When you first enroll in Medicare, one of the biggest decisions you’ll face is how to structure your coverage.
Do you want the freedom of Original Medicare with Part D and a Medigap plan, or the convenience of an all-in-one Medicare Advantage plan (Part C)?
If you choose Medicare Advantage, you’ll also need to decide between an HMO or PPO network. And with either option, remember: you must pay your Part B premium.
Option 1: Original Medicare + Part D + Medigap
Original Medicare (Parts A and B) covers hospital and medical services. Most people add:
- Part D: Prescription drug coverage. While optional, if you don’t enroll when first eligible, you’ll pay a permanent late-enrollment penalty that increases with each month you delay.
- Medigap (Medicare Supplement Insurance): Helps cover out-of-pocket costs Medicare doesn’t pay, such as deductibles and copays.\
Pros
- Freedom to see any doctor or hospital in the U.S. that accepts Medicare.
- Predictable costs when Medigap covers most “gaps.”
- Nationwide coverage—ideal for snowbirds or frequent travelers.
Cons
- Higher combined premiums (Part B, Part D, and Medigap).
- You’ll manage three separate policies.
- No extras like dental, vision, or hearing.
Option 2: Medicare Advantage (Part C)
Medicare Advantage plans are offered by private insurers and usually bundle hospital, medical, and prescription coverage into one plan. Many also include extras such as dental, vision, hearing, fitness memberships, and transportation.
Pros
- One-stop coverage, often with lower premiums (some plans even have $0 premiums).
- Extra benefits not included in Original Medicare.
- An out-of-pocket maximum for added protection.
Cons
- Must follow plan rules and stay within the network.
- Copays and coinsurance can add up.
- Travel coverage is limited to your service area (though some national companies offer access to their entire network).
HMO vs. PPO: Two Common Types of Medicare Advantage Plans
HMO (Health Maintenance Organization)
- Must use network providers (except emergencies).
- Often requires referrals for specialists.
- Lower premiums and out-of-pocket costs.
- Best for those who are comfortable staying in-network.
PPO (Preferred Provider Organization)
- Flexibility to see in- or out-of-network providers (no referrals).
- Out-of-network care costs more.
- No requirement to choose a primary care doctor.
- Best for those who want flexibility and may need care in multiple locations.
Key Questions to Ask Yourself
- Do I want nationwide freedom or am I comfortable with a local network?
- Do I prefer higher premiums with predictable costs, or lower premiums but more variable bills?
- Do I travel or live in more than one state each year?
- Are dental, vision, and hearing benefits important to me?
The Bottom Line Is: There is no “one-size-fits-all” Medicare plan:
- Original Medicare + Medigap: Best for those who want nationwide freedom and predictable costs.
- Medicare Advantage HMO: Best for those who want to keep costs low and don’t mind network rules.
- Medicare Advantage PPO: Best for those who want flexibility, even if it costs more. PPOs still have networks, but out-of-network care is covered at a higher cost.
A Note About Brokers
Choosing the right Medicare coverage is one of the most important health and financial decisions you’ll make. An independent Medicare broker can help you compare plans. They are paid by the insurance company if you enroll, and you’ll pay the same premiums as if you enrolled directly. If more than one insurance company offers plans in your area, look for a broker who represents several carriers—not just one or two.
Next week’s blog: When can I choose a plan and when can I make changes?
Frequently Asked Questions About Medicare
1. What is the difference between Original Medicare and Medicare Advantage? Original Medicare is run by the federal government and allows you to see any doctor nationwide who accepts Medicare. Medicare Advantage is offered by private insurers and usually limits you to a network, but it often includes extra benefits.
2. Do I need a Medigap plan if I have Medicare Advantage? No. Medigap only works with Original Medicare. You cannot have Medigap and Medicare Advantage at the same time.
3. Can I switch from Medicare Advantage to Original Medicare and buy a Medigap plan? Yes, but unless you’re in a guaranteed issue period (such as when your plan ends), you may have to go through medical underwriting, which means you could be denied or charged more based on your health. (topic of next week’s blog. Some states, like Connecticut are always guaranteed issue.
4. What’s the difference between an HMO and a PPO Medicare Advantage plan? An HMO requires you to use network doctors and usually referrals. A PPO allows you to go out of network for higher costs and doesn’t require referrals.
5. Does Medicare cover dental, vision, and hearing? Original Medicare does not cover routine dental, vision, or hearing. Many Medicare Advantage plans include these as extras.
6. Do I still have to pay the Part B premium if I choose Medicare Advantage? Yes. No matter which option you choose, you must continue to pay your Part B premium.
7. What happens if I don’t sign up for Part D when I’m first eligible? You’ll face a permanent late enrollment penalty that increases the longer you delay enrolling, unless you had other creditable drug coverage.