Original Medicare, Medicare Supplement (Medigap), and Medicare Advantage explained

For many Americans, Medicare can feel complicated. Terms like Parts A, B, C, and D are often used interchangeably, and it is not always clear how Medicare Advantage fits into the picture.

Roughly 2.3 million North Carolinians rely on Medicare⁠, and more than half have chosen a Medicare Advantage plan.⁠ Medicare plays a critical role for older adults and people with disabilities.

Understanding the basics can help policymakers, community leaders, and consumers make sense of the program and the choices available to beneficiaries.

What is Medicare?

Medicare and Medicaid are different programs, but some people qualify for both.

• Medicare⁠ is a federal health insurance program for people age 65 and older. People with certain disabilities may also qualify, even if they're not yet 65.
• Medicaid⁠ is jointly funded by states and the federal government and helps cover care for people with limited income or resources.
• Dual Eligible Special Needs Plan⁠, or D-SNP - Some people qualify for both Medicare and Medicaid. They are often called “dual eligible” and may qualify for specialized plan options designed to coordinate both types of coverage.

Understanding the Four Parts of Medicare

Medicare is divided into four parts, each covering different healthcare services.

Part A: Hospital Coverage

Part A generally covers:

• Inpatient hospital care
• Skilled nursing facility care
• Hospice services
• Certain home health services

Most Medicare beneficiaries do not pay a monthly premium for Part A because they or their spouse paid Medicare taxes during their working years.

Part B: Medical Coverage

Part B covers:

• Physician visits
• Outpatient care
• Preventive services
• Certain therapies and medical services

Most beneficiaries pay a monthly premium for Part B.

Part C: Medicare Advantage

Part C, also known as Medicare Advantage, is another way to receive Medicare benefits through private health plans approved by Medicare. These plans cover the services included under Original Medicare, and many also include prescription drug coverage. They may also include supplemental benefits such as routine dental care, vision services, hearing coverage, fitness programs, and more. Plan benefits, costs, provider networks, and prescription drug coverage vary by plan and location.

Part D: Prescription Drug Coverage

Part D is prescription drug coverage offered through private insurers. People enrolled in Original Medicare may enroll in a standalone Part D plan to help cover the cost of medications.

What is the difference between Original Medicare and Medicare Advantage?

One of the most common misconceptions is that Medicare Advantage is separate from Medicare. Beneficiaries generally choose between two paths:

1. Original Medicare (often combined with a Medicare Supplement and Part D plan) or
2. Medicare Advantage plan.

Both provide Medicare coverage, but they deliver benefits differently and may offer different costs, provider access, and additional benefits.

Original Medicare

Under Original Medicare, the federal government provides coverage through Parts A (hospital insurance) and B (medical insurance⁠). Beneficiaries may choose to add a standalone Part D prescription drug plan for medication coverage and a Medicare Supplement (Medigap) policy to help pay out-of-pocket costs for Medicare-covered medical services.

Medicare Supplement (Medigap)

A Medicare Supplement plan, often called Medigap, is private insurance that works with Original Medicare to help pay out-of-pocket costs such as deductibles, copayments, and coinsurance. Beneficiaries with Medigap typically enroll in a separate Part D plan for prescription drug coverage. Unlike Medicare Advantage, Medigap generally does not include extra benefits such as dental, vision, hearing, fitness, or over-the-counter allowances.

Medicare Advantage

Under Medicare Advantage⁠, beneficiaries receive their Medicare benefits through private health plans that contract with CMS. These plans must cover all services included under Original Medicare and often include additional benefits such as prescription drug coverage, dental, vision, hearing, or fitness. Unlike Original Medicare, Medicare Advantage plans include an annual limit on out-of-pocket medical expenses for covered services.

Plan availability, benefits, provider networks, prescription drug coverage, and costs can vary by county, carrier, and individual needs.

Key Medicare Enrollment Dates

• Your Initial Enrollment Period is a seven-month window that begins three months before your 65th birthday month, includes your birthday month, and ends three months after.
• January 1 – March 31 is Medicare Advantage Open Enrollment. This applies to people already enrolled in a Medicare Advantage plan and generally allows one plan change.
• October 15 – December 7 is the Annual Enrollment Period, when people can review and change Medicare coverage for the following year.
• Special Enrollment Periods may be available year-round for qualifying life events.

Medicare is not one-size-fits-all.

Some beneficiaries value the flexibility and predictable out-of-pocket costs that Medicare Supplement plans can provide. Others prefer the convenience of having medical coverage, prescription drug coverage, and supplemental benefits bundled together through a Medicare Advantage plan. Understanding these differences is an important part of choosing coverage that best fits an individual's healthcare needs and budget.

Want to learn more?

Blue Cross NC offers Medicare 101 sessions at our Beyond Blue Centers, where people can learn the basics, ask questions and better understand their Medicare options. Find a location near you and register.