The Two Main Paths to Medicare Coverage
When you become eligible for Medicare, you have two main ways to receive your health coverage: Original Medicare (Part A and Part B) or Medicare Advantage (Part C).
With Original Medicare, you can choose to add Medicare Supplement Insurance, also called Medigap, and a separate Part D prescription drug plan.
Medicare Advantage provides your Part A and Part B benefits through a private insurance company approved by Medicare. Most plans also include prescription drug coverage.
Both options provide important health benefits, but they work differently. Understanding those differences can help you decide which approach fits your needs.
How Original Medicare Plus Medigap Works
Original Medicare includes Part A, which helps cover inpatient hospital care, and Part B, which helps cover doctor visits, outpatient services, and other medically necessary care.
Original Medicare pays its share of covered services, and you are responsible for applicable deductibles, copayments, and coinsurance.
There is no annual out-of-pocket maximum for Part A and Part B services under Original Medicare alone.
A Medigap policy can help pay certain costs that Original Medicare leaves to you. The amount it covers depends on the Medigap plan you select.
One advantage of Original Medicare is provider flexibility. You can generally visit any doctor or hospital in the United States that accepts Medicare, without being limited to a plan's provider network.
With this approach, you generally pay your Part B premium and a separate premium for your Medigap policy. If you choose a Part D prescription drug plan, that plan may have its own premium.
How Medicare Advantage Works
Medicare Advantage is another way to receive your Medicare Part A and Part B benefits.
These plans are offered by private insurance companies approved by Medicare. Most include Part D prescription drug coverage, and many offer additional benefits such as dental, vision, or hearing services.
Most Medicare Advantage plans use provider networks.
Health Maintenance Organization (HMO) plans generally require members to use network providers for covered nonemergency care, with certain exceptions.
Preferred Provider Organization (PPO) plans generally allow members to receive covered services outside the network, although their share of the cost may be higher.
Medicare Advantage plans also have an annual out-of-pocket maximum for covered Part A and Part B medical services.
Once you reach your plan's applicable maximum, you generally pay nothing more for covered Part A and Part B services for the remainder of the year.
However, this limit does not include every healthcare expense. Plan premiums and Part D prescription drug costs are separate.
You must generally continue paying your Medicare Part B premium when enrolled in Medicare Advantage. Depending on the plan, you may also have an additional Medicare Advantage premium.
Provider Choice and Out-of-Pocket Costs
One of the biggest differences between Original Medicare and Medicare Advantage is how you access healthcare providers and manage medical expenses.
With Original Medicare, you generally have broader provider choice because you can use any doctor or hospital nationwide that accepts Medicare.
Adding Medigap can make your share of covered medical expenses more predictable, depending on the policy you choose.
Medicare Advantage plans typically use networks and may have different cost-sharing requirements for different services.
These plans provide an annual out-of-pocket maximum for covered Part A and Part B services. Some plans have different limits for in-network and out-of-network care.
Neither option automatically guarantees lower overall expenses.
Your total costs depend on premiums, deductibles, copayments, coinsurance, the services you use, and any additional coverage you carry.
Prescription Drug Coverage
Prescription drug coverage is another important difference.
With Original Medicare, you can enroll in a separate Part D prescription drug plan. Enrollment is optional, although going without Part D or other creditable prescription drug coverage may result in a late enrollment penalty if you enroll later.
Most Medicare Advantage plans include Part D prescription drug coverage.
Some Medicare Advantage plans do not include drug coverage, so it is important to understand the specific plan's benefits and enrollment rules.
Part D prescription drug coverage has its own deductible, cost-sharing requirements, and annual out-of-pocket limit.
Part D drug expenses do not count toward the Medicare Advantage plan's medical out-of-pocket maximum.
Whether you choose Original Medicare or Medicare Advantage, reviewing your medications and preferred pharmacy can help you understand how your prescription coverage may work.
Other Coverage Differences
Original Medicare generally allows you to receive covered care from Medicare-participating providers throughout the United States.
Medicare Advantage plans often have service areas and provider networks. Coverage for routine care outside those networks may be limited or involve higher costs.
Emergency and urgently needed care are covered under Medicare Advantage even when you are outside the plan's usual network, subject to applicable coverage rules.
Travel outside the United States is different. Original Medicare generally does not cover medical care outside the country, except in limited situations.
Some Medigap policies and Medicare Advantage plans provide certain foreign travel emergency benefits.
Medicare Advantage plans may also include additional benefits such as routine dental, vision, hearing, or fitness services. The services covered and any limits vary by plan.
Another difference involves prior authorization.
Original Medicare generally does not require prior authorization for most covered services, although some services and items have special requirements.
Medicare Advantage plans may require prior authorization before covering certain treatments, services, or medical equipment.
Understanding these requirements can help you compare how each type of coverage would work when you need care.
Changing Your Mind
Your Medicare coverage needs may change over time.
You may have opportunities to switch between Original Medicare and Medicare Advantage during certain enrollment periods.
However, changing your Medicare health coverage and obtaining a Medigap policy are not the same thing.
If you leave Medicare Advantage and return to Original Medicare, you are not automatically guaranteed the right to purchase Medigap.
Your eligibility to buy Medigap may depend on your enrollment circumstances, applicable guaranteed-issue rights, and Colorado insurance rules.
This is an important consideration before switching coverage.
Putting It Together
Original Medicare and Medicare Advantage offer two different approaches to receiving Medicare-covered healthcare.
Original Medicare generally provides broader access to doctors and hospitals that accept Medicare. Adding Medigap can help reduce certain out-of-pocket medical expenses, depending on the policy.
Medicare Advantage provides Part A and Part B coverage through a private insurance plan, usually with provider networks, an annual medical out-of-pocket maximum, and often additional benefits.
Neither approach is automatically the right choice for everyone.
Your doctors, prescriptions, healthcare needs, travel habits, and preferences for managing expenses all matter.
Taking time to compare how each option works can help you choose Medicare coverage that fits your circumstances.