Medicare Guidance

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The ABC’s of Medicare

  • Medicare is individual health insurance offered to U.S. citizens and other eligible individuals based on age, disability or qualifying medical condition.

  • Medicare coverage includes Medicare Part A and B (Original Medicare) offered by the federal government, and Part C (Medicare Advantage) and Part D (Medicare Prescription Drug coverage), which are offered by private insurance companies.

  • Medicare Supplement insurance (Medigap) plans are also offered by private insurance companies and help pay for some out-of-pocket expenses that Medicare Part A and Part B don’t pay.

Before choosing a plan, we want to be sure you know the difference between your many options. Specifically, how Medicare Supplement Insurance Plans differ from Medicare Advantage Plans.

Your Medicare Options

Original Medicare

Includes:

  • Part A

  • Part B

You can add:

  • Part D

You can also add:

  • Supplemental coverage: This includes Medicare Supplement Insurance (Medigap). Or, you can use coverage from a former employer or union, or Medicaid.

Medicare Advantage
(also known as Part C)

Includes:

  • Part A

  • Part B

Most plans include:

  • Part D

  • Some extra benefits

Some plans also include:

  • Lower out of pocket costs

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Medicare Part A (Summary)

Inpatient care in a hospital, including:

  • Semi-private room

  • Meals

  • General nursing

  • Drugs (including methadone to treat an opioid use disorder)

  • Other hospital services and supplies

Inpatient care in a skilled nursing facility (SNF) after a related 3-day inpatient hospital stay

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Medicare Part B (Summary)

Part B charges a monthly premium that is either deducted from your monthly Social Security benefits check or that you pay directly to Medicare. The amount you pay can vary depending on your tax reported income from two years prior.

Medicare Part B generally pays 80% of approved outpatient services, after you pay an annual deductible.

Annual Deductible $257 (2025 deductible - changes annually)
Your Coinsurance for Part B Services
  • 20% for most covered services, like doctor's services and some preventive services, if provider accepts Medicare assignment
  • $0 for most preventive services
  • 20% for outpatient mental health services, and copayments for hospital outpatient services

NOTE: If you can’t afford to pay these costs, there are programs that may help.

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Medicare Advantage Plans (Part C)

  • Another way to get your Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) coverage

  • Offered by Medicare-approved private companies that must follow rules set by Medicare

  • Most Medicare Advantage Plans include drug coverage (Part D)

  • In most cases, you’ll need to use health care providers who participate in the plan’s network (some plans offer non-emergency coverage out of network, but typically at a higher cost)

Medicare Part D (Prescription Drug Coverage)

  • You can get drug coverage with a stand-alone Part D plan or as part of a Medicare Advantage (Part C) plan.

  • Offered by private insurance companies approved by Medicare.

  • All Part D plans must meet the same basic guidelines created by the federal government, but not all plans are the same.

  • May pay a lifetime penalty if you join late (1% for every month you didn’t enroll)

  • Every Part D plan has a drug list or formulary which:

    • Categorize drugs into tiers based on how much the drug costs.

    • Must include range of drugs in each category

    • Are subject to change—you’ll be notified

  • Your out-of-pocket costs may be less if you use a preferred pharmacy

  • If you have limited income and resources, you may get Extra Help

    • Drugs most commonly prescribed for Medicare beneficiaries as determined by federal standards

    • Specific brand name drugs and generic drugs included in the plan’s formulary (list of covered drugs)

    • Commonly available vaccines like the shingles vaccine, not covered by Part B

Medicare Part D Costs

  • You may pay a monthly premium, an optional deductible, copay and coinsurance.

  • 3 phases of coverage

    • Deductible (may not apply), Initial Coverage and Catastrophic

    • Initial Coverage phase: 

    • Member pays copay or coinsurance for all covered prescriptions, until reaching the annual out-of-pocket maximum.

  • Annual out-of-pocket maximum or cap of $2,100. (This is the 2026 amount and will be adjusted annually.)

    • The $2,100 cap includes deductibles, copayments and coinsurance for covered drugs.

    • It doesn’t apply to Part B drugs

  • No donut hole or coverage gap – replaced with Manufacturer Discount Program, which makes manufacturer price reductions available to enrollees to make medications more affordable. 

  • Medicare Prescription Payment Plan

    • Enrollees are given the option to pay out of pocket prescription drug costs in the form of a capped monthly payment. Note, this does NOT reduce your prescription costs; helps budget expensive drugs.

How are Medigap/Medicare Supplement Policies and Medicare Advantage Plans Different?


 Medigap/Medicare Supplement Policies Medicare Advantage Plans
Offered by Private companies Private companies
Government oversight State, but must also follow federal laws Federal (plans must be approved by Medicare)
Works with Original Medicare N/A
Covers Gaps in Original Medicare coverage, like deductibles, coinsurance, and copayments for Medicare-covered services. All Part A and Part B covered services and supplies. May also cover things not covered by Original Medicare, like vision and dental coverage. Most Medicare Advantage Plans include Medicare drug coverage.
You must have Part A and Part B Part A and Part B
Do you pay a premium? Yes. You pay a premium for the policy and you pay the Part B premium. Yes. In addition to paying the Part B premium, you may have to pay a monthly plan premium.
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Disclaimer: Not affiliated with the U.S. government or federal Medicare program. We do not offer every plan available in your area. We represent + organizations which offer+ products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.