Medicare Parts and Coverage: Choosing Your Path
Choosing between Original Medicare and Medicare Advantage—and selecting supplemental coverage—is one of the most important healthcare decisions you'll make. This lesson breaks down your options so you can choose wisely.
Decision 1: Original Medicare or Medicare Advantage?
Pro Tip
This is the fundamental Medicare decision. Original Medicare + Medigap offers maximum flexibility but higher premiums. Medicare Advantage offers lower costs but more restrictions. Neither is universally "better."
Original Medicare (Parts A + B)
How It Works
- Federal program administered by CMS
- See any doctor who accepts Medicare
- No networks, no referrals
- You pay deductibles and coinsurance (20% for Part B)
Part A Details (Hospital)
What's Covered:
| Service | Coverage | Your Cost |
|---|---|---|
| Hospital stay (days 1-60) | Full | $1,632 |
| Hospital stay (days 61-90) | Full | $408/day coinsurance |
| Hospital stay (days 91-150) | Lifetime reserve | $816/day |
| Skilled nursing (days 1-20) | Full | $0 |
| Skilled nursing (days 21-100) | Full | $204/day |
| Home health | Full | $0 |
| Hospice | Full | $0 |
Part B Details (Medical)
What's Covered:
- Doctor visits and services
- Outpatient surgery
- Durable medical equipment
- Preventive services (many free)
- Lab tests and X-rays
- Mental health services
- Ambulance services
Your Costs:
- Annual deductible: $240 (2024)
- Coinsurance: 20% of approved amount
- No out-of-pocket maximum
The Gap in Original Medicare
20% coinsurance with no limit is the problem.
Example: $100,000 surgery
- Your 20% share: $20,000
- With no cap, costs can be devastating
Solution: Medigap (Medicare Supplement) insurance
Medigap (Medicare Supplement)
What Is Medigap?
Private insurance that fills the "gaps" in Original Medicare:
- Deductibles
- Coinsurance
- Copayments
Standardized Plans
Plans are labeled A through N. Same benefits across companies, but different prices:
| Plan | Part A Deductible | Part B Deductible | Part B Coinsurance | Foreign Travel |
|---|---|---|---|---|
| A | No | No | Yes | No |
| B | Yes | No | Yes | No |
| D | Yes | No | Yes | Yes |
| G | Yes | No | Yes | Yes |
| K | 50% | No | 50% | No |
| L | 75% | No | 75% | No |
| M | 50% | No | Yes | Yes |
| N | Yes | No | Yes (copays) | Yes |
Most Popular: Plan G
- Covers everything except Part B deductible ($240/year)
- Best value for most people
- Average cost: $150-300/month depending on location and age
When to Buy Medigap
Medigap Open Enrollment:
- 6 months starting when you're 65+ AND enrolled in Part B
- Guaranteed issue (can't be denied)
- No health questions
Watch Out
Outside this window, insurers can deny you or charge more based on health. Buy Medigap during open enrollment if you want it!
Medigap and Drugs
Medigap does NOT include drug coverage. You need Part D separately.
Medicare Advantage (Part C)
How It Works
- Private insurance approved by Medicare
- Replaces Original Medicare (A + B)
- Usually includes drug coverage (Part D)
- Network-based (HMO, PPO, etc.)
Types of Advantage Plans
| Type | Network | Referrals Needed | Out-of-Network |
|---|---|---|---|
| HMO | Strict | Yes | Not covered |
| PPO | Flexible | No | Partial coverage |
| PFFS | Any provider | No | Any accepting terms |
| SNP | Special populations | Varies | Varies |
What's Often Included
- Hospital and medical coverage
- Prescription drugs
- Dental (usually basic)
- Vision (routine exams, glasses allowance)
- Hearing (exams, some aids)
- Fitness programs (SilverSneakers, etc.)
Cost Structure
| Cost | Typical Range |
|---|---|
| $0-100/month (plus Part B) | |
| Deductible | $0-500 |
| PCP copay | $0-20 |
| Specialist copay | $20-50 |
| Hospital/day | $200-400 |
| Out-of-pocket max | $3,000-8,850 |
Advantage Pros
- Lower premiums
- Out-of-pocket maximum (Original Medicare has none)
- Extra benefits included
- Simplified coverage (one card)
Advantage Cons
- Network restrictions
- Prior authorization requirements
- May need referrals
- Can't use Medigap
- Plans change annually
- Travel limitations
Rosa chose a $0 premium Medicare Advantage plan. She loved it until she developed a rare condition requiring specialists who weren't in-network. She had to pay out-of-pocket or travel hours to see covered doctors. During Open Enrollment, she switched to Original Medicare + Medigap—but had to pass medical underwriting because she was outside her Medigap open enrollment.
Part D: Prescription Drug Coverage
When You Need It
- With Original Medicare: Separate enrollment required
- With Medicare Advantage: Usually included (MA-PD plans)
How Part D Works
Phases of Coverage (2024):
| Phase | You Pay | Notes |
|---|---|---|
| Deductible | Up to $545 | Some plans have $0 |
| Initial Coverage | 25% | Until $5,030 total drug costs |
| Coverage Gap | 25% | Donut hole (mostly closed) |
| Catastrophic | 5% | After $8,000 out-of-pocket |
Choosing a Part D Plan
Consider:
- Are your drugs covered? (Check formulary)
- What tier are your drugs on?
- Is your pharmacy in-network?
- What's the monthly premium?
- What's the annual deductible?
Use Medicare Plan Finder: Enter your drugs and pharmacy at medicare.gov/plan-compare
Comparing Your Options
Scenario 1: Healthy, Rarely Uses Healthcare
Consider: Medicare Advantage (HMO)
- Low/no premium
- Basic coverage sufficient
- Out-of-pocket max protects against catastrophe
Scenario 2: Multiple Chronic Conditions
Consider: Original Medicare + Medigap G + Part D
- See any specialist without referral
- Predictable costs
- Maximum flexibility
Scenario 3: Specific Doctors/Hospitals Important
Consider: Depends on network
- Check if providers accept Original Medicare
- Check if in Advantage plan networks
- Flexibility of Original Medicare often wins
Scenario 4: Budget-Conscious, Healthy
Consider: Medicare Advantage (PPO)
- Low premium
- Some out-of-network flexibility
- Extra benefits (dental, vision)
Scenario 5: Travel Frequently
Consider: Original Medicare + Medigap G
- Coverage anywhere in U.S.
- Some Medigap plans cover foreign travel
- Advantage plans often have travel restrictions
Annual Review: Why It Matters
Pro Tip
Medicare plans change every year. Premiums, formularies, networks, and benefits shift. Review your coverage during the Annual Enrollment Period (October 15 - December 7) every year.
Check:
- Are your drugs still covered?
- Is your pharmacy still in-network?
- Are your doctors still in-network?
- Did premiums increase significantly?
- Did benefits change?
Making the Switch
From Original Medicare to Advantage
- During Annual Enrollment Period (Oct 15 - Dec 7)
- During Initial Enrollment Period
From Advantage to Original Medicare
- During Annual Enrollment Period
- During Open Enrollment Period (Jan 1 - Mar 31)
- Warning: May not be able to get Medigap outside open enrollment
Switching Advantage Plans
- During Annual Enrollment Period
- During Open Enrollment Period (Jan 1 - Mar 31)
Coverage Decision Checklist
Quick Win
Choose Your Medicare Path:
Step 1: Assess Your Needs
- How often do you see doctors?
- Do you have chronic conditions?
- List your current medications
- Identify doctors you want to keep
- Do you travel frequently?
Step 2: Compare Options
- Get quotes for Medigap plans
- Research Advantage plans in your area
- Check drug coverage for Part D options
- Calculate total annual costs for each path
Step 3: Make Your Choice
- Choose Original Medicare + Medigap + Part D, OR
- Choose Medicare Advantage (with drug coverage)
- Enroll during appropriate period
- Set reminder to review next year
The Bottom Line
Original Medicare with Medigap and Part D offers maximum flexibility and predictable costs but higher premiums. Medicare Advantage offers lower premiums and extra benefits but network restrictions and annual changes. Neither is universally better—choose based on your health needs, doctors, medications, budget, and lifestyle. And review your choice every year during the Annual Enrollment Period.