for care

The four types are Original Medicare (Parts A and B), Medicare Advantage (Part C), Medigap (supplemental insurance), and Medicare Part D (prescription drug coverage). Original Medicare is run directly by the federal government. Medicare Advantage and Part D are sold by private insurance companies that contract with Medicare. Medigap is private supplemental insurance that works alongside Original Medicare only.

Each type has different rules about which doctors you can see, what you pay out of pocket, and whether you need to get approval before certain treatments. Understanding the differences helps you pick the plan that matches your health needs and budget.

Key Takeaways

  • Original Medicare (Parts A and B) is government-run and covers hospital care and doctor visits, but you pay a percentage of costs after meeting your deductible.
  • Medicare Advantage (Part C) is sold by private insurers, usually has lower monthly premiums, but requires you to use doctors in the plan's network.
  • Medigap is private supplemental insurance that only works with Original Medicare and helps pay the costs Medicare doesn't cover.
  • Medicare Part D covers prescription drugs and is sold by private insurers; you must enroll during your initial enrollment period or pay a penalty if you join later.
  • You cannot combine Medicare Advantage with Medigap, but you can combine Original Medicare with both Medigap and Part D.

Original Medicare: Parts A and B

Original Medicare is the traditional government program. Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient care, lab tests, and medical equipment. Most people do not pay a monthly premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. Part B has a monthly premium that changes each year based on your income.

With Original Medicare, you can see any doctor or hospital that accepts Medicare — which is most of them. You pay a yearly deductible for Part A and a different yearly deductible for Part B. After you meet the deductible, you typically pay 20 percent of the cost for most services, and Medicare pays 80 percent. There is no yearly limit on how much you can spend out of pocket, which is why many people add Medigap or Medicare Advantage on top.

Original Medicare does not cover prescription drugs. If you choose Original Medicare, you must also enroll in a Part D plan during your initial enrollment period or a later enrollment window, or you will face a penalty when you do join.

Medicare Advantage: Part C

Medicare Advantage is an alternative to Original Medicare. Private insurance companies offer these plans under contract with Medicare. Most Medicare Advantage plans have lower or zero monthly premiums than Original Medicare Part B, and many include prescription drug coverage built in. However, you must use doctors and hospitals in the plan's network, except in emergencies.

With Medicare Advantage, you typically pay a copay (a fixed amount like $20 for a doctor visit) rather than a percentage of the cost. Most plans have an annual out-of-pocket maximum — once you reach it, the plan pays 100 percent of covered services for the rest of the year. This is different from Original Medicare, which has no yearly cap.

Medicare Advantage plans often require you to get approval from the insurance company before certain procedures or specialist visits. This is called prior authorization. If you travel frequently or live part of the year in another state, check whether the plan's network covers care in those locations. You cannot use Medigap alongside Medicare Advantage.

Medigap: Supplemental Insurance

Medigap (also called Supplemental Insurance) is private insurance sold by insurance companies to fill the gaps in Original Medicare coverage. It pays some or all of the costs that Original Medicare does not — such as deductibles, copays, and coinsurance. Medigap only works with Original Medicare, not with Medicare Advantage.

There are ten standardized Medigap plans, labeled A through N. Each plan covers a different combination of costs. For example, Plan F covers the most (deductibles, copays, and coinsurance), while Plan A covers less. The benefits are the same no matter which insurance company sells the plan — the difference is in the monthly premium, which varies by company and your location.

You have the best rates and easiest enrollment if you buy Medigap within six months of turning 65 and enrolling in Medicare Part B. After that window, insurance companies can charge you more or deny coverage based on your health history. If you already have Medicare Advantage and want to switch to Original Medicare plus Medigap, you may face higher premiums or coverage limits depending on your age and health.

Medicare Part D: Prescription Drug Coverage

Part D covers prescription medications. It is sold by private insurance companies and is separate from Original Medicare, though many Medicare Advantage plans include it. You must enroll in Part D during your initial enrollment period (the three months before, during, and after the month you turn 65) or during the annual enrollment period in the fall. If you delay enrollment without a valid reason, you will pay a penalty for as long as you have Medicare.

Part D plans vary in which drugs they cover and how much you pay. Each plan has a formulary — a list of covered medications. If your regular medication is not on the formulary, you may need to switch drugs, pay out of pocket, or ask your doctor to request an exception. Most plans charge a monthly premium, a yearly deductible, and copays or coinsurance for each prescription.

Part D has a coverage gap sometimes called the "donut hole." Once you and your plan have spent a certain amount on drugs in a year, you enter the gap and pay a higher percentage of drug costs until you reach a yearly out-of-pocket maximum. The amounts and percentages change each year. If you take expensive medications, check the plan's coverage details before enrolling.

Comparing Costs Across Plan Types

Original Medicare has no network restrictions but higher out-of-pocket costs with no yearly maximum. Medicare Advantage has lower premiums and a yearly spending cap but limits you to in-network doctors. Medigap reduces your out-of-pocket costs but adds a monthly premium on top of Part B. Part D adds a monthly premium and copays for drugs.

The right choice depends on your health, your doctors, your medications, and your budget. If you see many specialists or take expensive drugs, Original Medicare plus Medigap and Part D may cost less overall despite higher premiums. If you are healthy and do not mind using a specific network of doctors, Medicare Advantage may save you money. Use the Medicare Plan Finder tool on Medicare.gov to compare plans available in your area and see estimated costs for your specific situation.

When You Can Change Plans

You can change Medicare plans during the Annual Enrollment Period, which runs from October 15 to December 7 each year. Changes take effect January 1. If you have a may have access to life event — such as moving to a new state, losing other insurance, or a significant change in income — you may be able to change plans outside the annual window.

If you switch from Medicare Advantage to Original Medicare, you have a limited time to buy Medigap at the best rates. If you miss that window, you may pay more or face coverage limits. If you switch from Original Medicare to Medicare Advantage, you do not need Medigap anymore and should cancel it to avoid paying for coverage you cannot use.

Frequently Asked Questions

Can I have both Original Medicare and Medicare Advantage at the same time?

No. You must choose one or the other. If you enroll in Medicare Advantage, you are automatically disenrolled from Original Medicare Parts A and B. If you later switch back to Original Medicare, you will have a gap in coverage unless you act quickly.

What happens if I do not enroll in Part D when I first become may be able to access?

You will pay a penalty each month for as long as you have Medicare. The penalty is added to your Part D premium. The only way to avoid it is to have other creditable drug coverage (such as from an employer or union) during the time you are not enrolled in Part D.

Do all Medicare Advantage plans cover prescription drugs?

Most do, but not all. Some Medicare Advantage plans do not include drug coverage, which means you would need to enroll in a separate Part D plan. Always check the plan details before enrolling to see whether drugs are included.

Can I use my Medicare Advantage plan if I travel out of state?

Medicare Advantage plans have networks that vary by state. Emergency care is usually covered anywhere, but routine care outside your plan's service area is not. If you travel frequently or spend time in multiple states, ask the plan whether it covers care in those locations before enrolling.

What is the difference between a copay and coinsurance?

A copay is a fixed amount you pay for a service — for example, $20 for a doctor visit. Coinsurance is a percentage of the cost — for example, you pay 20 percent and Medicare or your plan pays 80 percent. Original Medicare uses coinsurance; Medicare Advantage plans typically use copays.