Medicare: Parts A, B, C, D, Medigap — How to Choose the Right Coverage
Medicare isn't free and it doesn't cover everything. Part A has deductibles and coinsurance. Part B has monthly premiums. Understanding the alphabet soup of Medicare options can save you thousands.
Medicare is federal health insurance for people 65 and older, as well as younger individuals with certain disabilities or end-stage renal disease. It is not free — it includes premiums, deductibles, and coinsurance that vary by part and plan. Most people enroll in Original Medicare (Parts A and B) and then choose between adding Medigap plus Part D or switching to Medicare Advantage (Part C). The choice you make affects your out-of-pocket costs, provider access, and coverage for years to come. Compare Medicare to private health insurance →
Real-world example: Original Medicare + Medigap Plan G + Part D: monthly = $174.70 (Part B) + $150 (Plan G) + $40 (Part D) = $365/month. Out-of-pocket: Part B deductible only ($240/year). Everything else covered. Compare to Medicare Advantage $0 premium: doctor copays $20-50, specialist $50, hospital $395/day, max out-of-pocket $8,300. Original + Medigap = predictable costs. Advantage = lower premium, higher risk.
Part A — Hospital Insurance
Part A covers inpatient hospital stays, skilled nursing facility care, hospice care, and home health services. Most people get Part A premium-free if they or their spouse paid Medicare taxes for at least 10 years (40 quarters). The Part A deductible is $1,632 per benefit period in 2024. A benefit period begins when you enter a hospital and ends after you have been out for 60 consecutive days. Coinsurance costs: days 1-60 are $0 after the deductible, days 61-90 cost $408 per day, and days 91 and beyond (lifetime reserve of 60 days) cost $816 per day. There is no out-of-pocket maximum for Part A.
Part B — Medical Insurance
Part B covers doctor visits, outpatient care, preventive services, durable medical equipment, and ambulance services. Unlike Part A, Part B requires a monthly premium — $174.70 per month in 2024 for most beneficiaries (higher for high-income earners via Income-Related Monthly Adjustment Amount). The annual deductible is $240 in 2024. After the deductible is met, you typically pay 20% coinsurance of the Medicare-approved amount for most services with no cap on out-of-pocket costs. Part B is optional but most people enroll when first eligible because delaying enrollment results in a late enrollment penalty of 10% of the premium for each 12-month period you could have had Part B but did not enroll.
Part C — Medicare Advantage
Medicare Advantage (Part C) is a private insurance alternative to Original Medicare. These plans combine Part A, Part B, and usually Part D into a single plan with network-based coverage (HMO, PPO, PFFS). Many plans offer $0 monthly premiums but require copays for doctor visits ($20-50), specialist visits ($50), and hospital stays ($300-400 per day). Part C plans have an out-of-pocket maximum ($8,300 in 2024 for in-network services) which Original Medicare lacks. They often include additional benefits like dental, vision, and hearing that Original Medicare does not cover. The trade-off: you are restricted to the plan's network of doctors and hospitals. Factor Medicare costs into your retirement plan →
Part D — Prescription Drug Coverage
Part D provides prescription drug coverage through private insurance plans. Monthly premiums vary by plan, typically $30-120. The maximum deductible is $545 in 2024. The coverage gap (donut hole) begins after $5,030 in total drug costs: you pay 25% of drug costs until you reach the catastrophic threshold of $8,000 in out-of-pocket costs. After that, you pay the greater of 5% or a small copayment. Part D has a late enrollment penalty: 1% of the national base beneficiary premium ($34.70 in 2024) for each month you delay enrollment beyond your Initial Enrollment Period. Coordinate Medicare with Social Security →
Medigap — Medicare Supplement Insurance
Medigap policies fill the gaps in Original Medicare — deductibles, coinsurance, and copayments. There are 10 standardized plans (A, B, C, D, F, G, K, L, M, N) offered by private insurers. Plan G is the most popular choice because it covers the Part A deductible, Part B coinsurance, and Part B excess charges, leaving you only responsible for the Part B deductible ($240/year). Monthly premiums range from $100-300 depending on your age, location, and plan. The best time to buy is during the Medigap Open Enrollment Period — 6 months starting when you are 65 or older and enrolled in Part B. During this period, insurers cannot deny you coverage or charge higher premiums for pre-existing conditions. Long-term care coverage options →
What is the difference between Medicare and Medicare Advantage?
Original Medicare (Parts A and B) is administered by the federal government and allows you to see any doctor or hospital that accepts Medicare nationwide — no network restrictions. Medicare Advantage (Part C) is offered by private insurance companies and has network limitations (HMO or PPO). Original Medicare has no out-of-pocket maximum, meaning your 20% Part B coinsurance has no cap. Medicare Advantage has a maximum out-of-pocket limit ($8,300 in 2024). Medicare Advantage often includes extra benefits like dental and vision but requires prior authorization for many services. The choice depends on your health needs, budget, and desire for provider flexibility.
Is Medigap worth it?
Medigap is worth it if you want predictable health care costs in retirement and can afford the monthly premium. Plan G costs $100-300/month but covers almost all out-of-pocket costs except the Part B deductible. If you have chronic conditions, see specialists frequently, or want the freedom to see any Medicare-accepting provider, Medigap provides peace of mind. If you are generally healthy, do not mind network restrictions, and want to save on premiums, Medicare Advantage may be more cost-effective. Consider that once you leave the Medigap Open Enrollment window, you may face medical underwriting and could be denied coverage or charged higher premiums.
When should I enroll in Medicare?
Your Initial Enrollment Period (IEP) is a 7-month window: 3 months before the month you turn 65, the month of your birthday, and 3 months after. Enrolling during this window avoids late enrollment penalties. If you are still working and have employer coverage at 65, you can delay Part B without penalty as long as you have creditable coverage. You get a Special Enrollment Period to enroll later without penalty. For Part D, you must enroll when first eligible or pay a penalty unless you have creditable prescription drug coverage. If you miss your IEP, the General Enrollment Period runs January 1 to March 31 each year, with coverage starting July 1, and you may pay higher premiums permanently.
Does Medicare cover dental and vision?
Original Medicare (Parts A and B) does not cover routine dental care (cleanings, fillings, extractions, dentures) or routine vision care (eye exams for glasses, contact lenses). Medicare covers dental only when it is part of a covered medical procedure (e.g., jaw surgery). Vision is covered only for medical eye conditions like cataracts or glaucoma. Medicare Advantage plans often include routine dental and vision benefits, but coverage levels vary significantly by plan. Standalone dental and vision insurance or discount plans are available to supplement Original Medicare. Many retirees budget $500-1,000 per year for dental and vision costs not covered by Medicare.