Learn About Medicare Plans and Coverage Options

Understanding Medicare: What It Is and Who It Serves

Medicare is a federal health insurance program run by the Centers for Medicare & Medicaid Services (CMS). It primarily serves people age 65 and older, though some younger people with disabilities or end-stage renal disease may also receive coverage. As of 2024, approximately 67 million people receive Medicare benefits, making it one of the largest health insurance programs in the United States.

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The program began in 1965 as part of the Social Security Act. President Lyndon B. Johnson signed it into law to address a gap: many older Americans struggled to pay for medical care. Before Medicare existed, about half of seniors had no health insurance. Today, Medicare covers hospital stays, doctor visits, prescription medications, preventive care, and other services depending on which plan type a person has.

Medicare is divided into different parts, each covering different services. Part A covers inpatient hospital care, skilled nursing facility care, and some home health services. Part B covers outpatient doctor visits and medical equipment. Part D covers prescription drug costs. Part C, also called Medicare Advantage, is an alternative way to receive Parts A and B benefits through private insurance companies approved by Medicare.

Understanding these distinctions matters because they affect what services are covered and how much you might pay out of pocket. Someone enrolled in Original Medicare (Parts A and B) will have different coverage than someone with a Medicare Advantage plan. The type of plan also determines which doctors and hospitals participate in your network.

This guide explores each plan type in detail so you can learn how they differ and what each one covers. The information here is educational and meant to help you understand the landscape of Medicare options before you make decisions about your coverage.

Practical Takeaway: Medicare has multiple plan types available. Knowing the basic differences between Original Medicare and Medicare Advantage is the foundation for understanding which options might work for your situation.

Original Medicare: Parts A and B Explained

Original Medicare consists of Part A and Part B. These are run directly by the federal government rather than by private insurance companies. When you turn 65, you become part of the Original Medicare system unless you choose a different option like Medicare Advantage.

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Part A Coverage: Part A is hospital insurance. It covers inpatient hospital stays, care in a skilled nursing facility after a hospital stay, hospice care, and some home health services. If you are admitted to a hospital, Part A typically covers your hospital room, meals, nursing care, and necessary medical procedures and tests while you are there. You do not pay a monthly premium for Part A if you or your spouse paid Medicare taxes while working for at least 10 years. If you do not meet this work history requirement, you may still enroll but will pay a monthly premium.

Part B Coverage: Part B is medical insurance for outpatient services. It covers doctor visits, outpatient surgery, diagnostic tests, physical therapy, and durable medical equipment like wheelchairs or oxygen supplies. Part B also covers preventive services such as annual wellness visits, cancer screenings, and vaccinations. Most people who enroll in Part B pay a monthly premium; the 2024 standard premium is $174.70 per month. Your actual premium may be different based on your income.

What Original Medicare Does Not Cover: Original Medicare has gaps in coverage. It does not cover routine dental care, vision exams, hearing aids, or long-term care services like nursing home care for non-medical reasons. Prescription drugs are also not covered under Part A or Part B alone; you need Part D for that. Many people with Original Medicare purchase a Medigap (supplemental insurance) policy to help cover these gaps and reduce out-of-pocket costs.

Out-of-Pocket Costs with Original Medicare: Even with coverage, you pay costs when you receive care. With Part A, you pay a deductible (in 2024, $1,632 per hospital stay) for your first 60 days in the hospital. For days 61-90, you pay a daily coinsurance amount ($408 per day in 2024). With Part B, you pay an annual deductible ($240 in 2024), then typically pay 20% of the approved amount for most services after that. These costs can add up, especially if you have ongoing medical needs.

Practical Takeaway: Original Medicare is a two-part system where Part A covers hospital care and Part B covers outpatient doctor visits. Many people with Original Medicare buy additional Medigap coverage to reduce out-of-pocket expenses, so understanding what is and is not covered helps you plan for additional insurance needs.

Medicare Advantage Plans: An Alternative Approach

Medicare Advantage, also called Part C, is a way to get your Medicare benefits through a private insurance company instead of the federal government. Private insurers approved by Medicare offer these plans. As of 2024, more than 28 million Medicare beneficiaries are enrolled in Medicare Advantage plans, representing about 42% of all Medicare members.

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How Medicare Advantage Works: When you enroll in a Medicare Advantage plan, you receive all your Part A and Part B coverage through that private insurance company rather than Original Medicare. You still pay your Part B premium to Medicare, but the private insurer administers your benefits. Medicare Advantage plans must cover at least the same services as Original Medicare, but they often add extra benefits that Original Medicare does not provide, such as dental care, vision coverage, hearing aids, or fitness programs.

Types of Medicare Advantage Plans: The most common type is a Health Maintenance Organization (HMO) plan. HMOs have a network of doctors and hospitals you must use, except in emergencies. You typically need to choose a primary care doctor who coordinates your care. Preferred Provider Organization (PPO) plans offer more flexibility; you can see doctors outside the network, but you pay more when you do. Point-of-Service (POS) plans combine features of both HMOs and PPOs. Private Fee-for-Service (PFFS) plans allow you to go to any doctor or hospital that accepts Medicare, but fewer doctors participate in these plans.

Costs in Medicare Advantage Plans: Most Medicare Advantage plans have $0 monthly premiums beyond your Part B premium, though some charge a small additional monthly premium. However, you often pay more at the point of care through copayments and coinsurance. A doctor visit might cost $15-$50 per visit depending on your plan. Specialist visits might cost $50-$100. These plans also typically have an out-of-pocket maximum, meaning once you spend a certain amount in a year on copayments and coinsurance, the plan covers 100% of additional covered services. In 2024, the maximum out-of-pocket limit for Medicare Advantage plans cannot exceed $7,550.

Practical Takeaway: Medicare Advantage plans are offered by private insurance companies and often include extra benefits like dental or vision coverage. They typically have lower or no monthly premiums but higher costs when you use services. The trade-off is less choice in providers if you have an HMO plan.

Prescription Drug Coverage: Part D and Integrated Plans

Prescription drug coverage is a separate component of Medicare. If you take medications regularly, understanding how drug coverage works will affect your overall healthcare costs. Without some form of drug coverage, you pay the full price for prescriptions out of pocket, which can be expensive.

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Part D Standalone Plans: Part D is prescription drug insurance offered by private insurance companies approved by Medicare. You can add Part D to Original Medicare by enrolling in a standalone Part D plan. These plans vary by company and by region. Each plan has its own list of covered medications called a formulary. Some medications are covered; others are not. Some medications require prior approval from the insurance company before the pharmacy will fill them. Part D plans are required to cover at least two medications in most major drug categories, so you typically have options even if your specific medication is not on the formulary.

How Part D Costs Work: Most Part D plans have a monthly premium, ranging from about $5 to $100 per month depending on the plan and your location. You pay an annual deductible (up to $545 in 2024), then the plan starts helping pay for your drugs. After you reach a certain spending threshold, you enter what Medicare calls the "doughnut hole" or coverage gap. In this phase, you pay a larger