Whether you’re new to Medicare, getting ready to turn 65, or preparing to retire, you’ll need to make several important decisions about your health coverage. 

If you wait to enroll, you may have to pay a penalty, and you may have a gap in coverage. When you first enroll in Medicare and during certain times of the year, you can choose how you get your Medicare coverage. 

There are 2 main ways to get your Medicare coverage—Original Medicare (Part A and Part B) or a Medicare Advantage Plan (Part C). 

Some people need to get additional coverage, like Medicare prescription drug coverage or Medicare Supplement Insurance (Medigap).    

Medicare Part A (Hospital Insurance) covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Medicare Part B (Medical Insurance) covers certain doctors' services, outpatient care, medical supplies, and preventive services. 

Most people should enroll in Part A when they turn 65, even if they have health insurance from an employer. This is because most people paid Medicare taxes while they worked so they don't pay a monthly premium for Part A. Certain people may choose to delay Part B. In most cases, it depends on the type of health coverage you may have. 

Everyone pays a monthly premium for Part B. The premium varies depending on your income and when you enroll in Part B.

Medicare Prescription Drug Plan (Part D) . These plans (sometimes called "PDPs") add drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private Fee-for-Service (PFFS) Plans, and Medicare Medical Savings Account (MSA) Plans. Medicare prescription drug coverage is an optional benefit offered to everyone who has Medicare. 

If you decide not to get Medicare drug coverage when you're first eligible, you'll likely pay a late enrollment penalty if you join later, unless one of these applies: You have other creditable prescription drug coverage. You get Extra Help. Generally, you'll pay this penalty for as long as you have Medicare prescription drug coverage. 

To get Medicare drug coverage, you must join a Medicare plan that offers prescription drug coverage. Each plan can vary in cost and drugs covered.

Medicare Advantage Plan (Part C) (like an HMO or PPO) or other Medicare health plan that offers Medicare prescription drug coverage. You get all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, and prescription drug coverage (Part D), through these plans. Medicare Advantage Plans with prescription drug coverage are sometimes called “MA-PDs.” 

You must have Part A and Part B to join a Medicare Advantage Plan. Medicare Advantage Plans cover all Medicare services. Some Medicare Advantage Plans also offer extra coverage, like vision, hearing and dental coverage. 

Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. Each Medicare Advantage Plan can charge different out-of-pocket costs. 

They can also have different rules for how you get services, like: Whether you need a referral to see a specialist. If you have to go to doctors, facilities, or suppliers that belong to the plan for non-emergency or non-urgent care. These rules can change each year. 

A Medicare Supplement Insurance (Medigap) policy helps pay some of the health care costs that Original Medicare doesn't cover, like: Copayments, Coinsurance, Deductibles.

Medigap policies are sold by private companies. Some Medigap policies also cover services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. 

If you have Original Medicare and you buy a Medigap policy, here's what happens: Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then, your Medigap policy pays its share. You must have Medicare Part A and Part B. 

A Medigap policy is different from a Medicare Advantage Plan.  Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits. You pay the private insurance company a monthly premium for your Medigap policy. You pay this monthly premium in addition to the monthly Part B premium that you pay to Medicare.  

Who can join a Medicare Advantage Plan? 

You must have Medicare Parts A and B and live in the plan’s service area to be eligible to join. People with End-Stage Renal Disease (permanent kidney failure) generally can’t join a Medicare Advantage Plan. 

How much do Medicare Advantage Plans cost? 

In addition to your Part B premium, you usually pay one monthly premium for the services included in a Medicare Advantage Plan. Each Medicare Advantage Plan has different premiums and costs for services, so it’s important to compare plans in your area and understand plan costs and benefits before you join. 

Who can buy a Medigap policy? 

Generally, you must have Medicare Parts A and B to be able to buy a Medigap policy. The best time to buy a Medigap policy is on the first day of the month in which you’re 65 or older and enrolled in Part B. This time period, called your Medigap Open Enrollment Period, ends 6 months later. During this period, an insurance company can’t refuse to sell you a policy or charge you more because of your health. If you’re under 65, you won’t have this Open Enrollment Period until you turn 65, but state law might give you a right to buy a policy before then.