Learn About Medicare Options for Older Adults

Understanding the Main Medicare Plans: Original Medicare vs. Medicare Advantage

Medicare offers two basic ways to receive health coverage for people age 65 and older, as well as some younger people with disabilities. Learning about these two main pathways helps you understand what each covers and how they work differently.

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Original Medicare is a government-run health insurance program with two parts. Part A covers hospital stays, skilled nursing facility care, hospice, and some home health services. Part B covers doctor visits, outpatient services, medical equipment, and preventive care. You pay a monthly premium for Part B, and there are deductibles and coinsurance amounts you pay when you use services. In 2024, the Part B premium is $164.90 per month for most people, though this changes yearly.

Medicare Advantage, sometimes called Part C, is a different approach. Private insurance companies offer these plans under contract with Medicare. They must cover everything Original Medicare covers, but they often do it differently. Many Medicare Advantage plans include prescription drug coverage (Part D) built into the plan. They typically have lower premiums than Original Medicare plus a Medigap policy, but they often require you to use doctors within a specific network. These plans frequently include dental, vision, or hearing coverage that Original Medicare doesn't provide.

The main difference comes down to how you receive care. With Original Medicare, you can see any doctor that accepts Medicare anywhere in the country. With Medicare Advantage, you usually must see doctors in the plan's network, similar to a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) from your working years. However, Medicare Advantage plans often charge $0 in monthly premiums, making them attractive to people watching their budgets carefully.

About 51% of Medicare beneficiaries choose Medicare Advantage plans, while 49% stick with Original Medicare, according to 2023 data. This roughly even split shows that both options work well for different people based on their health needs, budget, and preferences about doctor choice.

Practical Takeaway: Write down which doctors you see regularly and whether you travel frequently. If you see many specialists or travel outside your current state, Original Medicare may suit you better. If you want lower premiums and don't mind using a specific network of doctors, explore Medicare Advantage options available in your area.

Prescription Drug Coverage: Part D and What It Covers

Prescription medications can become very expensive as people age. Medicare Part D exists specifically to help with the cost of prescription drugs. Understanding how Part D works, what it covers, and how much you'll pay is essential for managing your healthcare costs.

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Part D is offered through private insurance companies that contract with Medicare. If you choose Original Medicare, you must enroll in a standalone Part D plan. If you choose a Medicare Advantage plan, the plan usually includes drug coverage already. Part D plans differ from each other—each company decides which drugs to cover, how much they cost, and which pharmacies you can use. This means you need to look at the actual plans available where you live to understand your options.

Part D coverage works in stages throughout the calendar year. First, you pay a monthly premium. Then you typically pay a small copayment or coinsurance when you fill prescriptions until you reach your deductible (usually between $0 and $590 in 2024, depending on the plan). After you've paid enough in copayments and coinsurance to reach your out-of-pocket limit (usually around $7,050 in 2024), you generally pay only a small amount for the rest of the year.

One important thing to understand is the "donut hole," officially called the coverage gap. In the past, Part D coverage stopped after you reached a certain spending amount and didn't resume until you spent significantly more out-of-pocket. While this gap still technically exists, the Inflation Reduction Act of 2022 changed it considerably. Now, once you reach the coverage gap, you only pay 25% of drug costs (instead of the full amount). This significantly reduces what people pay during this period.

Each Part D plan covers a specific list of medications called a formulary. Brand-name drugs, generic drugs, and specialty medications may or may not be on your plan's formulary. If a drug you take isn't covered, you can ask your doctor about alternatives or request an exception. Some people with low incomes and limited resources may qualify for the Low-Income Subsidy program, which helps pay Part D premiums and out-of-pocket costs.

Practical Takeaway: Write down all the medications you currently take, including the strength and quantity. When comparing Part D plans, check whether each medication is covered and at what cost. Use the official Medicare plan comparison tool to see how much you'd pay under different plans—costs vary dramatically between plans, sometimes by hundreds of dollars per year.

Medigap Insurance: Filling Gaps in Original Medicare Coverage

Original Medicare doesn't cover everything. You're responsible for deductibles, coinsurance, and copayments. For some people, these out-of-pocket costs add up quickly. Medigap, also called Medicare Supplement Insurance, is private insurance designed to cover some or all of these costs that Original Medicare doesn't pay.

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Medigap is sold by private insurance companies, not by the government. It's available only if you have Original Medicare—you cannot use it with a Medicare Advantage plan. There are several standardized Medigap plans, labeled A through N, each covering different combinations of costs. For example, Plan G covers the Part B deductible, coinsurance and copayments for hospital and medical services, skilled nursing facility care, blood, and foreign travel emergency care. Plan N is similar but has small copayments for office visits and emergency room visits.

The major advantage of Medigap is predictability. Instead of wondering whether you can afford a health event, you know exactly what you'll owe. Many people find this peace of mind worth the monthly premium they pay. Medigap premiums vary by age, location, and the specific plan you choose. In 2024, monthly Medigap premiums range from about $100 to $300 or more, depending on these factors and your insurance company.

Timing matters significantly when buying Medigap. You have the best chance of getting coverage at reasonable prices during your initial enrollment period, which is the six months after you turn 65 and enroll in Medicare Part B. During this period, insurance companies cannot deny you coverage or charge higher premiums based on existing health conditions. If you wait to buy Medigap after this period, companies can charge you more based on your health history, or they may deny you coverage entirely.

About 27% of Original Medicare beneficiaries have some form of Medigap coverage, according to recent data. Others rely on Medicare Advantage plans instead, or they choose to take on the financial risk of paying out-of-pocket costs when they occur.

Practical Takeaway: If you're approaching age 65 and plan to choose Original Medicare, research Medigap plans during your enrollment period. Request quotes for a few different plan levels to compare costs. Remember that premiums are fixed—once you buy a plan within your enrollment period, insurance companies cannot increase your rates due to developing health conditions.

How Medicare Works With Other Insurance You May Have

Many people approaching Medicare age wonder what happens to their existing health insurance. Understanding how Medicare coordinates with other coverage prevents confusion and ensures you're covered properly when you need care.

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If you're still working and have employer-sponsored health insurance, Medicare is typically your secondary payer. This means your employer plan pays first, and Medicare pays what remains, if anything. However, there's an important exception: if your employer has 20 or more employees, you might not need to enroll in Medicare Part B right away. You can delay Part B enrollment without penalty as long as you remain covered under the employer plan and are actively employed. This delay option is called creditable coverage. When you eventually retire, you have a special enrollment period to sign up for Medicare Part B without facing higher premiums for the rest of your life.

If you have retiree health insurance from a former employer, that coverage continues to work alongside Medicare. Again, Medicare typically pays second. Retiree plans vary widely in what they cover, so review your specific plan documents or contact your former employer's benefits office to understand how your coverage coordinates with Medicare.

For people with Medicaid (state healthcare for low-income individuals), Medicare is your primary coverage when you turn 65