Medicare is not one plan — it’s a system of parts, gaps, deadlines, and private insurance options that interact in ways nobody explains until you’ve already made a mistake you can’t easily fix. This guide covers what each option costs right now, what each one leaves uncovered, and which combination fits your specific situation.
These are the questions that keep seniors up at night — or should. Read these before you talk to any insurance agent or make any enrollment decision.
No — you cannot have both simultaneously, and it’s illegal for an agent to sell you a Medigap policy while you’re enrolled in Medicare Advantage. These are two completely different approaches. Medigap (also called Medicare Supplement) sits on top of Original Medicare and pays the costs Medicare doesn’t — deductibles, coinsurance, copays. You keep full Medicare benefits and can see any doctor nationwide who accepts Medicare. Medicare Advantage replaces Original Medicare entirely — a private insurer manages your care within a network, often adding dental, vision, and drug coverage. The decision between these two paths is the most consequential insurance choice most seniors make, and switching from Medicare Advantage back to Medigap later is not guaranteed — insurers can deny you coverage based on health history outside your initial enrollment window.
Original Medicare (Parts A and B) covers hospital care, doctor visits, outpatient services, lab tests, durable medical equipment, and some home health care. What it leaves out — and this is the part most people don’t learn until they get a bill — is significant. Original Medicare has no annual out-of-pocket maximum. A serious illness or extended hospital stay can expose you to unlimited costs. It doesn’t cover dental care, routine vision, hearing aids, or most long-term care. The Part A hospital deductible is $1,736 per benefit period (not per year — it can reset with each new hospitalization). The Part B deductible is $283 annually, after which Medicare pays 80% and you owe 20% — on every covered service, with no cap. That 20% on a major surgery can be devastating without supplemental coverage.
Plan G is the most popular Medigap plan for new Medicare enrollees as of mid-2026, having replaced Plan F after Plan F was closed to people becoming Medicare-eligible on or after January 1, 2020. Plan G covers everything Original Medicare doesn’t pay — with one single gap: the annual Part B deductible of $283. After you meet that, Medicare and Plan G cover 100% of your approved costs. Average premiums at age 65 run $120–$200 per month depending on your state, gender, and insurer. Plan N is the budget alternative — it costs $40–$80 less per month than Plan G but adds $20 copays for office visits, $50 copays for emergency room visits, and does not cover Part B excess charges (what a doctor can legally bill above Medicare’s approved rate). For healthy seniors who see doctors infrequently and stick to Medicare-assignment providers, Plan N often wins the math.
The average Medicare Advantage premium is $14 per month nationally — and many plans do charge $0. But “premium” is only one cost component. You still pay your Part B premium of $202.90 per month regardless of which plan you choose. More importantly, Medicare Advantage plans have copays, coinsurance, and network restrictions that determine your actual out-of-pocket costs when you use care. The in-network out-of-pocket maximum is $9,250 per year — meaning you could potentially owe that much in a bad health year before coverage kicks in at 100%. The $0 premium is not the same as $0 cost. Compare plans on total potential annual exposure, not just monthly premium, and always verify your specific doctors and hospitals are in the plan’s network before enrolling.
Something genuinely significant happened to Medicare Part D, thanks to the Inflation Reduction Act of 2022. As of 2025, Part D gained a hard out-of-pocket cap on covered prescription drugs — previously there was no cap at all, and some seniors with expensive medications owed tens of thousands of dollars per year. For 2026, that cap sits at $2,100. Once your out-of-pocket spending on covered drugs reaches $2,100, you pay $0 for the rest of the year. The Part D standard deductible is $615. Additionally, Medicare can now negotiate prices directly with drug manufacturers for selected high-cost drugs — the first negotiated prices take effect in 2026 on a list of drugs including widely used medications for diabetes, heart disease, and blood clots. The eliminated “donut hole” coverage gap and the new $2,100 cap are the biggest favorable changes to drug coverage in Medicare’s history.
IRMAA stands for Income-Related Monthly Adjustment Amount — a surcharge added to your Part B and Part D premiums if your income exceeds certain thresholds. It applies to roughly 7–8% of Medicare enrollees, based on your tax return from two years prior. For 2026, IRMAA kicks in at $109,000 of modified adjusted gross income for single filers (up from $106,000 in 2025) and $218,000 for married couples filing jointly. If your income exceeds those amounts, your Part B premium could range from $284.10 to $689.90 per month depending on your income tier, rather than the standard $202.90. Part D carries an additional surcharge of $14.50 to $91.00 per month. If your income dropped significantly recently — due to retirement, a spouse’s death, or other life events — you can appeal IRMAA using Form SSA-44 to have it recalculated based on current, lower income.
Medicare enrollment deadlines are strict and the penalties for missing them are permanent. Your Initial Enrollment Period (IEP) runs for seven months: the three months before your 65th birthday month, your birthday month, and three months after. If you delay Part B enrollment without qualifying coverage through an employer, you pay a 10% penalty added permanently to your Part B premium for every 12-month period you went without it. Part D late enrollment carries a similar lifelong premium penalty. For Medigap specifically: your six-month Medigap Open Enrollment Period starts the month you turn 65 AND are enrolled in Part B — during this window, no insurer can deny you coverage or charge you more based on health history. Once this window closes, you lose that guaranteed-issue protection and can be turned down or charged more for pre-existing conditions.
Not necessarily — and this is where people make expensive mistakes in both directions. If you are covered by employer health insurance through your own job (or your spouse’s job) at a company with 20 or more employees, you can delay Medicare Parts B and D without penalty. Your employer plan is considered primary coverage. However: if you work for a company with fewer than 20 employees, Medicare becomes primary even if your employer offers insurance — delaying Part B in that situation does trigger the penalty. COBRA coverage does not count as employer-based coverage for this purpose. Once you stop working or lose employer coverage, you have an eight-month Special Enrollment Period to sign up for Part B penalty-free. Do not rely on a drug plan from COBRA or retiree coverage as your sole protection — always verify with Medicare or a SHIP counselor before delaying.
Medicare is not one plan with one premium. It’s four parts that work together — or separately — depending on which coverage path you choose. These are the official numbers from the Centers for Medicare & Medicaid Services (CMS).
| Part | What It Covers | Premium | Deductible / Cost-Sharing | Key Gap |
|---|---|---|---|---|
| Part A — Hospital | Inpatient hospital, skilled nursing, hospice, some home health | $0 for most | $1,736 per benefit period · $434/day days 61–90 · $217/day SNF days 21–100 | Deductible resets per BENEFIT PERIOD — not calendar year |
| Part B — Medical | Doctor visits, outpatient care, lab tests, preventive care, durable medical equipment | $202.90/mo standard | $283 annual deductible · then 20% coinsurance — no cap | No out-of-pocket maximum; 20% coinsurance on all covered services |
| Part C — Medicare Advantage | Replaces A + B; usually adds Part D and extras (dental, vision, hearing) | Avg $14/mo + $202.90 Part B | Varies by plan · in-network OOP max $9,250 | Network restrictions; prior authorization requirements; plan can exit your area |
| Part D — Drugs | Prescription drugs through private plan formularies | Varies by plan ($0–$100+/mo) | $615 standard deductible · $2,100 OOP cap on covered drugs | Formulary changes annually; your drug may be dropped or moved to higher tier |
| Medigap (Supplement) | Pays costs Original Medicare leaves — deductibles, coinsurance, copays | Avg $149.50/mo (varies widely by plan/age) | Plan G: only gap is $283 Part B deductible · Plan N: adds copays | No drug coverage; no dental/vision; not usable with Medicare Advantage |
Medigap plans are sold by private insurance companies but are federally standardized — meaning a Plan G from Humana covers exactly the same services as a Plan G from Aetna or AARP/UnitedHealthcare. The only differences between companies are price, customer service, and pricing structure over time. Shop on all three.
Plan G covers everything Original Medicare doesn’t pay, with one predictable exception: the annual Part B deductible of $283. Pay that once in January, and after that, Medicare and Plan G together cover 100% of all Medicare-approved costs for the rest of the year. No surprise bills. No 20% coinsurance on a $40,000 surgery. No Part A hospital deductible on a second stay. This predictability is what you’re paying for. Plan G also covers foreign travel emergency care at 80% (after a lifetime deductible of $250), which Original Medicare and Medicare Advantage typically do not cover abroad. Average monthly premium at age 65 is approximately $165 nationally, but ranges significantly by state, gender, tobacco use, and the insurer’s pricing method. Get at least three quotes for the same plan letter in your area — premiums for identical Plan G coverage can vary by $60–$100 per month between carriers. Use medicare.gov/find-a-plan or call 1-800-MEDICARE (1-800-633-4227) for free comparisons.
Plan N covers almost everything Plan G covers, with three differences that matter: you pay up to $20 per office visit, up to $50 per emergency room visit (waived if you’re admitted), and you are responsible for Part B excess charges — the amount some doctors bill above Medicare’s approved rate when they opt out of Medicare assignment. In most of the country, excess charges are rare because most doctors accept Medicare assignment. The math favors Plan N if you have fewer than roughly 6–8 doctor visits per year and consistently use Medicare-assignment providers. A $100/month premium savings over Plan G adds up to $1,200 per year — likely more than most healthy seniors’ annual copays. Verify before enrolling whether your specific doctors accept Medicare assignment; this is the single most important Plan N check.
High-Deductible Plan G has the same eventual coverage as standard Plan G but requires you to meet a $2,950 annual deductible before the plan starts paying. The trade-off is a dramatically lower monthly premium — typically $40–$90 per month at age 65, depending on your state. Once you meet the deductible, the same comprehensive Plan G coverage kicks in. This plan makes financial sense if you are healthy, rarely need care, and can afford to absorb up to $2,950 in a bad year without financial hardship. It works like a high-deductible health plan structure that many working-age adults are familiar with. Pair it with a Medicare Savings Account strategy if you’re financially organized. This is not the right choice if a $2,950 bill would be a true hardship — standard Plan G’s predictability is worth more than the premium savings in that case.
Medigap premiums are set using one of three rating methods that dramatically affect how much your premium increases over time. Attained-age pricing (used by AARP/UnitedHealthcare and many others) means your premium increases each year as you get older — a plan starting at $177/month at 65 may cost $250+ at 75. Issue-age pricing sets your premium based on the age you are when you first buy the plan; it doesn’t increase with age. Community-rated pricing charges everyone the same premium regardless of age. Issue-age and community-rated plans typically start higher but stay more stable over decades. Ask specifically about rating method before purchasing — this is often not volunteered, and a 20-year cost projection looks very different depending on the method used.
Medicare Advantage now covers more than half of all eligible Medicare beneficiaries — a milestone crossed recently. The reasons people choose it are real: $0 or low premiums, bundled drug coverage, dental and vision benefits that Original Medicare doesn’t touch. But so are the trade-offs, and understanding those before enrolling matters enormously.
Medicare Advantage fills three gaps that Original Medicare ignores: dental coverage (cleanings, X-rays, sometimes major work), routine vision care and eyeglasses, and hearing aids. For seniors living on Social Security who can’t budget an extra $150/month for Medigap plus separate dental and vision plans, a $0-premium Medicare Advantage plan that bundles all of these into one card is a real financial relief. The $9,250 in-network out-of-pocket maximum also provides protection that Original Medicare without Medigap entirely lacks — for someone who can’t afford a Medigap premium, Medicare Advantage’s cap is significantly better than no cap at all. Many plans add over-the-counter allowances, transportation to appointments, meal delivery after hospital discharge, and SilverSneakers gym memberships — extras that matter in daily life for people on fixed incomes.
Medicare Advantage plans restrict you to a network of doctors and hospitals. If your preferred specialist isn’t in the plan’s network, you pay full price out of pocket or find a new specialist. Many services — including certain surgeries, cancer treatments, and specialist referrals — require prior authorization, a process that can delay care by days or weeks. Plans can and do change their provider networks, drug formularies, and cost-sharing structures every January, requiring annual review. The most consequential risk: if you later decide Medicare Advantage isn’t working for you and want to switch to Original Medicare with Medigap, you lose the guaranteed-issue protections you had at age 65. Insurers in most states can deny you a Medigap policy or charge you substantially more based on your health history. This asymmetry — easy to get into, hard to get out of — is the single most important thing to understand before choosing Medicare Advantage.
Part D is the most misunderstood component of Medicare because it changes the most, both in plan structure and in what it costs you personally. Two things that are genuinely better than they used to be — and one thing that still catches people every year.
The Inflation Reduction Act eliminated what used to be called the “donut hole” — a coverage gap where seniors paid dramatically more for drugs after crossing a spending threshold. That’s gone. In its place is a streamlined benefit with a $615 deductible, then cost-sharing until you hit $2,100 in out-of-pocket spending on covered drugs — after which you pay $0 for the remainder of the year. Medicare also now negotiates prices directly with manufacturers on selected high-cost drugs, with the first negotiated prices applying in 2026 to drugs including medications for blood clots, diabetes, and arthritis. The Medicare Prescription Payment Plan lets you spread out-of-pocket drug costs across monthly installments throughout the year instead of facing large lump sums at the pharmacy in January. This is opt-in — you must request it. The thing that still catches people annually: formularies change every January. A drug covered this year may be dropped, moved to a higher cost tier, or require prior authorization next year. Review your plan’s Annual Notice of Change every fall and compare plans during open enrollment (October 15 – December 7) to confirm your medications are still covered at the same tier.
This is the clearest case for Original Medicare plus Medigap Plan G. Chronic illness — heart disease, diabetes, kidney disease, cancer — means frequent specialist visits, lab tests, imaging, and potentially hospitalizations. With Original Medicare and Plan G, you can see any doctor or specialist who accepts Medicare anywhere in the country, without referrals, without network checks, without prior authorization for most services. After paying the $283 annual Part B deductible, your share is zero on all Medicare-approved costs for the rest of the year. The predictability matters enormously when you’re managing an expensive, ongoing condition. Add a Part D plan to cover prescriptions. Your total monthly cost will be higher than Medicare Advantage, but your total annual cost in a serious health year may be considerably lower — and you’ll never be denied access to a specialist because they left the plan’s network in January.
Medicare Advantage is genuinely the right answer here — not just because it’s cheaper, but because it provides a protection that uninsured Original Medicare entirely lacks: an annual out-of-pocket cap. Without either Medigap or Medicare Advantage, Original Medicare’s 20% coinsurance with no ceiling is a financial exposure that a fixed income cannot absorb. A $0-premium Medicare Advantage plan with a $9,250 cap is meaningfully safer than Original Medicare alone. Also check whether you qualify for Medicare Savings Programs (MSPs), which are government programs that help pay Medicare premiums, deductibles, and sometimes copays for people at or near the poverty line. Four MSP levels exist — call your State Medicaid office or 1-800-MEDICARE to check eligibility. If you qualify for Extra Help, the Low Income Subsidy program dramatically reduces your Part D costs — many qualifying seniors pay $0 in premiums and minimal copays for prescriptions.
Original Medicare plus Medigap is the right choice. Medicare Advantage plans are geographically restricted to a service area — if you spend three months in Florida and nine months in Oregon, a plan built around one area’s provider network doesn’t work. Original Medicare covers you at any hospital or doctor who accepts Medicare anywhere in the country, which is the case at the vast majority of providers in every state. Medigap Plan G’s foreign travel emergency benefit also covers emergency care outside the U.S. at 80% (after a $250 lifetime deductible, up to a $50,000 lifetime limit) — something Medicare Advantage plans rarely provide when you’re outside the service area. If you split time between states: establish Medicare at your primary address and verify that your Medigap carrier is licensed in both states where you regularly receive care.
The $2,100 Part D out-of-pocket cap changed the calculation significantly. Under prior rules, seniors with high drug costs had no cap and could owe tens of thousands in drug costs annually. Now, your maximum exposure on covered drugs is $2,100 per year — after which you pay nothing for the rest of the year. The key phrase is “covered drugs.” If a drug is not on your specific plan’s formulary, it doesn’t count toward the cap and you pay out of pocket. During open enrollment each fall, use the Medicare Plan Finder at medicare.gov/plan-compare to enter your exact medications and dosages — the tool calculates your estimated annual drug cost across every Part D plan available at your zip code. This comparison can reveal differences of $1,000 or more per year between plans for identical medications. Always run this tool; never renew a Part D plan without checking whether a better option exists for your specific drug list.
Three months before your 65th birthday, your Initial Enrollment Period for Medicare opens. This is the most important window you have. Sign up for Part A immediately — it’s free for most people and there’s no reason to delay. Part B: sign up unless you have qualifying employer coverage from a job you’re still working. Do not assume retiree coverage, COBRA, or a spouse’s plan will protect you from Part B penalties — verify with Medicare specifically. During the three months before you turn 65 AND are enrolled in Part B, contact a SHIP counselor (free, unbiased, federally funded — find yours at shiphelp.org or 1-800-MEDICARE). They will walk you through your options for your specific situation, your state’s rules, and your health needs at no cost. Do not make Medigap or Medicare Advantage decisions without running your specific medications through the Medicare Plan Finder first.
This is possible but requires careful timing and realistic expectations about what it involves. You can switch from Medicare Advantage back to Original Medicare during Medicare’s Annual Enrollment Period (October 15 – December 7) or the Medicare Advantage Open Enrollment Period (January 1 – March 31). Returning to Original Medicare is straightforward. Getting a Medigap plan after that is the hard part. Outside of a guaranteed-issue window, Medigap insurers in most states can review your health history and decline your application — or approve you at significantly higher rates — for pre-existing conditions. A few states (New York, Connecticut, Massachusetts, and Maine) have year-round guaranteed-issue Medigap rules that protect you regardless of when you try to switch. If you live elsewhere, consult a SHIP counselor before attempting to switch — they can explain the medical underwriting rules in your specific state and the best strategy for your health situation.
This is one of the most financially painful gaps in American health coverage. The years between early retirement and Medicare eligibility at 65 require private health insurance, which often costs $700–$1,400 per month for an individual in their late 50s or early 60s. Your options: keep COBRA from your former employer (usually 18 months, at full premium cost plus 2%); shop the ACA marketplace at healthcare.gov for a subsidized plan (subsidies can be generous if your income is below 400% of the federal poverty level in retirement); or check your spouse’s employer plan if you’re married. COBRA’s premium shock surprises most early retirees — your employer was paying a large share while you were working, and COBRA requires you to pay the full group rate plus an administrative fee. Run an ACA marketplace comparison before defaulting to COBRA — at many income levels, a marketplace silver plan with subsidies costs less. Income for ACA subsidy purposes is your projected income for the coverage year, not your former salary.
These aren’t just mistakes — many of them have permanent financial consequences. They are avoidable with the right timing and information.
The Part B late enrollment penalty is 10% of the standard premium added permanently to your monthly bill for every 12-month period you were without Part B coverage when you should have had it. If you delayed two years without qualifying employer coverage, you pay an extra 20% premium every month for the rest of your life. At the current $202.90 standard premium, that’s an extra $40.58 every single month, permanently. The Part D late enrollment penalty is similar — 1% of the national base beneficiary premium for every month you went without creditable drug coverage. The most common reason people fall into this trap: they retired from an employer with fewer than 20 employees and assumed their employer plan kept them exempt from Medicare enrollment requirements. Employers with fewer than 20 employees are not required to make their plan primary over Medicare — in that situation, Medicare should be primary and delaying Part B triggers the penalty.
Your Medigap Open Enrollment Period runs for exactly six months starting the month you turn 65 AND are enrolled in Part B. During this window, no insurer can deny you any Medigap plan or charge you more based on your health history. Once it closes, that protection is gone in most states. People who are healthy at 65, choose Medicare Advantage to save on premiums, and then develop serious health conditions at 68 or 70 find themselves unable to get Medigap coverage when they need it most — because the guaranteed window closed and the insurer can now see their health record. The trap is painfully common and entirely preventable. If there’s any chance you’ll want Medigap in the future, the six months around your 65th birthday is the safest time to get it — even if you’re healthy and the premium feels high right now.
Part D plans are allowed to change their formularies, tier placements, and cost-sharing every January. A medication you paid $30 for last year may cost $120 in the new year because your plan moved it to a higher tier — and you’ll only find out in January when you go to the pharmacy. The Medicare Plan Finder at medicare.gov/plan-compare allows you to enter your exact medications and see your estimated annual cost across every plan in your area. Differences of $500–$2,000+ per year are documented regularly between the plan people stay in by default and the lowest-cost plan for their specific drug list. Open enrollment runs from October 15 to December 7 each year. Set a calendar reminder, enter your drugs, and compare. This fifteen-minute annual task consistently saves seniors more money than any other single step.
Every resource listed here is free, unbiased, and funded specifically to help Medicare beneficiaries navigate their options without being sold anything.
SHIP counselors are trained, certified, and federally funded to provide free, unbiased Medicare counseling — they do not sell insurance, do not work on commission, and have no financial incentive to steer you toward any plan. They know your state’s specific rules, which matters because Medigap pricing regulations, guaranteed-issue protections, and low-income assistance programs vary significantly by state. Find your state’s SHIP program at shiphelp.org or call 1-800-633-4227 and ask to be connected to your local SHIP office. This is the single most valuable free resource available to Medicare beneficiaries — use it before making any enrollment decision.
Medicare’s official plan comparison tool at medicare.gov/plan-compare shows every Medicare Advantage and Part D plan available at your zip code, side by side, including estimated annual costs based on your specific medications. Enter your drugs, dosages, and preferred pharmacies — the tool calculates your expected annual out-of-pocket costs across every available plan, not just premiums. This tool does for Medicare what the ACA marketplace does for employer alternatives: it makes an otherwise opaque set of choices transparent and comparable. Use it every fall during open enrollment, not just when you first enroll.
Two programs specifically help lower-income Medicare beneficiaries pay their costs. Extra Help (also called Low Income Subsidy or LIS) reduces Part D drug plan premiums, deductibles, and copays — qualifying seniors often pay $0 in Part D premiums and $0–$11 copays per prescription. Apply through Social Security at ssa.gov/extrahelp or 1-800-772-1213. Medicare Savings Programs (MSPs) are four state-administered programs that pay some or all of your Medicare premiums, deductibles, and coinsurance depending on your income level. Apply through your state Medicaid office — income limits are higher than many people expect, and being denied once doesn’t mean you’re ineligible. Check every year as income and program thresholds change. The National Council on Aging’s BenefitsCheckUp tool at benefitscheckup.org searches all available programs in your zip code for free.
This guide is for general informational purposes only and does not constitute insurance, legal, or financial advice. All Medicare costs cited are from official CMS sources published November 14, 2025. Medigap premium ranges are national averages from AHIP and American Association for Medicare Supplement Insurance 2025–2026 data — actual premiums vary by state, age, gender, tobacco use, and insurer. Medicare plan availability, formularies, and costs change annually — always verify current details at medicare.gov or with a licensed SHIP counselor before enrolling. Nothing in this guide constitutes a recommendation to purchase or avoid any specific insurance product or carrier. Reviewed by a certified SHIP counselor.