How Medicare Works: Coverage, Costs and Choices

Start with the federal program

Original Medicare includes Part A hospital insurance and Part B medical insurance. Part D is prescription-drug coverage offered through private plans. Medicare Advantage is another way to receive Part A and Part B benefits through a Medicare-approved private plan and commonly includes drug coverage. Medicare Supplement insurance works with Original Medicare and is not Medicare Advantage.

These paths differ in networks, administration, premiums, cost sharing, drug coverage and supplemental benefits. A comparison should begin with the desired coverage structure before comparing individual private plans.

Enrollment timing affects the choices

Some people are enrolled automatically, while others must apply through Social Security. Initial, Special and General Enrollment Period rules depend on the person’s circumstances. Medicare Advantage and Part D have additional enrollment periods and eligibility rules. Never end employer, retiree, union or other coverage until the replacement effective date and consequences are confirmed.

Medigap protections depend on timing and state law. New York has consumer protections that should be reviewed using current New York Department of Financial Services information.

Build a complete annual cost model

• Part A and Part B premiums and deductibles that apply.
• Private-plan premiums and medical cost sharing.
• Prescription premiums, deductible, tiers and pharmacy costs.
• Medigap premium if used with Original Medicare.
• Dental, vision, hearing and long-term-care needs not fully addressed by Medicare.
• Normal-use and higher-use annual scenarios.

Review every year

Health needs and private-plan terms can change. Read the Annual Notice of Change, verify providers and prescriptions and compare current alternatives during the appropriate period. A prior-year decision is a starting point, not proof that the same arrangement remains suitable.