Understanding Medicare Advantage and Medigap Plans

Linda initially selected a zero-premium Medicare Advantage plan at age 65 to retain more of her Social Security income and avoid Medigap premiums, benefiting from additional services like dental and vision care. This strategy was effective for several years until a stroke at age 71 led to unexpected medical expenses. By August, her costs reached the plan’s in-network out-of-pocket maximum of $9,250, highlighting potential high costs with Medicare Advantage plans during significant health events.

Medicare Advantage plans often feature low or zero premiums, but the real costs emerge when medical services are needed, including copays and coinsurance for hospital stays, skilled nursing, specialist visits, and outpatient therapies. The cap for out-of-pocket expenses in 2026 is set at $9,250 for in-network services, with PPOs potentially incurring higher costs for out-of-network care. Additionally, these plans generally exclude Part D drug costs, which operate under separate cost-sharing arrangements.

Conversely, Original Medicare combined with Medigap Plan G offers more predictable expenses. After meeting the Part B deductible, Plan G typically covers most remaining costs, leaving a Medicare enrollee with a lower overall financial burden during high medical need. For instance, a 71-year-old with a monthly Medigap premium might pay around $2,083 annually, covering most medical expenses beyond Part D costs.

Linda's experience highlights a challenge for Medicare Advantage enrollees seeking to switch back to Original Medicare with Medigap coverage after a major health incident. Federal rules provide a one-time Medigap open enrollment period starting when a beneficiary first enrolls in Part B at age 65 or older. Afterward, Medigap policies in most states can require medical underwriting, complicating switches after significant health events. Some states offer more extensive protections, ensuring easier access to Medigap plans, though these are not universal.

Individuals nearing 65 should consider both Medicare Advantage and Original Medicare with a Medigap plan, assessing their long-term implications. Those already enrolled in Medicare Advantage should not assume access to a Medigap policy during open enrollment without specific state regulations. Reviewing plan details, including the Summary of Benefits, is crucial to understanding potential out-of-pocket liabilities.

While zero-premium Medicare Advantage plans may suit some retirees, especially if their healthcare providers and prescriptions are covered in-network, discerning the distinction between low premiums and potentially high medical costs during significant health changes is vital. Before making enrollment decisions, it is beneficial to evaluate potential expenses, reflecting on both current savings and long-term financial exposure.