PolicyZenPolicyZenMedicare is federal health insurance for people 65 and older, and for certain younger people with disabilities or end-stage renal disease. Over 67 million Americans are enrolled. And a remarkable number of them — including people who have been on it for years — don't fully understand what it covers, what it doesn't, and what happens if they miss an enrollment deadline.
The program is split into four parts with overlapping purposes, supplemented by a separate layer of private plans, all governed by enrollment rules with permanent financial penalties for getting them wrong. Here's how it actually works.
What it covers: Inpatient hospital care, skilled nursing facility care (after a qualifying hospital stay), some home health care, hospice care.
What it costs: Most people pay $0 premium for Part A if they or their spouse worked and paid Medicare taxes for at least 10 years (40 quarters). You still pay deductibles and coinsurance — the Part A deductible for 2025 is $1,632 per benefit period (not per year — per hospital stay or illness episode).
Key limitation: Part A does not cover long-term custodial care — help with daily activities like bathing or dressing. That's not covered by Medicare at all.
What it covers: Doctor visits, outpatient care, preventive services, lab tests, X-rays, durable medical equipment (wheelchairs, walkers), mental health services, some home health care.
What it costs: The standard 2025 monthly premium is $185/month, deducted from Social Security if you receive it. Higher earners pay more (IRMAA surcharges apply above $106,000 individual / $212,000 joint income). Annual deductible: $257. After deductible, Medicare pays 80% of approved amounts; you pay 20% — with no out-of-pocket maximum.
Key limitation: That 20% coinsurance with no cap can be catastrophic for serious illness. A $500,000 hospital bill means $100,000 owed — unless you have supplemental coverage.
What it is: Private insurance plans (from companies like Humana, UnitedHealth, Aetna) that provide all of your Part A and Part B benefits — and usually Part D — bundled together. You must still be enrolled in Medicare Parts A and B.
What it typically adds: Most Advantage plans include prescription drug coverage, and many add dental, vision, hearing, and wellness benefits that Original Medicare doesn't cover.
The tradeoff: Lower premiums (many plans are $0/month above your Part B premium) but restricted networks. You typically must use in-network providers. Prior authorization is common and frequently contested. If you need care from a specialist or out-of-network provider, Advantage plans can create real barriers.
What it covers: Prescription drugs. Each Part D plan has a formulary — a list of covered drugs — organized into tiers with different cost-sharing at each tier.
What it costs: Varies by plan; average about $46/month in 2025. Higher earners pay IRMAA surcharges here too. Plans have deductibles, copays, and coinsurance that vary significantly.
Important change (2025): The Inflation Reduction Act capped Medicare Part D out-of-pocket drug costs at $2,000/year starting in 2025, eliminating the old "catastrophic" spending spiral that left some seniors paying thousands per year for medications.
When you enroll in Medicare, you face a fundamental choice: stay on Original Medicare (Parts A + B, with optional Part D) or switch to a Medicare Advantage plan. This decision shapes your entire healthcare experience.
| Original Medicare + Medigap | Medicare Advantage | |
|---|---|---|
| Network | Any provider that accepts Medicare — nationwide | Network-restricted (HMO or PPO); must use in-network for lowest cost |
| Out-of-pocket max | No cap on Original Medicare; Medigap fills the gap | Capped by law (up to ~$8,850 in-network for 2025) |
| Monthly cost | Part B premium + Medigap premium (can be $150–$300/mo) | Often $0–$50 above Part B premium |
| Prior authorization | Rare | Common; frequently creates delays or denials |
| Dental/vision/hearing | Not covered; need separate plans | Often bundled |
| Best for | People who travel frequently, have complex health needs, or want maximum provider choice | Generally healthy people who want low premiums and extra benefits |
Original Medicare leaves significant gaps — most importantly, the unlimited 20% coinsurance on Part B charges. Medigap (also called Medicare Supplement) policies are private insurance plans that fill these gaps. There are standardized plan types (Plan G, Plan N, Plan F, etc.) with identical benefits from any insurer — the only difference is price and customer service.
Plan G is currently the most popular for new enrollees. It covers Part A deductibles, Part B coinsurance (the 20%), hospital stays beyond Medicare limits, and skilled nursing facility coinsurance. You pay only the Part B annual deductible out of pocket — after that, Plan G covers almost everything else.
Medicare has some of the harshest late enrollment penalties in insurance. They're permanent — they follow you for life.
There are valid reasons to delay — primarily if you have employer-sponsored insurance from an active employer. "Active employer" matters: COBRA and retiree coverage don't count as delaying reasons. If you're working past 65 with employer health coverage, coordinate carefully with HR before deciding when to enroll in Medicare.
These are two completely different programs. People confuse them constantly.
Some people qualify for both — called "dual eligibles." Medicaid can pay Medicare premiums, deductibles, and coinsurance for qualifying low-income Medicare beneficiaries, and it covers long-term care that Medicare doesn't.
Upload your Medicare Supplement, Medicare Advantage, or Part D plan documents to PolicyZen. Ask about your deductibles, out-of-pocket limits, covered services — get real answers from your actual plan documents.
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