Key takeaways
- Private insurance may be a better fit for individuals with dependents, as it often allows for extending coverage to family members, whereas Medicare provides individual coverage only.
- While private insurance premiums vary based on factors such as location and age, Medicare Part A typically has no monthly premium for eligible individuals, although costs can vary across different Medicare plans.
- Both Medicare and private insurance plans generally cover preventive healthcare. However, private insurance often includes an out-of-pocket maximum, whereas Original Medicare (parts A and B) has no cap on out-of-pocket expenses.
The federal government provides Original Medicare, while private companies administer private health insurance and Medicare Advantage plans on behalf of the government.
The cost of private insurance varies by plan type and coverage levels. Some employers provide private insurance as a benefit. People should assess what they need from health insurance to help guide their plan choices.
Read on to learn about the key differences between private health insurance plans, private Medicare plans, and Original Medicare.
Private insurance plans may be private group insurance plans or plans that a person purchases on the Health Insurance Marketplace.
This contrasts with Original Medicare, which is comprised of Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). Some key differences between Original Medicare and private insurance plans are that:
- Original Medicare is for people 65 and older, those receiving disability benefits, or those living with certain conditions. Private group plans are for employees or union members, and most people can enroll in a Marketplace plan.
- Original Medicare is a public health insurance plan, whereas non-Medicare plans are private plans managed by private insurers.
- Original Medicare does not include coverage for prescription drugs or other coverage, such as dental, vision, or hearing insurance.
- Original Medicare has nationwide fixed costs that change yearly and may depend on income. Private plan costs can depend on the insurer, the plan, the person’s employer, or the person’s location. The Marketplace offers four different tiers, each with different cost-sharing levels.
- Original Medicare does not have out-of-pocket maximums, whereas many private health plans do.
In order to get coverage not included in Original Medicare, a person eligible for Medicare can choose to enroll in plans that are approved by Medicare but offered by private insurers. These are Medicare Advantage plans, also called Part C, Medicare Part D, and Medigap.
Advantage plans have to offer the same benefits as Original Medicare and will generally offer extra coverage, such as dental, vision, or hearing insurance. Some plans may also lump in coverage for prescription plans.
Medicare Part D, on the other hand, is a separate plan just for prescription drug coverage. Medigap, also called Medicare supplement insurance, is not a medical plan but a plan that covers a person’s remaining out-of-pocket costs after Original Medicare coverage applies. A person cannot use Medigap with Medicare Advantage.
The following are some key differences and similarities between non-Medicare private plans and Medicare private plans.
Key similarities:
- The costs of Medicare Advantage plans and non-Medicare private plans will vary based on the company providing them, where the person lives, and factors like the person’s age, whether they smoke, the type of plan they choose, and whether the plan covers only the individual or also dependents.
- Both Marketplace plans and Medicare Advantage plans have a maximum out-of-pocket (MOOP) limit, which is the most money a person will pay for a covered service in one year. The MOOP for Advantage plans changes annually. Some employer plans may have a MOOP, but this depends on the plan.
- The structure of both non-Medicare private plans and Medicare private plans may also be similar, depending on the type of plan. For example, Medicare Advantage, Marketplace, and employer plans can be Health Maintenance Organization (HMO) plans or Preferred Provider Organization (PPO) plans.
- Small employer plans and Marketplace private plans must cover 10 essential benefits, such as doctor visits, hospital care, and prescription drugs. A person needing more coverage may have to pay more. Larger group plans are not subject to this mandate, whereas Medicare Advantage includes at least Original Medicare’s benefits and may offer extras, depending on the plan.
Key differences
- Only people eligible for Original Medicare can enroll in private Medicare plans. People who work for certain companies or belong to a union can enroll in a group insurance plan, and most people can enroll in a Marketplace plan.
- Although Medigap plans are private plans, the plans are standardized in most of the United States. Beneficiaries can use Medigap only with Original Medicare; they cannot use it with Medicare Advantage or other non-Medicare plans.
- Medicare Part D premiums depend on the plan. How much a person will pay as a copayment for prescription drugs is determined based on tiers, which also vary from plan to plan.
- Certain types of Medicare Advantage plans, such as Medicare Savings Accounts (MSAs) and Special Needs Plans (SNPs), are unique to Medicare.
2026 Medicare changes
We’re currently updating this article to reflect 2026 costs and other changes.
Read more: Medicare cost changes in 2026
For people deciding which type of healthcare plan best fits their needs, several additional factors are worth considering:
- Workers with employer insurance who qualify for Medicare should compare both options. They can also choose between Original Medicare and Medicare Advantage. In some cases, Medicare may cost less, while employer plans might offer broader coverage.
- A person requiring more than basic preventive services may need to add extra coverage, whether by paying for a more expensive private plan or by enrolling in a Medicare Advantage plan that includes these extra benefits.
- Certain Medicare options, such as SNPs, can help people with chronic conditions manage expenses, which private insurance doesn’t always provide.
- With some exceptions, Medicare plans offer coverage only to individuals, while private insurers often allow people to extend health coverage to dependents, including children and spouses.
Additional considerations include whether a person’s spouse needs coverage, the person’s income level, and their travel frequency, all of which can influence which health insurance plan is the best fit.
The following chart summarizes the key things to know about the main types of Medicare and non-Medicare broad health insurance plans:
| Original Medicare | Medicare Advantage | Private Insurance | Either Medicare or Private Insurance | |
|---|---|---|---|---|
| Eligibility | at age 65 or earlier with certain disabilities or conditions | at age 65 or earlier with certain disabilities or conditions | must be an employee or member of a union | must live in the U.S., be a U.S. citizen or lawfully present non-citizen, and not be incarcerated. |
| Cost | annual fixed costs, but some depend on work history and income | varies by plan | varies by plan | varies by plan |
| Out-of-Pocket Maximum (OOP) | none | annual MOOP that limits spending | may have MOOP, but depends on the plan | annual MOOP that limits spending |
| Provider Network Flexibility | can be used nationwide as long as the provider accepts Medicare | usually limited to regional coverage, and may be restricted to a provider network, depending on the plan type | usually limited to regional coverage, and may be restricted to the provider network, depending on the type of plan | may be limited to regional coverage and may be restricted to the provider network, depending on the type of plan, with some plans being more restrictive |
| Referral Requirements | with some exception, not required | varies by plan type | varies by plan type | varies by plan type |
| Coverage | does not cover supplemental benefits like vision, dental, and drugs; a person can enroll in Part D for drug coverage or Medigap for out-of-pocket cost support | depends on location and other factors, and often offers supplemental benefits like vision, dental, and drugs | small group plans must cover 10 Essential Health Benefits (EHB), though larger plans may not | must cover mandated 10 Essential Health Benefits (EHB) |
Can you use Medicare and private insurance at the same time?
A person can have both Medicare and private insurance at the same time. In these cases, Medicare establishes primary and secondary payers. The primary payer pays the claim first, while the secondary payer covers expenses that remain unfunded by the primary payer.
Medicare has various rules for establishing the primary payer. For example, Medicare is the primary payer when a person has private insurance through an employer with fewer than20employees. To determine their primary payer, a person should call their private insurer directly.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Many factors may determine whether Medicare or private insurance is better for a person, including their medical needs, location, and desired coverage. It may come down to personal preference.
Medicare may be preferable to private insurance for some people, possibly due to the cost. People with dependents may also prefer private insurance over Medicare. That said, the ideal plan for each person depends on their medical needs and budget.