Up until a few years ago, Medicare was blessedly uncomplicated. You got your card when you turned 65. To cover your co-pays, co-insurance, and deductibles, you could choose a Medigap supplement from among 12 standardized plans. As for outpatient drugs, well, you were on your own.

The 2003 Medicare Modernization Act upended this system. Now you have to navigate a set of choices as confusing as the private system that might have baffled you during your younger years. Which Medicare plan makes the most sense to you might depend on where you live, whether you have retiree health coverage, the size of your income, and whether you have a pre-existing health condition. We can't provide more than a quick overview here, but the nonprofit Medicare Rights Center operates a valuable Web site that has answers to practically any question you can think of.

Here are some of the important things you need to know:

Public Medicare and Medicare Advantage: Understand the difference

The Medicare Modernization Act created a new category of private Medicare plans under the umbrella name Medicare Advantage. Dozens of insurance companies offer thousands of various plans nationwide. "Medicare Advantage plans are not Medigap plans," explains Judith Stein, executive director of the Center for Medicare Advocacy, a nonprofit group based in Connecticut. "They are not on top of traditional Medicare; they are instead of traditional Medicare. If you enter a Medicare Advantage plan, it's like joining any private managed-care plan." About 20 percent of Medicare beneficiaries had signed up for these plans as of January 2009.

Another big difference is that if you choose a private Medicare plan, you are not allowed to buy a supplemental Medigap plan to pick up any co-pays or deductibles. Medicare Part D drug coverage is also a part of many private Medicare plans, whereas people on traditional public Medicare have to buy a separate Part D plan.

Know Medicare Advantage's drawbacks

Many private Medicare plans have richer benefits and cost consumers less than public Medicare, in part because the government gives them an average of 14 percent extra per member to spend. Some plans don't even charge additional premiums, and you don't have to buy gap insurance.

But there are serious trade-offs. You give up the nationwide choice of providers available with public Medicare. Some private plans, for instance, require you to get all of your treatment within a local network.

Moreover, cost-sharing provisions in some plans could stick you with large out-of-pocket expenses if you need costly treatments, cautions Paul Precht of the Medicare Rights Center.

Last, private Medicare plans can increase co-pays or premiums on an annual basis and change their roster of providers at any time. If you don't like it, you have to wait until the next open-enrollment period to change to another private plan.