Medicare is the federal government's health care program for people over the age of 65, some younger people with disabilities, and people with End-Stage Renal Disease (ESRD).

Most Medicare recipients have what’s known as Original Medicare coverage. The federal government runs the Original Medicare program, which includes two parts:

Medicare Part A (Hospital Insurance)

Medicare Part A covers hospital stays, a certain amount of time in a skilled nursing facility, hospice care, and some health care services at home. Medicare Part A is free if you have at least ten years of U.S. work history.

Medicare Part B (Medical Insurance)

Medicare Part B is health insurance. It covers services like visits to the doctor, lab work, X-rays, medical supplies, outpatient care, mental health care, and preventive services. You’ll pay a monthly premium for Medicare Part B.

Instead of Original Medicare coverage, some people choose Medicare Advantage:

Medicare Part C (Medicare Advantage)

With Medicare Advantage, you buy health insurance from a private company that contracts with Medicare. The plan must provide the same benefits offered by Part A and Part B; it will usually offer additional benefits, too. You may get Medicare Advantage from a Health Maintenance Organization, Preferred Provider Organization, Private Fee-for-Service Plan, Special Needs Plan, or Medicare Medical Savings Account Plan. Most Medicare Advantage Plans offer prescription drug coverage. You’ll pay a monthly premium in addition to the fixed, national premium for Part B coverage.

You can compare Medicare Advantage plans here.

Prescription drug coverage is provided under a separate part of the Medicare program:

Medicare Part D (Prescription Drug Coverage)

Medicare Part D is for outpatient prescription drug coverage. You can get a Part D plan from an insurance company or other private company approved by Medicare. You must choose a drug plan that works with your other Medicare benefits. For Original Medicare, you’ll choose a separate Part D plan. If you have Medicare Advantage, you can look for a plan that includes prescription drug coverage — most do.

Supplemental coverage is available to help you pay for certain kinds of Medicare costs:

Medigap

A Medigap Plan is a private plan you can buy to supplement your Original Medicare coverage. It covers some or all of your out-of-pocket costs. Medigap Plans don’t include prescription drug coverage. Nor can you use Medigap with a Medicare Advantage plan.

More Information

What's the difference between Original Medicare and Medicare Advantage?

What's the difference between Medigap and Medicare Advantage?

How do I get prescription drugs with Medicare Advantage?

Can I use an HSA with Medicare Advantage?

Compare Medicare Advantage Plans

Medicare Advantage is an alternative way of getting Medicare coverage by purchasing a health plan from a private insurance company. If you have Medicare coverage and it's not Medicare Advantage, it's probably Original Medicare (Parts A and B). Medicare Advantage is also called Medicare Part C. (To compare the two types of coverage, see What's the difference between Original Medicare and Medicare Advantage?)

Medicare Advantage coverage. A Medicare Advantage plan must offer the same benefits as Original Medicare, but the plan may offer more benefits such as dental or vision care. Most Medicare Advantage Plans also include prescription drug coverage (Medicare Part D).

For more, see What Does Medicare Advantage Cover?

Medicare Advantage costs. With Medicare Advantage, you'll pay the established monthly premium for Part B plus a monthly premium for your plan. The plan will also include a deductible and/or copays for health care services. Usually, you'll get these services through an HMO (health maintenance organization) or PPO (preferred provider organization). Your choice of health care providers will probably be limited to those in the plan’s network.

For more, see How Much Does a Medicare Advantage Plan Cost?

Medicare Advantage limits and changes. Every Medicare Advantage plan must have an out-of-pocket maximum, which places a yearly limit on the amount you'll pay for health care. That said, each year the plan is legally allowed to change its monthly premiums, copays, or benefits, or it may choose to withdraw from Medicare altogether.

For more, see Your Medicare Advantage Rights.

Types of Medicare Advantage plans. Medicare advantage plans come in several varieties, including PPOs, HMOs, PFFS plans, MSA plans, and Special Needs Plans.

To learn more about each type and how it works, see Types of Medicare Advantage Plans.

To find Medicare Advantage plans in your area, see our plan comparison page.

Original Medicare is the traditional Medicare program run by the federal government. Medicare Advantage is an alternative way of getting Medicare coverage by purchasing a health plan from a private insurance company. 

Here are some facts about each:

Original Medicare

• Original Medicare includes Part A (hospital) and Part B (medical coverage), if you choose to enroll in both parts.
• You pay a deductible or coinsurance payment when you get health care services, which is usually 20% of the cost approved by the federal government. (These rates are standard, no matter where you live.)
• There is no monthly premium for Part A as long as you have at least ten years of U.S. work history, but most people pay a small monthly premium for Part B.
• If you want supplemental insurance to cover your out-of-pocket costs, you may purchase what’s known as a Medigap plan.
• With Original Medicare, you can go to any doctor, hospital, or other health care provider that accepts Medicare patients anywhere in the country. 
• To get prescription drug coverage, you must purchase Part D coverage by enrolling in a separate Medicare drug plan offered by a private insurance company.
• When you sign up for Medicare for the first time, you’ll automatically be enrolled in Original Medicare. If you prefer, you can switch to a Medicare Advantage plan within the first few months of your Medicare eligibility, or later on during an open enrollment period. 

To learn more about Original Medicare, visit Medicare.gov.

Medicare Advantage Plans 

• Medicare Advantage is also known as Medicare Part C. Every Medicare Advantage plan must offer the same benefits as Original Medicare Parts A and B, but a plan may also offer additional benefits like dental or vision care. Most plans also include Part D drug coverage.
• With a Medicare Advantage plan, you pay a deductible and/or copay for health care services — and you’re still required to pay the Medicare Part B premium. Many plans charge an extra premium as well.
• You’ll usually get your services through a local HMO (health maintenance organization) or PPO (preferred provider organization).
• Your choice of health care providers will probably be limited to those in the plan’s network.
• You’re not permitted to buy a Medigap plan to help you pay for out-of-pocket costs, but every plan must have an out-of-pocket maximum, which places a yearly limit on the amount you can be required to pay for health care.
• Every year, a plan may change its monthly premiums, copays, or benefits, or it may choose to withdraw from Medicare altogether.

For more information about Medicare Advantage plans, see Medicare Advantage Plans in Colorado: What You Need to Know.

To find Medicare Advantage plans in your area, see our plan comparison page.

Medicare Advantage plans provide a comprehensive private insurance alternative to Original Medicare. Medigap insurance, on the other hand, is a private plan you can purchase to supplement your Original Medicare coverage. You can’t have both types of plans at the same time.

Here’s a little more about each type of plan:

Medigap (Medicare Supplement) Plans

• If you have Original Medicare coverage — also known as Medicare Part A and Part B — you will be responsible for certain out-of-pocket costs. A Medigap plan will cover most of these costs for you.
• With a Medigap plan, after Medicare has paid its portion of your claim, it will forward the claim to your Medigap plan, which will then cover its part of the bill.
• Medigap doesn’t cover prescription drugs. For drug coverage, you must get a separate Medicare Part D plan.

For good advice on how to pick a Medigap plan, see How to Choose the Best Medigap Plan, from Consumer Reports.

Medicare Advantage Plans

• Every Medicare Advantage plan must offer the same benefits as Original Medicare Parts A and B, but a plan may also offer additional benefits like dental or vision care. Most plans also include Part D drug coverage.
• With a Medicare Advantage plan, you pay a deductible and/or copay for health care services — and you’re still required to pay the Medicare Part B premium. Many plans charge an extra premium as well.
• Every plan must have an out-of-pocket maximum, which places a yearly limit on the amount you can be required to pay for health care.
• You’ll usually get your services through a local HMO (health maintenance organization) or PPO (preferred provider organization).
• Your choice of health care providers will probably be limited to those in the plan’s network.
• Every year, a plan may change its monthly premiums, copays, or benefits, or it may choose to withdraw from Medicare altogether.
• If you join a Medicare Advantage plan for the first time, and you aren’t happy with the plan, you’ll have special rights to buy a Medigap policy if you return to Original Medicare within 12 months of joining.

Which Is Right for You?

If you need a lot of health care services, it may pay to compare the costs of Medigap with those for Medicare Advantage plans. With Medicare Advantage, you may have to meet a deductible and then reach into your pocket for copayments for visits to the doctor and other services. Medigap plans help you cover the out-of-pocket costs you'd incur if you stay with Original Medicare.

More Information

For more information about Medicare Advantage plans, including how to get help with decisions you need to make, see Medicare Advantage Plans in Colorado: What You Need to Know.

To find Medicare Advantage Plans in your area, see our plan comparison page.

A health savings account (HSA) is a bank account for people with high deductible health plans. The IRS doesn't tax account contributions or withdrawals as long as you use the money to pay for health care costs.

Generally, HSA plans and Medicare don’t mix: If you have an HSA, you'll probably have to stop contributing to it as soon as your Medicare enrollment kicks in. (To learn more about why, see Health Savings Accounts and Medicare at Medicare Interactive.)

That said, Medicare Advantage (Medicare Part C) gives you an option that works very much like an HSA -- a type of Medicare Advantage plan called an MSA Plan. Every MSA plan has two parts: a high-deductible health insurance plan and a tax-advantaged medical savings account you can use to pay your health care bills. 

Unlike an HSA plan, you don't deposit your own money into the MSA account. You set up the account with a bank the plan selects, then the plan makes an annual deposit into your account using money provided by Medicare.

Medicare MSA plans don’t cover prescription drugs, as many other Medicare Advantage plans do. If you want prescription drug coverage, you will have to buy a stand-alone Medicare Part D plan.

For details about how MSA plans work, see Your Guide to Medical Savings Account (MSA) Plans, from The Centers for Medicare and Medicaid Services.

To find available Medicare Advantage plans in your area, including MSA plans, you can use our plan comparison page.

Medicaid and Medicare are two different government programs established to provide Americans with health care services:

Medicare is the federal governments health care program for people over the age of 65 or those with severe disabilities. Coverage doesn’t depend on your income.

Medicaid is a program run by the federal and state governments together. It provides health benefits to individuals and families with very low incomes. If you meet the eligibility rules for both programs, you may have Medicare and Medicaid at the same time.

Some Medicare Advantage plans include prescription drug (Part D) coverage and some don’t. Here’s a brief statement of the rules for each type of plan:

Medicare Advantage PPO Plan. Most Medicare PPOs offer prescription drug coverage, but they aren’t required to do so. If your PPO doesn’t offer prescription drug coverage, you’re not allowed to join a separate Medicare Part D plan.

Medicare Advantage HMO Plan. Most Medicare HMOs offer Part D coverage, but they aren’t required to do so. If your HMO doesn’t offer prescription drug coverage, you’re not allowed to join a separate Medicare Part D plan.

Medicare Advantage PFFS Plan. A PFFS plan may or may not offer Medicare prescription drug coverage. Unlike PPOs and HMOs, if your PFFS plan doesn’t offer prescription drug coverage, you can get it by joining a stand-alone Medicare Part D plan.

Medicare Advantage MSA Plans. MSA plans don’t offer Medicare prescription drug coverage. If you want drug coverage, you may join a stand-alone Medicare Part D plan.

Medicare Advantage SNP (Special Needs Plan). All SNPs must offer prescription drug coverage.

Whether to buy Medicare prescription drug coverage is up to you, but keep in mind that if you don’t get it when you’re first eligible, you may owe a penalty if you change your mind and want to sign up later. 

To learn more about the different types of Medicare Advantage plans, see Medicare Advantage: What You Need to Know.

To find Medicare Advantage plans in your area, you may use our plan comparison page.

To get Medicare prescription drug coverage (Medicare Part D) under Medicare Advantage, you must choose a plan that offers it. (Medicare Advantage plans that include Part D coverage are sometimes known as MA-PDs.) Medicare Advantage plans are run by private companies under contract with Medicare.

The type of drug coverage you can get depends on the type of Medicare Advantage plan you choose:

Medicare Preferred Provider Organization (PPO) Plan. Under these plans, you pay less for health care services when you use providers within the plan’s network. Most PPOs offer prescription drug coverage, though they’re not required to do so. If your PPO doesn’t offer prescription drug coverage, you’re not allowed to join a separate Medicare Part D plan.

Medicare Health Maintenance Organization (HMO) Plan. If you join an HMO plan, you must use network providers for all but emergency care. Like PPOs, HMO plans usually offer Part D coverage, but they aren’t required to do so. If your HMO doesn’t offer prescription drug coverage, you’re not allowed to join a separate Medicare Part D plan.

Medicare Private Fee-for-Service (PFFS) Plan. With a PFFS plan, you may go to any health care provider who is:

• state licensed
• authorized to provide services under Medicare Part A and Part B
• accepts to the plan’s terms, and
• agrees to treat you.

PFFS plans may or may not offer Medicare prescription drug coverage. Unlike PPOs and HMOs, if your PFFS plan doesn’t offer prescription drug coverage, you can get it by joining a stand-alone Medicare Part D plan.

Medicare Medical Savings Account (MSA) Plan.  An MSA plan allows folks with high-deductible insurance plans to put money into a tax-advantaged bank account to cover health care expenses. (This arrangement is similar to an HSA plan outside of Medicare.) MSA plans don’t offer Medicare prescription drug coverage. If you want drug coverage, you may join a stand-alone Medicare Part D plan. 

Medicare Special Needs Plan (SNP). Individuals may enroll in an SNP only if they are part of the “special needs” population that the plan serves — for example, nursing home residents, folks eligible for both Medicare and Medicaid, or people with certain chronic or disabling conditions like diabetes, end-stage renal disease (ESRD), HIV/AIDS, or dementia. All SNPs must provide prescription drug coverage.

If you decide not to join a Medicare drug plan when you’re first eligible, you may pay a late enrollment penalty if you choose to join later

To learn more about Medicare Advantage plans, see Medicare Advantage: What You Need to Know.

To find out about Medicare Advantage plans in your area, you may use our plan comparison page.

Please consider this website to be only a starting place for research on the topic of Medicare Advantage. Before you rely on any statements made here, you should use primary sources to confirm them. Wherever possible, we provide links and resources for obtaining additional information and assistance.

Nothing on this website is meant to be a substitute for the services, advice, or counsel of a lawyer or of an official representative of the Medicare program. Because everyone’s situation is unique, an experienced advisor may find specific opportunities or risks presented by your circumstances that this website does not address. 

About LegalConsumer.com

Since 2006, LegalConsumer.com has helped more than a million consumers navigate their legal troubles.

About Albin Renauer

Albin Renauer is an independent web and database developer and Webby Award judge. He created LegalConsumer.com as an online companion to his book, How to File for Chapter 7 Bankruptcy, to help people file for bankruptcy.

After receiving his J.D. from the University of Michigan Law School in 1985, Albin Renauer worked for various public-interest law firms in the Bay Area and as a staff attorney for Chief Justice Rose Bird of the California Supreme Court.  He spent 17 years as an editor at leading do-it-yourself legal publisher Nolo, where he helped create numerous books and software programs, including the bestselling Quicken WillMaker. He also edited Law on the Net, the first online directory of legal resources, and was the architect of Nolo's Webby Award winning website.

About Shae Irving

Shae Irving graduated from Berkeley Law (Boalt Hall). She has been a legal editor and writer since 1994, when she joined Nolo, specializing in estate planning, health care, and family law issues. For almost a decade, she was the managing editor of Nolo’s bestselling Quicken WillMaker software. Her books include Living Wills and Powers of Attorney for California and Prenuptial Agreements: How to Write a Fair and Lasting Contract. 

For More Information

Contact Albin Renauer.