Our advice is to stick with traditional Medicare with Medigap plans as desired

Morton Tavel, MD, and Paul Nolan

Since 1965 the original Medicare program has brought health and economic security to millions of older and disabled people along with their families. Prior to that time, half of Americans aged 65 or older had no health insurance whatsoever. Since 1972, Medicare has also supported those with disabilities.

The original Medicare program alone pays for most of the health care received by about thirty-four million elderly and about eight million disabled people. The program’s expenses have soared in recent years as health care costs go up faster than most other segments of the economy, while advances in medical science have extended the lives of many of those receiving Medicare benefits.

Original Medicare has two major parts:

1) Medicare Part A without a monthly premium, covers inpatient hospital and hospice care, as well as short stays in rehabilitation facilities. Participants must pay a deductible fee of $1,676 for each 60-day benefit period of care in a hospital or skilled nursing facility. For longer hospitalizations the co-insurance charge is $419 for days 61 through 90, then $838 for days 61 through 90. For beneficiaries in skilled nursing facilities, the co-insurance charge for days 21st through 100 is $209.50. There is no limit to the number of benefit periods in a year.

2) Medicare Part B covers services received in doctors’ offices and outpatient settings. This part also pays for medical equipment such as walkers, wheelchairs, oxygen tanks, etc. About a quarter of the costs of this part of the program come from participants’ monthly $185 premium withheld from Social Security benefit checks for most people and an additional premium withheld from wealthier participants. Coinsurance is 20% of the Medicare-approved amount for most services after the deductible is met. This means that for most covered services, you’ll pay 20% of the cost, and Medicare will pay the remaining 80%.

Supplements to Medicare

Seniors should consider extending health insurance coverage to the basic original Medicare policy, with a Medicare Supplemental Insurance Plan, also called a “Medigap” plan. These plans were placed under federal oversight in 1980. They are health insurance policies sold by private insurance companies to fill the “gaps” in original Medicare coverage. They can help provide valuable protection against thousands of dollars in medical expenses that are not covered by Medicare. If one has original Medicare with a Medigap plan, then the two plans will pay all the covered health care costs. Without a Medigap plan to help pay the bills not paid by Medicare, one’s out-of-pocket health care expenses could be substantial.

Medigap plans provide freedom to choose any from all the doctors, hospitals, and specialists that accept Medicare, and not limited to specific networks of practitioners. So, if a doctor or hospital takes Medicare (most do) they will accept all Medigap plans. All standard Medigap plans are written in compliance with federal and state laws; thus, they must be clearly identified as “Medicare Supplement Insurance” and must have all the specific benefits that allow for easy comparison. Currently, there are ten different standardized federally approved plans to choose from, each with a separate set of basic and extra benefits. These ten plans are alphabetized (A through N) and there are two versions of the ten: F and G, with “high deductible” options. One should compare all alphabetized Medigap plans because costs can vary, but all must provide the same standard coverage. Each insurance company decides which of the Medigap plans it sell and sets its own rates. Insurance companies may charge different premiums for the same Medigap coverage. However, because of intense competition, premiums are similar. In order to determine locations for the best choices, go to the Medicare.gov website and use the Medigap finder tool to compare and choose a policy. Enter your zip code in the Medicare search tool to see which Medigap policies are offered in your state.

Plan G (high and low-deductible versions) are the most popular, and will be discussed below:

Medigap Plan G, Low Deductible: Plan G covers all the gaps in Medicare except for the annual Part B deductible, which is only $257 in 2025. This encompasses all Medicare Part A and Part B charges, hospice care copayments, expenses for the first three pints of blood, 80% of foreign travel emergencies, and the cost of skilled nursing facility coinsurance.

Medigap Plan G High Deductible: Everything listed in the preceding low-deductible coverage is the same, except coverage does not start until the participant has paid the higher deductible ($2,875) out-of-pocket for the covered services. One’s residential location makes a difference: Popular medigap Plan G high-deductible plans aren’t available in every state, and premium prices can vary significantly state-to-state and even between regions within a state. One may also consider the various alphabetized plans that can minimize out-of-pocket Medicare costs.

In Florida all Medigap plans are acceptable and underwritten on an issue age basis by all insurance companies. This means that one’s premiums may only increase due to increasing health care costs for all policies in the same plan. Once accepted, the premiums will not increase because of increasing age. However, when changing insurance companies, a premium adjusted for the applicant’s current age should be expected from the new insurance company. Plan G is acceptable in Florida and is considered a popular choice for new enrollees due to its comprehensive coverage.

Prescription drug plans

Medicare Part D, first introduced in 2010, is the Prescription Drug Plan (PDP) category for standalone health insurance plans that are available to people eligible for Medicare Part A and/or Part B. They are voluntary programs offered by private insurance companies and approved by the federal government. They help Medicare beneficiaries cover the cost of their medications. Monthly premiums range in 2025 from $44 to $124 per person but vary because plans offer more or less coverage. If a PDP is not purchased when one is first eligible, premiums will be higher. In 2025, Medicare Part D has a $2,000 out-of-pocket cap, and after reaching this cap, all drugs are covered for the rest of the year with only copayments or coinsurance for each prescription. One can get Part D coverage either through a standalone plan (Prescription Drug Plan or PDP) or as part of a Medicare Advantage plan. Part D is voluntary, meaning you don’t have to enroll, but it is highly recommended if you take prescription medications. The PDP is obtained from a private insurance company for a monthly premium, with copayments or coinsurance for each prescription. The monthly fee for this plan depends on the plan selected. Most plans have a deductible that must be met before the plan starts paying for drugs. After the deductible is met, you’ll pay a copay (a fixed amount, like $10) or coinsurance (a percentage of the drug cost) when the prescription is filled.

Medicare Advantage plans

Medicare Part C is the Medicare Advantage Plan (MAP) that was first introduced in 2003. It bundles your doctor, hospital, and most often prescription drug coverage, along with extra coverage such as vision, hearing, dental, and/or health and wellness programs, in one convenient plan but without full Medigap coverage. Thus, the one convenient MAP plan covers less than combining Medicare, Medigap, and a PDP plan. Because MAPs seem to be all inclusive and have lower monthly premiums, they appear quite attractive. For those who already have, or are eligible for, Medicare, many are considering these highly touted “Medicare Advantage” plans. All too often, a patient is confused and believes he/she has Medicare after signing up for a Medicare Advantage plan. In reality, one’s treatment options may be limited because in fact they do not have full Medicare, Medigap, and PDP, which is not the same. Once a person has signed up for a Medicare Advantage plan, $185 dollars is withheld from their Social Security benefit check and turned over to a private insurance company as payment for their care. The private insurance company can be expected to try to maximize profits. They often have restricted provider networks, meaning that patients may only access care from a specific group of doctors within the plan’s network, potentially limiting their choice of physicians and health care systems as compared to traditional Medicare. Thus, rationing of care or denial of certain services is more likely to occur.

Insurance companies, as we all know, make more money when they don’t pay claims. So, unless things change, traditional Medicare is stable, healthy, and efficient. This means that 98% of the dollars in the system go to pay for care from medical care providers − doctors, hospitals and pharmacies. None of the Medicare dollars pad corporate profits.

Our advice is to stick with traditional Medicare with Medigap plans as desired.

A person can switch from a Medicare Advantage plan to a Medicare plan with a Medigap policy, but only during certain periods. To switch from a Medicare Advantage plan to Medigap, one must first disenroll from the Medicare Advantage plan and return to original Medicare. Then, a Medigap policy can be purchased within specific time frames.

Conclusion

The health care insurance options for the elderly discussed in this article provide a centralized, single payer model that could be used for future coverage of the entire population. Such a model could also be used to control overall costs of health care, placing it in line with other advanced Western countries.

Morton Tavel, MD, of Fort Myers is Clinical Professor Emeritus, Indiana University School of Medicine; Paul F. Nolan, CPA/PFS, CSA, CFE, is a former FBI agent and wealth manager.