If you're new to Medicare, the alphabet soup of Part A, Part B, Part C, Part D, and Medigap can feel completely overwhelming. You're not alone. Most people approaching 65 have heard of Medicare but have no idea how the pieces fit together or what choices they actually need to make.
This guide breaks down every Medicare option in plain English. By the end, you'll understand exactly what's available, how the different parts work together, and the two main paths you can choose from. No jargon, no sales pitch, just the facts you need.
★ Key Takeaway
Medicare comes down to one big choice: Original Medicare with a Medigap supplement, or Medicare Advantage. Everything else (Parts A, B, and D) fits into one of these two paths. Understanding this framework makes all other Medicare decisions easier.
What Is Original Medicare?
Original Medicare is the traditional Medicare program run directly by the federal government. It's been around since 1965 and is what most people think of when they hear "Medicare."
Original Medicare has two parts:
Part A: Hospital Insurance
Part A covers inpatient care when you're admitted to a hospital. It also covers:
- Skilled nursing facility care (after a hospital stay)
- Hospice care
- Some home health care
Cost: Most people pay $0 for Part A if they (or their spouse) paid Medicare taxes for at least 10 years while working. There's a $1,676 deductible per benefit period in 2025.
Part B: Medical Insurance
Part B covers outpatient care, which is everything that doesn't require hospital admission:
- Doctor visits
- Lab tests and diagnostic imaging
- Outpatient surgery
- Preventive services (many covered at 100%)
- Durable medical equipment
- Mental health services
Cost: The standard Part B premium is $185/month in 2025. There's also an annual deductible of $257, after which Medicare pays 80% of approved costs and you pay 20%.
The 20% Problem
Original Medicare has no out-of-pocket maximum. That 20% coinsurance is unlimited. A $500,000 hospital bill would leave you owing $100,000. This is why most people with Original Medicare add supplemental coverage (Medigap). For more details, see our Medicare Parts Explained guide.
What Is Medigap (Medicare Supplement Insurance)?
Medigap policies are private insurance plans that fill the "gaps" in Original Medicare coverage. They're specifically designed to cover costs that Original Medicare doesn't pay, like deductibles and that 20% coinsurance.
How Medigap Works
When you have a Medigap policy alongside Original Medicare:
- You receive medical care from any provider that accepts Medicare
- Medicare pays its share (typically 80%)
- Your Medigap plan automatically pays some or all of the remaining costs
Medigap Plan Options
Medigap plans are standardized by the federal government and labeled with letters (A, B, C, D, F, G, K, L, M, N). Each letter covers the same benefits no matter which insurance company sells it. The main differences between companies are price and customer service.
Most popular plans: Plan G and Plan N offer the best balance of coverage and cost for most people. Plan G covers nearly everything except the Part B deductible ($257/year). Plan N has lower premiums but includes small copays for some services.
Medigap Has a Limited Enrollment Window
Your best opportunity to buy Medigap is during your 6-month Medigap Open Enrollment Period, which starts when you turn 65 AND have Part B. During this window, insurance companies cannot deny you coverage or charge more due to health problems. Miss it, and you may face medical underwriting.
What Is Medicare Advantage (Part C)?
Medicare Advantage is an alternative way to get your Medicare benefits. Instead of getting Parts A and B through the government, you get all your coverage through a private insurance company.
How Medicare Advantage Works
When you enroll in a Medicare Advantage plan:
- You still pay your Part B premium to Medicare
- Medicare pays the insurance company a fixed amount per month for your care
- The insurance company provides all your Part A and Part B benefits
- Most plans include Part D (drug coverage) built in
- Many plans add extra benefits like dental, vision, and hearing
Medicare Advantage Trade-offs
Medicare Advantage plans often have $0 monthly premiums and include extras that Original Medicare doesn't cover. However, there are important trade-offs:
- Network restrictions: Most plans limit you to specific doctors and hospitals
- Prior authorization: The plan may require approval before certain treatments
- Out-of-pocket costs: You pay copays and coinsurance for services, up to an annual maximum (up to $8,850 in 2025)
- Geographic limits: Coverage may be limited when traveling
For a detailed comparison, see our guide on Medigap vs Medicare Advantage.
What Is Part D (Prescription Drug Coverage)?
Medicare Part D is prescription drug coverage. Original Medicare (Parts A and B) doesn't cover most outpatient prescription drugs, so you need Part D if you want drug coverage.
Two Ways to Get Part D
- Standalone Part D plan: If you have Original Medicare + Medigap, you add a separate Part D plan for drugs
- Medicare Advantage with drug coverage (MA-PD): Most Medicare Advantage plans include Part D automatically
Part D Basics
All Part D plans have the same basic structure:
- Monthly premium: Varies by plan (some as low as $0)
- Annual deductible: Up to $590 in 2025
- Copays/coinsurance: Varies by drug tier
- Out-of-pocket cap: $2,000 maximum in 2025 (this is new starting in 2025)
Important: Part D Has a Late Penalty Too
If you go 63+ days without Part D or "creditable" drug coverage, you'll pay a permanent late enrollment penalty when you do enroll. Even if you don't take medications now, consider enrolling to avoid penalties later.
The Two Main Medicare Paths
Now that you understand the individual pieces, here's how they fit together. You essentially have two main options:
| Feature | Path 1: Original Medicare + Medigap | Path 2: Medicare Advantage |
|---|---|---|
| Coverage Source | Government (Parts A & B) + Private Medigap | Private insurance company |
| Monthly Cost | Part B premium + Medigap premium + Part D premium | Part B premium + plan premium (often $0) |
| Doctor Choice | Any doctor that accepts Medicare (nationwide) | Usually limited to plan network |
| Out-of-Pocket Costs | Predictable (most costs covered by Medigap) | Copays for services up to annual max |
| Prior Authorization | Rarely required | Often required for procedures/specialists |
| Drug Coverage | Add separate Part D plan | Usually included |
| Extras (Dental, Vision) | Not included (buy separately) | Often included |
| Best For | Those who want maximum flexibility and predictable costs | Those who want lower premiums and are comfortable with networks |
This Is a One-Way Decision (Sort Of)
You can switch from Original Medicare to Medicare Advantage relatively easily each year. However, switching FROM Medicare Advantage back to Original Medicare + Medigap can be difficult. After your initial enrollment window, you may face medical underwriting for Medigap and could be denied or charged more due to health conditions.
Medicare Savings Programs (For Those Who Qualify)
If you have limited income and resources, several programs can help pay for Medicare costs:
Medicare Savings Programs (MSP)
These state-administered programs help pay Medicare premiums and sometimes deductibles:
- QMB (Qualified Medicare Beneficiary): Pays Part A premium, Part B premium, deductibles, coinsurance, and copays
- SLMB (Specified Low-Income Medicare Beneficiary): Pays Part B premium only
- QI (Qualifying Individual): Pays Part B premium only
- QDWI (Qualified Disabled Working Individual): Pays Part A premium only
Extra Help (Part D Low-Income Subsidy)
If you qualify, Extra Help can pay most of your Part D premium, deductible, and copays for prescription drugs. The savings can be worth thousands of dollars per year.
For more details on these programs, see our guide on Medicare Assistance Programs.
How to Get Help Deciding
Understanding your options is one thing. Choosing between them is another. Here are your resources:
Free Resources
- SHIP counselors: Every state has a State Health Insurance Assistance Program offering free, unbiased counseling. Find yours at shiphelp.org
- Medicare.gov: The official Medicare site has plan comparison tools and educational resources
- 1-800-MEDICARE: Call the official Medicare helpline (1-800-633-4227)
Professional Help
- Insurance agents/brokers: Licensed professionals who can help you enroll in plans (they earn commissions from insurance companies)
- Fee-only Medicare advisors: Independent consultants who charge a fee for advice and don't earn commissions (like us)
For more guidance on finding help, read our posts on how to choose the right Medicare plan and help selecting a Medicare plan.
📋 The Bottom Line
Medicare has a lot of moving parts, but it comes down to a fundamental choice: Original Medicare with Medigap (maximum flexibility, predictable costs) or Medicare Advantage (lower premiums, extra benefits, but networks and restrictions). Everything else, including Part D, builds on top of that foundation.
Your Next Steps
Now that you understand the basics, here's how to move forward:
- Learn more about the parts: Our Medicare Parts Explained guide goes deeper into Parts A, B, C, and D
- Understand enrollment timing: Read our Turning 65 Medicare Guide to know when to sign up
- Compare the two paths: Our Medigap vs Medicare Advantage guide helps you evaluate which path fits your situation
- Get personalized help: Schedule a free consultation to discuss your specific situation
Need Personalized Help?
Everyone's Medicare situation is different. If you'd like to talk through your specific options with someone who doesn't sell insurance or earn commissions, we offer free initial consultations. Learn more about our Medicare consulting services.