Original Medicare is a federally funded program, while Medicare Advantage, Part D, and Medigap plans are offered by private insurance companies.
Medicare provides healthcare coverage to people 65 and older, as well as younger adults with certain health conditions or disabilities.
You may be eligible for Medicare before age 65 if you:
- have received Social Security Disability benefits for at least 24 months
- are receiving dialysis
- have or are waiting for a kidney transplant
- have end stage renal disease (ESRD)
- have amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease
The following chart gives an overview of the different parts of Medicare. Additional details about each part follow below.
| Original Medicare’s Part A | Original Medicare’s Part B | Medicare Advantage (Part C) | Part D | Medigap | |
|---|---|---|---|---|---|
| What it covers | inpatient stays in hospital, skilled nursing facility (SNF), and hospice | outpatient medical care | equivalent to Parts A and B + additional benefits in some cases | prescription drugs | out-of-pocket costs from Original Medicare like premium, deductible, and coinsurance |
| Cost in 2025 | premium: $0 for most people deductible: $1,676 copay: $419 and up after day 61 for hospital; $209.50 day 21 and up at SNF coinsurance: 20% | premium: $185 and up deductible: $257 coinsurance: 20% | depends on the plan | depends on the plan | depends on the plan |
| Administered by | government | government | private insurer | private insurer | private insurer |
Medicare vs Medicaid
Medicaid is another federally funded insurance program that provides free or lower cost healthcare to people of any age with lower incomes.
Medicare and Medicaid are both federal insurance programs, but states operate the Medicaid program. Much of Medicaid coverage also differs from state to state.
In many cases, if you’re eligible for Medicaid, you won’t have to pay anything for eligible services. Sometimes, a small fee may apply. Some people may qualify for both programs.
Original Medicare is primarily funded through government contributions, payroll taxes collected under the Federal Insurance Contributions Act (FICA), and premiums paid by beneficiaries.
Most people do not pay a monthly premium for Part A because they paid into the program through taxes during their working years. You’ll pay a monthly premium for Part B based on your income level.
You can go to doctors and facilities that accept Medicare without prior approval from your plan. Deductibles, copayments, and coinsurance costs apply but are usually income-based and may be subsidized.
Medicare Advantage, or Part C, is offered by private insurance companies as an all-in-one alternative to Original Medicare.
It bundles hospital and medical insurance with additional coverage, such as prescription drug (Part D) coverage. Some plans include dental, vision, and hearing services and other supplemental health and wellness benefits.
Medicare Advantage is primarily funded through premiums paid by beneficiaries and payments from Medicare.
Medicare pays private insurance companies a set rate per beneficiary each month to cover the costs of Parts A and B. The amount is based on the individual’s expected healthcare costs and the county where they live.
Medicare Advantage plans usually fall into a few different classifications:
- Health Maintenance Organization (HMO): These plans require you to receive nonemergency care from specific providers within your plan’s network.
- Preferred Provider Organization (PPO): These plans allow you to use providers within or outside your network, but youpay less for in-network care.
- Private Fee-for-Service (PFFS): These plans also allow you to use providers within or outside the plan’s network; however, the plan sets rates for what it will pay for its member services and your share.
- Special Needs Plans (SNPs): These plans are reserved for people with certain diseases or chronic conditions. Services and coverage are tailored to your specific situation.
Medicare Part D provides prescription drug coverage under Medicare. Although the federal government covers 75% of the costs for Part D medications, individuals are still responsible for paying premiums, copays, and deductibles.
That said, like Part C, private insurers administer Part D plans. This means that coverage and costs can differ depending on the chosen plan.
To qualify for Part D, you must enroll in Medicare Part A or Part B. Medicare Part D is optional, but if you wish to enroll, you must do so between October 15 and December 7. Coverage does not begin automatically, and there may be penalties for late enrollment.
Each plan has to cover at least two drugs from among commonly prescribed drugs, and they also must cover most drugs from six protected categories:
- immunosuppressants for organ transplant rejection
- antidepressants
- antipsychotics
- anti-seizure drugs
- antiretroviral
- certain chemotherapy drugs
Outside of these rules, every Part D plan may cover different medications. The cost of a covered drug depends on the tier in the plan’s formulary. The higher the tier, the higher the cost.
Medigap is supplemental insurance — not healthcare coverage. Private insurance companies offer it to help cover the out-of-pocket costs associated with Original Medicare, including deductibles, copayments, and coinsurance.
Premiums paid by beneficiaries primarily fund it. Depending on your history of Medicare enrollment and legal residence, you can choose from 10 different Medigap plans:
For a table summary of all plans, visit Medicare.gov.
Do you pay for Medicare Part B and C?
To be enrolled in a Part C plan, you still have to pay the Part B premium. That said, some Part C may cover your Part B premium.
Is Medicare Part D worth it?
Part D offers extensive prescription coverage for outpatient needs, including medications from local and mail-order pharmacies. Coverage levels vary by plan, so whether Part D is beneficial depends on your expected prescription needs and specific medications.
What is Medicare QMB?
There is no Medicare Part Q. That said, Medicare does offer a Qualified Medicare Beneficiary (QMB) program, which helps people with limited income and resources pay for Original Medicare costs.
Sifting through the many types of Medicare plans can take time and effort. However, these options give you more choices regarding coverage and the cost of your healthcare.
When you’re first eligible for Medicare, review all its parts to find the best fit for you and avoid paying penalties later.
