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Medicare vs. Private Health Insurance

Are you newly eligible for Medicare? You may have been covered by private insurance your whole life, so you might be wondering what to do. If you’re skeptical about the quality of Medicare vs. private insurance, you might like to know that you can actually have both.

What types of Medicare coverage is offered by private insurance companies?

Medicare works with private insurance companies to provide Medicare benefits. The types of Medicare coverage you can get from Medicare-approved private insurance companies include:

  • Medicare Part D prescription drug coverage

  • Medicare Supplement (Medigap) insurance to help cover out-of-pocket Medicare costs, such as deductibles, copayments, and coinsurance

  • Medicare Advantage plans, which include your Part A (hospital) and Part B (medical) insurance in one convenient plan. Medicare Advantage plans also might include added benefits, like prescription drugs, routine vision, routine hearing, and routine dental coverage.

No matter which coverage option you may choose, you’re still in the Medicare program. You still need to stay enrolled in Medicare Part A and Part B to qualify for Medicare Advantage or Medicare Supplement. If you sign up for a stand-alone Medicare Part D prescription drug plan, you need to have either Medicare Part A or Part B (both is okay).

Does Medicare coverage from private insurance companies cost more?

Medicare coverage from Medicare-approved private insurance companies may cost you an additional monthly premium, but might also save you money over time.

You might be surprised to learn that Original Medicare (Part A and Part B) has no out-of-pocket maximum. This means that if you need extensive medical care, you could face enormous bills. Two Medicare Supplement plans, Medicare Supplement Plan K and Plan L, have out-of-pocket limits. Other Medicare Supplement plans may still help you cover Medicare’s out-of-pocket costs.

All Medicare Advantage plans are required to have an out-of-pocket limit, protecting you from devastating financial responsibility if you have a serious health condition. Limits may vary among plans.

Medicare vs. private insurance: premiums and costs

Generally, private insurance companies can raise your premium based on three things that don’t affect your Original Medicare premiums.

  • Age: private insurance companies can charge premiums for older people up to three times higher than premiums for younger people, according to

On the other hand, most people who qualify for Medicare don’t pay a premium for hospital insurance (Part A). Most people with Medicare do pay a premium for medical insurance (Part B) but this premium does not go up or down depending on your age.

  • Location: According to, where you live has a big effect on your premiums from private insurance companies. The Medicare Part A and Medicare Part B premiums are the same regardless of your location in the USA.

If you get any type of Medicare coverage from a private insurance company, such as Medicare prescription drug coverage, a Medicare Supplement plan, or a Medicare Advantage plan, these premiums may vary from location to location. Premiums and other costs may also be different among insurance companies.

  • Tobacco use: cigarette use will not increase your Original Medicare (Part A and Part B) premiums. However, according to, Medicare Supplement plans may offer discounts to non-smokers.

Medicare vs. private insurance: dependents

Private health insurance often allows you to extend coverage to dependents, such as your spouse and children. Medicare, on the other hand, is individual insurance. Most people with Medicare coverage have to qualify on their own through age or disability. But in some cases, your spouse might help you qualify for certain coverage.

Medicare vs. private insurance: benefits

Original Medicare has some significant gaps in coverage for things that private insurance usually covers, like prescription drugs. Original Medicare may cover prescription drugs you receive in the hospital or certain medications (such as injections or infusions) you receive in a doctor’s office, but generally doesn’t cover most prescription drugs you take at home.

The only way to get Medicare prescription drug coverage for most medications you take at home is through a Medicare-approved private insurance company. You can opt for a stand-alone Medicare Part D prescription drug plan to go alongside Original Medicare, or a Medicare Advantage prescription drug plan.

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