Medicare and Medigap, Explained Without the Sales Pitch

Educational — no plan recommendations About 7 minutes Medicare is not one thing, and almost every expensive mistake people make with it comes from treating it as one thing. It is four parts, combined in two broadly different ways, wrapped in a set of deadlines that are unforgiving in a way the rest of the insurance world is not.

This is the plain version. No plan names, no prices, and nothing you have to buy at the end of it.

The four parts, quickly Part A covers inpatient hospital stays, skilled nursing facility care, hospice and some home health care. Most people pay no premium for it, having already paid in through decades of payroll tax.

Part B covers the outpatient half of medicine: doctor visits, tests, preventive care, durable medical equipment. It has a monthly premium, and higher earners pay more through an income-related adjustment based on a tax return from two years earlier.

Part C, better known as Medicare Advantage, is not an addition. It is a different way of receiving Parts A and B, through a private plan approved by Medicare.

Part D is prescription drug coverage — bought separately, or bundled into a Medicare Advantage plan. Each plan publishes a formulary, the list of drugs it covers and what tier each one sits in. This is why the same prescription can cost wildly different amounts depending on which plan you hold.

Those are the pieces. The decision is what to do with them.

The one decision that actually matters There are two routes, and you are choosing between them rather than assembling something bespoke.

Original Medicare Any provider that accepts Medicare. No network. Part A Hospital, skilled nursing, hospice Part B Doctors, outpatient, equipment What Medicare does not pay Deductibles, coinsurance — with no annual cap Medicare Supplement (Medigap) Optional. Fills the gap above. Standardised by letter. Part D Bought separately EITHER / OR Medicare Advantage A private plan delivers Parts A and B. Network applies. One plan, covering Part A — hospital Part B — outpatient Part D — drugs, usually included Extras — dental, vision, hearing are common Annual out-of-pocket cap There is a ceiling. That is the trade. In exchange A provider network, and referrals in some plans Prior authorisation for some services A Medigap policy cannot be used with this The two routes. A Medicare Supplement policy attaches to Original Medicare and pays part of what Medicare leaves you — it is not coverage on its own. Medicare Advantage replaces the delivery of Parts A and B and caps your annual costs, in exchange for a network. Holding both is not possible, and not legal to sell. Route one: Original Medicare, usually with a supplement You keep Parts A and B, and you can use any provider in the country that accepts Medicare — which is most of them. No network, no referrals, no prior authorisation for the great majority of services.

The catch is that Original Medicare has no annual limit on what you can pay out of pocket. There is no cap. A bad year has no ceiling on it.

That single fact is why Medicare Supplement insurance exists.

Route two: Medicare Advantage A private plan takes over delivery of your Parts A and B benefits. These plans do cap your annual out-of-pocket costs, frequently bundle drug coverage, and often add dental, vision or hearing benefits — usually for a low or zero additional premium.

In exchange you accept a network, and some services require the plan's approval before it will pay.

You cannot hold both. A Medicare Supplement policy does not work with a Medicare Advantage plan, and it is not legal for someone to sell you one to sit alongside the other. If a conversation ever implies otherwise, stop the conversation.

Medicare Supplement — what "Medigap" actually is A Medicare Supplement policy, commonly called Medigap, is private insurance that pays some of what Original Medicare leaves you to pay: the deductibles, the coinsurance, the twenty percent of outpatient costs Part B does not cover.

It is not coverage in its own right. It sits behind Original Medicare and fills the holes. Hence the name.

They are standardised, which is the useful part In most states, Medigap policies come in lettered plans — Plan G, Plan N and so on — and the letters are defined by law. A given letter covers exactly the same things no matter who sells it. One company's Plan G is, benefit for benefit, identical to another company's Plan G.

Three states do it differently — Massachusetts, Minnesota and Wisconsin standardise their own way — but everywhere else, the letter is the product.

The consequence is worth sitting with: once you have chosen a letter, the remaining differences are price, the company's service, and how that company raises rates over time. Not benefits. Anyone selling you on the superior coverage of their Plan G is selling you something that does not exist.

One more piece of history that catches people out: the plans that cover the Part B deductible are not available to anyone who became eligible for Medicare on or after 1 January 2020. If you read older advice recommending Plan F, that is why it may not be available to you.

How the price is set matters more than the price today Medigap policies are priced one of three ways, and the label rarely appears in the sales conversation:

Community rated — everyone with that policy pays the same, regardless of age. Issue-age rated — the price is based on your age when you bought it, and does not rise because you get older. Attained-age rated — the price is based on your current age, and rises as you age. An attained-age policy is frequently the cheapest at sixty-five and the most expensive at eighty. That is not a trick; it is the design. But it means comparing two quotes on today's premium alone can be actively misleading, and it is a fair question to ask of anyone quoting you: how is this policy rated, and what has this company's rate history looked like?

The six-month window nobody mentions until it has closed This is the part of Medicare where a missed date is genuinely irreversible, and it is the reason this article exists.

The window

Your Medigap open enrolment period is the six months beginning the first month you are both 65 or older and enrolled in Part B.

During those six months you have a guaranteed right to buy any Medigap policy sold in your state. Your health cannot be used against you. You cannot be turned down, charged more, or made to wait for a pre-existing condition beyond narrow limits.

After it closes, in most states, that protection is gone. An insurer can medically underwrite you — ask about your health, your medications, your history — and can decline you outright or price you according to what it finds.

This is why "I'll start with Advantage and switch to a supplement later if I don't like it" is a riskier plan than it sounds. Switching to Advantage is generally straightforward. Switching back may require passing underwriting you cannot control.

There are limited guaranteed-issue rights outside the window — losing other coverage through no fault of your own, for instance, or a plan leaving your area. They are real, and they are narrower than most people assume.

The other deadlines, and what they cost Your Initial Enrolment Period runs seven months: the three months before your 65th birthday month, the month itself, and the three after.

If you are still working at 65 with coverage through current employment, a Special Enrolment Period may let you delay Part B without penalty. Whether it applies depends on the size of the employer, which is exactly the sort of thing to confirm with Social Security rather than assume. Getting this wrong is one of the few Medicare mistakes that is both common and permanent.

Open Enrolment, each autumn from 15 October to 7 December, is when you can move between Original Medicare and Advantage, or change drug plans.

Medicare Advantage Open Enrolment, 1 January to 31 March, lets those already in an Advantage plan make one change.

The penalties are the part to take seriously:

Part B: an amount is added to your premium for each full twelve-month period you could have had it and did not — and it stays there for as long as you have Part B. Permanently. Part D: a penalty calculated from the number of months you went without creditable drug coverage, added to your premium and generally kept for as long as you have Part D. Neither is a fine you pay once. Both are a permanent adjustment to what you pay every month for the rest of your life. The current amounts are on Medicare.gov, and they are worth reading before assuming a delay is harmless.

What a yearly review should actually check Plans change every year, and the notice announcing the changes arrives looking exactly like the junk mail it is sitting in. Four things are worth twenty minutes each autumn:

Are your prescriptions still on the formulary, and in the same tier? Are your doctors and hospitals still in the network? Have the premium, deductible or out-of-pocket maximum moved? Has your own health changed in a way that makes a different structure fit better? A plan that was the right choice last year can quietly become the wrong one without anything happening on your side at all.

Where to check things for yourself Everything above is the shape of the rules, not the numbers, and the numbers change annually. For current premiums, deductibles, penalty calculations and the plans available where you live:

Medicare.gov — the official source, including the plan finder with real formularies and networks Social Security — enrolment, and whether a Special Enrolment Period applies to you SHIP — free, unbiased counselling in your own state, funded to advise rather than to sell That last one deserves more attention than it gets. Every state has one, it costs nothing, and the counsellors are not paid on what you choose.

If you would rather talk it through We publish a Medicare Review Tool that asks what coverage you have now, which prescriptions and doctors matter to you, and tells you whether a closer look is likely to be worth your time. It does not pick a plan and neither does this article — plan comparison belongs on Medicare.gov, where the formularies and networks are current.

If you want a person, ask for a callback. No obligation, no cost to talk, and no assessment to complete first.

This article is general educational information. It is not advice, an offer of coverage, or a determination of eligibility or enrolment status. We are not connected with or endorsed by the United States government, the Centers for Medicare & Medicaid Services, or the Social Security Administration. Plan availability, costs, formularies and networks vary by location and change each year.