MEDICARE

Understanding Medicare: Parts, Options, and Supplemental Coverage

Medicare is a federal health insurance program for individuals aged 65 and older, as well as certain younger individuals with disabilities. It consists of four distinct parts, and it's important to understand how each works before you enroll.

Original Medicare: Part A and Part B

Original Medicare includes:

  • Part A (Hospital Insurance):
    Covers hospitalizations, skilled nursing facility care (following a qualifying hospital stay), hospice, and some home health services.
    Cost: Free for most individuals who have worked at least 40 quarters (approximately 10 years) and paid Medicare taxes.

  • Part B (Medical Insurance):
    Covers doctor visits, outpatient services, preventive care, ambulance services, and emergency room care.
    Cost: $185.00/month (2025 standard premium; income-related adjustments may apply).

Coverage Gaps in Original Medicare

Original Medicare does not cover all costs, which can leave beneficiaries exposed to high medical bills.

  • Part A:
    $1,676 deductible per 60-day benefit period (you could incur this multiple times per year).

  • Part B:
    $270 annual deductible (2023), followed by 20% coinsurance on most services.

Due to these gaps, most Medicare beneficiaries choose to add supplemental coverage.

Part C: Medicare Advantage Plans

Medicare Advantage (Part C) is an alternative to Original Medicare, offered by private insurance companies approved by Medicare. These plans:

  • Combine Part A and Part B benefits

  • Often include Part D (prescription drug coverage)

  • May offer additional benefits not covered by Original Medicare (e.g., dental, vision, hearing, fitness)

  • Have annual out-of-pocket maximums

  • Require the use of a provider network

  • Typically have low or $0 additional premiums beyond the Part B premium

Note: When you enroll in a Medicare Advantage plan, you are no longer using Original Medicare—your care is coordinated through the private plan.

Medigap (Medicare Supplement) Insurance

Medigap plans are private insurance policies that work with Original Medicare to help pay for out-of-pocket costs such as:

  • Deductibles

  • Copayments

  • Coinsurance

Key features:

  • No provider networks—you can see any doctor that accepts Medicare

  • Do not include prescription drug coverage

  • Require enrollment in both Part A and Part B

  • Monthly premiums vary by carrier and plan

  • Plans are standardized by letter (e.g., Plan G, Plan N)—the benefits are the same across all insurers offering the same lettered plan

Part D: Prescription Drug Coverage

Part D provides coverage for prescription medications and is offered in two ways:

  1. Through a Medicare Advantage Plan (Part C) that includes drug coverage

  2. As a stand-alone plan for those on Original Medicare or with a Medigap policy

Part D plans:

  • Require a monthly premium

  • Include copays for medications based on a tiered formulary

  • Use a network of pharmacies

  • Change annually—so reviewing your plan every year during Open Enrollment is important

Important: If you’re in a Medicare Advantage plan that includes drug coverage, you cannot enroll in a separate Part D plan.

Your Medicare Coverage Options

When you become eligible for Medicare, you have several options for structuring your coverage:

  1. Original Medicare only (Part A and/or Part B)

  2. Original Medicare + Part D + Medigap Supplement

  3. Medicare Advantage Plan (Part C) – usually includes drug coverage

  4. Standalone Part D Plan (if not included in your plan)

  5. Medicare Supplemental Insurance (Medigap) – works with Original Medicare

Note: Availability of plans varies by geographic region, so it’s important to review your local options.

Medicare Supplement (Medigap) Plans – Standardized Protection

Medigap plans are offered by numerous private insurance carriers across the country. To enroll:

  • You must have Part A and Part B

  • You generally enroll during your Medigap Open Enrollment Period (a six-month window starting the month you're 65 and enrolled in Part B)

Medigap plans are regulated by federal law, and the benefits are standardized. For example, a Plan G from one insurer must offer the same coverage as Plan G from another—only the premiums and service vary.

Final Thoughts: Make an Informed Decision

Choosing your Medicare path is one of the most important health care decisions you’ll make in retirement. You must consider:

  • Your budget

  • Provider preferences

  • Current and future health care needs

  • Prescription drug requirements

Because your options and premiums vary by location and individual situation, it’s highly recommended that you speak with a licensed Medicare professional to evaluate your needs and avoid unnecessary costs or penalties.