Medicare Demystified: Part B, Part D, and Medigap Strategy Guide
Medicare Demystified: Part B, Part D, and Medigap Strategy Guide
CORE INSIGHTS
- The 20% Trap: Original Medicare only covers 80% of costs. There is no cap on the remaining 20%. A single catastrophic event can bankrupt you without supplemental coverage.
- The Choice: At 65, you choose: Original Medicare + Medigap (High premium, total freedom) OR Medicare Advantage (Low premium, restricted network).
- Plan G Standard: Medigap Plan G is the “Gold Standard.” It covers 100% of the gaps except the small Part B deductible. You pay the premium, and you see no bills.
Medicare is not free. It is a menu of choices with lifelong consequences. The most critical decision happens at age 65 during your Initial Enrollment Period. Miss this window, and you may face medical underwriting forever.
What-If Scenario: The $200,000 Surgery
| Plan Type | Medicare Pays | You Owe |
|---|---|---|
| Original Only | $160,000 (80%) | $40,000 (No Cap) |
| Medigap Plan G | $160,000 (80%) | $0 (Gap Covered) |
Visualizing the Risk Trade-off
*Figure 1: Risk Profile. Medigap (Green) caps your risk at $0. Original Medicare (Red) leaves it open-ended.*
Strategic Action Steps
1
Enroll on Time
Sign up for Part A & B 3 months before your 65th birthday. Delaying Part B without creditable coverage leads to lifetime penalties.
Sign up for Part A & B 3 months before your 65th birthday. Delaying Part B without creditable coverage leads to lifetime penalties.
2
Choose Your Path
If you can afford it, Medigap Plan G offers the most peace of mind. Medicare Advantage is cheaper but restricts your doctor choice.
If you can afford it, Medigap Plan G offers the most peace of mind. Medicare Advantage is cheaper but restricts your doctor choice.
3
Add Part D
If you choose Medigap, you must buy a separate Part D drug plan. Use Medicare.gov to find the cheapest plan for your specific meds.
If you choose Medigap, you must buy a separate Part D drug plan. Use Medicare.gov to find the cheapest plan for your specific meds.
The Bottom Line: Who Should Choose What?
- Choose Medigap: Retirees who travel, want freedom of choice, and hate surprise bills.
- Choose Advantage: Healthy retirees with tight monthly budgets who don’t mind network restrictions.
Frequently Asked Questions
What is the difference between Part A and Part B?
Part A is hospital insurance (free). Part B is medical insurance (doctors/outpatient) and costs a monthly premium.
Why do I need Medigap?
Original Medicare has no out-of-pocket maximum. Medigap pays the 20% coinsurance that Medicare doesn’t cover.
What about Part D?
Part D covers prescription drugs. It is not included in Original Medicare and must be purchased separately.
Disclaimer: This content is for informational purposes only. Consult a SHIP counselor or broker.