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Coverage Options
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Important Points
Consider your healthcare needs and financial situation to choose the coverage option that best suits your needs.
There are three general coverage options when it comes to your overall Medicare Coverage.
You can choose any of these three options with or without prescription drug coverage.
So you took your first step. You now have Medicare Part A & Part B, and the Social Security office has sent out your Medicare card. So what's next?
At this point, you will want to explore additional coverage to fill in the gaps that are not covered by Medicare Part A and Part B. Some of these options are free while others will add an additional premium. Make sure to evaluate your financial situation when choosing expanded coverage. In this article we will discuss the three major coverage options to complete your Medicare package. Let's take a look at them:
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Original Medicare
If you have Medicare Part A & Part B, you have Original Medicare. These two "parts" are the foundation of your Medicare coverage. Part A covers your hospital and inpatient needs and Part B covers your doctor and outpatient needs, including preventative care.
Benefits of Original Medicare
Original Medicare is very portable. By choosing this option you will be able to see any doctor in the U.S. that accepts Medicare. Other forms of coverage will sometimes limit you to getting your care in a certain "service area," but with Original Medicare you can go anywhere in the United States.
Additionally, Original Medicare is normally the least expensive option of your three choice (unless you find a suitable Medicare Advantage plan at no cost).
Drawbacks of Original Medicare
The biggest drawback of choosing Original Medicare is the 20% co-insurance that is attached to Medicare Part B. This means that for any doctor visit or outpatient procedure you will owe 20% of the bill every time. For example, if an MRI costs $10,000, you will be on the hook for $2,000. Additionally, there is no maximum out-of-pocket limit for the year, so there is no point where the insurance is going to take over and pay 100%. You will always have a 20% co-insurance share.
Cost of Original Medicare
Most people will have cost-free Medicare Part A. As long as you or your spouse have contributed 10 working years (40 quarters) paying into the Medicare program through your payroll taxes, Part A will be cost free. On the other hand, Part B does have a premium. In 2025, the standard premium is $174.70 per month. This covers most Medicare beneficiaries, but if you have a high income you may also be subject to an IRMAA surcharge.
Each year the Medicare program will adjust it's standard Part B premium, so this number may slowly increase over time. Also, there are penalties for not enrolling in Part B when you are first eligible. We always advise that you enroll in Part B as soon as possible to avoid any penalties. Part A & B are a precursor to obtaining the other two options for coverage, so regardless, you will need Part B.
Can I add prescription drug coverage?
Yes. You can add prescription drug coverage by purchasing a separate Part D prescription drug plan. The cost of these plans can vary, but the average cost is around $55 per month. This will be in addition to your Part B premium.
Part D also has a penalty if you do not enroll when you are first eligible. The penalty is only triggered once you finally do enroll in a Part D plan, but the longer you go without one, the larger the penalty gets. We always advise getting a Part D prescription plan as soon as you are eligible in order to avoid the penalties later on. Even if you are healthy now, you may need prescription medication later in life as you age.
Medicare Advantage
The first option you have to help eliminate the 20% Part B coinsurance is through a Medicare Advantage plan. A Medicare Advantage plan rolls all of your coverage into one plan. They are offered by private insurance companies, but must be approved by the Medicare program. Additionally, they typically offer a lot of extra benefits that Original Medicare does not. These can include things like dental, vision, hearing, chiropractic, gym memberships, transportation, etc.
Benefits of Medicare Advantage
The largest benefit of having a Medicare Advantage plan is that it limits your financial liability. Instead of always paying 20% for procedures under Medicare Part B, you will have a copay or coinsurance amount for different appointments and procedures. For example, you might have a $15 copay to see a specialist or a $100 copay to have an MRI. You will never be liable for a full 20% of the bill. Your Summary of Benefits will break down how much of a copay your are responsible for whenever you need to use your coverage.
Additionally, there is a limit to how much you have to pay out of pocket each year. They call this the maximum out-of-pocket limit. If at any time during the year all of the copays you paid out for various procedures reach the out-of-pocket limit, your plan will pay 100% for the remainder of the calendar year.
Finally, many Medicare Advantage Plans come with extra benefits not included in Original Medicare. These can include things like hearing, vision, dental, meals, transportation, gym memberships, and more.
Drawbacks of Medicare Advantage
The biggest drawback of choosing Medicare Advantage is that it generally limits your use of medical services to a certain "service area." Your service area is typically a handful of counties that surround your physical address, but in some cases it could be the entire state you reside in. You will need to check your Summary of Benefits to see where your service area is.
Cost of Medicare Advantage
Here's some good news! Some Medicare Advantage plans have a small monthly premium (on top of your Part B premium), but there are many Medicare Advantage plans that have no cost at all, and some that even give you money back.
If your Medicare Advantage plan has a monthly premium attached to it, you can expect to pay that premium on top of the Part B premium you are already paying. The Part B premium must always continue to be paid since it is a condition of getting a Medicare Advantage plan. If you stop paying your Part B premium for any reason, you will be disenrolled from your Medicare Advantage plan.
If you Medicare Advantage plan is one of the many available that have no charge, you won't see any change to what you are paying. You will continue to pay your Part B premium and the Medicare Advantage plan will cost nothing.
In some cases, a Medicare Advantage plan will even pay you! This is called a Part B giveback. Most plans that have a Part B giveback and typically plans that do not cover prescription drugs, but sometimes you can find a plan that covers prescriptions and gives a Part B giveback.
Here's how it works - If a plan has a $100 Part B giveback, the money will be applied toward your Part B premium. If you were currently having the $174.70 Part B premium deducted from your Social Security check, you will now only see $74.70 deducted from your check, freeing up $100 for you. If you are direct billed for your Part B premium, you will see the bill reduced by $100 per month.
Can I add prescription drug coverage?
Yes - and it's easy! There are a ton of Medicare Advantage plans that include prescription drug coverage at NO EXTRA COST. It is included in the Medicare Advantage plan and there is no need to buy a separate Part D prescription drug plan. This makes it a great way to cover the gaps in your Part B and avoid having a Part D premium with no penalty.
There are two main types of Medicare Advantage plans: (MA) Medicare Advantage only & (MAPD) Medicare Advantage with prescription drugs. An MAPD plan satisfies your Part D requirement with no extra cost. It also prevents you from having the Part D penalty.
Medicare Supplement Plan (Medigap Insurance)
A Medicare Supplement Plan, also known as, Medigap Insurance is a separate insurance policy that covers various gaps in Part A & Part B. Some plans cover a portion of the gaps while others virtually cover all of them. They are sold through private insurance companies and act as secondary insurance. For instance, if you have a Medigap plan, Part A & B will cover your initial costs and your Medigap plan will cover the rest (depending on the specific plan you have). Medigap plans do not cover prescription drugs. You must have Part A & Part B in order to purchase a Medigap plan. This is typically the most expensive option, but may have the ability to cover your healthcare fully.
Benefits of Medigap
Medigap plans cover some or all of the 20% coinsurance that you have on Part B. Imagine if you had a $300,000 heart surgery. In this example, Part A & B would cover $240,000 and your Medigap plan would cover the $60,000 that you would have been responsible for if you just had Original Medicare.
And just like Original Medicare, a Medigap plan is extremely portable. You can use it with any doctor in the U.S. that accepts Medicare. There is no need to be limited to a specific service area. This could allow you to see some of the best specialists in the country if you have a major health issue.
Drawbacks of Medigap
The major drawback of a Medigap plan is that they do not cover prescription drugs, which means you would need to also purchase a separate Part D prescription drug plan. Additionally, they can be expensive and tend to go up in price every year as you age. The only time that you are guaranteed to be approved for a Medigap plan is during your initial enrollment period when you turn 65. If you want one later, you can apply for one, but the insurance company will underwrite the policy based on your age and your health conditions and possibly deny the application.
Cost of Medigap
When you choose Medigap Insurance you will have 2, and possibly 3 different premiums you need to pay. First, you must continue to pay your Part B premium. Second, you must pay the premium for your Medigap plan, which can be anything from around $75 up to $500+ per month. This premium will increase each year as you age, so making a sound financial plan around it would be wise. And finally, if you choose to get prescription coverage, you will need to purchase a separate Part D prescription drug plan. These plans vary in cost, but the average plan is around $55 per month.
Here's how it looks: Part B premium + Medigap Premium + Part D premium
Many people who take this route can end up paying well over $500 a month for their coverage.
Can I add prescription drug coverage?
No. Medigap plans never cover prescription drugs. If you want prescription drug coverage you will need to purchase a separate Part D prescription drug plan.
As you can see, there are many different options for your coverage. By considering your healthcare needs and financial situation we can help you navigate which coverage option may be best for you.
Key Points
Original Medicare has a 20% Part B co-insurance, and there is no limit on the amount you are liable for out-of-pocket.
A Medicare Advantage plan can help cover the gaps and provide prescription drug coverage included at no extra cost.
A Medicare Supplement plan can potentially cover all of the gaps, ensuring that you never have to worry about a medical bill.
At Mohring Insurance Services LLC, we are happy to offer assistance with Medicare when you choose to enroll. Give us a call at (866) 440-1885, or to schedule a free consultation, click the link below:
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Rates are reviewed periodically and are subject to change in your state.
Cost Estimates are based on the information entered, using data about past experiences by beneficiaries with similar attributes and the premiums and benefits provided by the plan. Actual costs may vary. Monthly medical costs are represented by annual figures divided evenly per month.
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