The first two parts – Part A and Part B – comprise “original Medicare” introduced in 1965.

• Part A (Hospital Insurance) provides inpatient hospital coverage, skilled nursing care, hospice care, and home health care.
• Part B (Medical Insurance) covers doctor’s services, outpatient care, medical supplies, and preventive care.

You can think of A and B as the mandatory parts of Medicare. The government requires you to enroll in this coverage unless you have a qualified insurance alternative (more on that elsewhere).

Most people do not pay a premium for Part A. In 2024, the premium for Part B is $174.70 per month (and can be higher, depending on the member’s previous two year’s income).

As a Medicare Part A and B participant you have no provider network. You can see any physician who accepts Medicare (approximately 97% of all physicians do).

Original Medicare offers excellent medical insurance coverage but does not cover all medical costs.

• Part A involves a large deductible ($1,634 in 2024) that, under certain circumstances, can apply more than once per year.
• Part B generally covers 80% of all qualifying medical expenses (except preventive care and certain vaccines, which are covered at 100%). There is no stop loss for out-of-pocket expenses. Part B participants are responsible for 20% of the cost unlimitedly.
• Additionally, original Medicare does not cover prescription drugs outside the hospital setting.

Recognizing original Medicare coverage limitations, Congress authorized the creation of Medicare Supplement Plans in 1966 to fill the program’s financial “gaps.”

A Medigap policy is private insurance that supplements Original Medicare. You pay for the policy separately and in addition to your Medicare Part B premium. It is designed to pay some or all of the costs that Medicare does not pay. Medicare pays its approved amounts, and then the Medigap policy pays its share up to its policy limits.

In 2024, ten plans are available, labeled in most states by letter: A, B, C, D, F, G, K, L, M, and N. Each plan offers the same basic range of benefits and then provides an additional level of financial coverage you can choose to meet your specific needs.

A Medigap plan is designed only to fill the financial gap of original Medicare. If Medicare covers a procedure, the Medigap plan will also cover it, but that is all it covers. Medigap plans do not extend the types of service you receive.

For example, because original Medicare does not offer prescription drug coverage, neither do Medigap plans.

The Medicare Supplement program is heavily regulated, and each letter plan provides standard coverage regardless of the state or insurance carrier you select. Generally, the only meaningful difference will be the plan’s cost, which can vary by location, participant age, and individual carrier.

Medigap plan members must participate in Medicare Parts A and B, and still pay their Part B premium.

Important: You have a six month guaranteed issue open enrollment period that starts with your Medicare Part B enrollment. Beyond this period, you will likely have to pass medical underwriting to elect or to change a Medigap plan.

Part C “Medicare Advantage” plans were introduced in 1999 as an all-in-one alternative to traditional Medicare. The Medicare Advantage program was designed to address the high costs of the Original Medicare and Medigap system.

Medicare Participants are not required to enroll in Part C. It is entirely optional.

Part C “Medicare Advantage” plans completely replace original Medicare with a comprehensive managed care plan provided through a private healthcare company. Medicare Advantage plans offer all the benefits of Medicare Part A and Part B and generally include additional benefits such as prescription drug coverage, vision, dental, and hearing services.

Important: To reiterate, Medicare part C does not augment Original Medicare. It replaces it entirely with a plan that is administered through private insurance companies approved and regulated by Medicare.

Some Medicare Advantage features:

• Unlike Medigap plans, Medicare Advantage plans have networks of physicians and hospitals. They may require referrals to see specialists. Additionally, many plans require pre-certification for some procedures.
• Medicare Advantage plans have lower monthly premium costs than Medigap plans (although like Medigap plans, Medicare Advantage participants must still pay their Part B premium).
• Medicare Advantage plans also use deductibles, copays and coinsurance fees – with out of pocket annual cost that can range from several thousand to eight thousand or more per year.

Part D drug coverage was introduced in 2006 to resolve the original Medicare/Medigap lack of drug coverage. (Medicare Part A provides drug coverage only while under inpatient care.)

Medicare Part D offers self-administered prescription drug coverage and covers many recommended vaccines. You must participate in Part A or B to qualify for this coverage.

Part D plans are offered through private companies. The premium depends on the individual plan and can vary significantly between companies.

Important: While Part D coverage is considered “optional,” unless you have qualifying alternative prescription drug coverage, you will pay a penalty if you enroll past your initial enrollment period or a special enrollment period for which you may qualify.