Medicare: A Valuable Benefit With Confusing Options

By Sharon Wagner

As you reach your 65th birthday, you may get excited thinking you are no longer on the hook for the high cost of private health insurance. After all, Medicare is going to kick in, and you can sit back, relax, and let the tax dollars you paid in your entire life go to work for you, right? Not necessarily.

The reality is that basic Medicare doesn’t cover all issues relating to physical and mental health, and you’ll soon be faced with choices on how to supplement your coverage or risk your entire life savings should you experience a significant health event. The Motley Fool estimates that an elderly couple will need $350,000 in cash to cover their medical bills in full once they are eligible for Medicare.


Supplemental insurance

Despite the high cost noted above, there is good news. It is possible to reduce your out-of-pocket expenses. The two main options are a Medicare Advantage Plan and Medigap insurance. There’s plenty of information out there if you’re looking to sign up for Medicare Advantage Plan, such as this guide from If you’re not particularly internet savvy or are confused about your coverage (more on Medicare coverage below), call and speak with a licensed insurance agent, who can answer your questions and help you find a plan that’s right for you.

What are the different Medicare sections?

You’ve probably heard about Medicare Parts A, B, C, and D. But what are they? 

  • Medicare Part A is essentially hospital insurance. If you have a heart attack, Part A will cover your hospital admission, including surgeries and inpatient care.

  •  Medicare Part B is what covers doctor services, rehabilitation, and other services you may receive at the hospital or doctor’s office. Thinking about that heart attack, Part A covers your hospital stay, and Part B would cover the cost of the ambulance ride to get you there and any cardiac rehabilitation you may require.

  •  Medicare Part D is prescription drug coverage. This would help if you were prescribed nitrogen pills after your heart attack. However, although it is required if you do not have prescription drug coverage, it can add up to $76.20 to your monthly premium, according to financial journalist and Investopedia contributor Tim Parker.

  •  Medicare Part C, or Medicare Advantage, is private insurance and, for the most part, covers everything that traditional Medicare does. Medicare Advantage is optional, but is often more cost effective than paying separately for the other three Medicare services.

The primary benefit of a Medicare Advantage plan is that it is structured similarly to traditional health insurance. You have a deductible and a co-pay, but the vast majority of your medical expenses are covered. You may even have the option to enroll in a PPO or HMO network plan.


Medigap insurance

Similar to a Medicare Advantage Plan, Medigap insurance essentially fills in the areas where you would be financially responsible with basic Medicare. Medigap coverage is typically more expensive per month than a Medicare Advantage plan, although it may result in slightly lower expenses per medical incident. Just to add even more confusion, Medigap policies are also named using the A, B, C, D system, although these designations do not correlate to government Medicare plans.

Medigap may not provide the level of coverage you need if you have a preexisting condition. Reuters explains more about this caveat in this article.   

Medicare Advantage plans and Medigap insurance can both decrease your financial liability as you age. Medicare Advantage has the edge when it comes to coverage for health maintenance items, such as dental and vision care. Medigap may be a more suitable choice if you have an expendable monthly income. It is important to note that you cannot have both a Medicare Advantage plan and a Medigap policy. There is no right answer for everyone, and your insurance agent can go into greater detail regarding the pros and cons of each.