Understanding Your Medicare Options in Retirement: Original Medicare, Advantage, and Medigap Explained

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In planning for retirement, Medicare is a foundational part of your healthcare planning in retirement. But “Medicare” isn’t just one plan—it’s a set of options, each with different rules, coverage levels, and costs. Understanding the main paths—Original Medicare, Medicare Advantage, and Medigap—can help you make a confident, informed decision about your healthcare coverage as you age.

Basic Medicare Terminology

When beginning to learn about your options, you’ll quickly come across the terms Parts and Plans. Here is what you need to know.

Parts are sections of the original Medicare that provide different types of coverage. Currently, there are four parts: Part A, Part B, Part C, and Part D.

Part A and Part B are hospital and medical insurance. Everyone eligible for Medicare will have these.
Part C is a Medicare Advantage which is a bundled coverage.
Part D is drug coverage.

Plans are different standardized offering from private insurance companies to supplement, add to, or fill in gaps the Parts. Plans also known as Medigap or Supplemental coverage. There are 10 different types of Medigap plans offered in most states, which are named by letters: A-D, F, G, and K-N.

If you choose Part C, you do not have to worry about the Plans.

Your Medicare Options

With Medicare, you have two primary routes: Original Medicare and Medicare Advantage

Original Medicare

Original Medicare + Medigap offers broader access, more predictable costs, and excellent coverage, but usually at a higher monthly cost and with more components to manage.

Generally, this route will include:

Part A
Part B
Part D
And a Supplemental Policy Plan or Medigap.

Why Medigap is Needed?

While Medicare Parts A and B (Original Medicare) provide foundational health insurance for hospital and outpatient services, they leave significant gaps that can result in high out-of-pocket costs for beneficiaries. These include deductibles, copayments, and the 20% coinsurance for most medical services—with no annual out-of-pocket maximum. If you had a $100,000 medical bill, you would pay $20,000 and Medicare would pay $80,000.

Medicare Advantage

Medicare Advantage offers convenience, extras, and often lower premiums, but with more limitations on access and potentially higher out-of-pocket costs when you use care.

Since Medicare Advantage is a bundled plan, it encompasses the coverage provided under Part A, Part B, and the Supplemental Coverages. Most Medicare Advantage Plans include drug coverage but if your plan does not, you’ll need to separately enroll in a Part D plan.

Comparison of Features

Feature	Original Medicare + Medigap	Medicare Advantage (Part C)
Provider Access	Any doctor or hospital in the U.S. that accepts Medicare	Typically limited to a network (HMO or PPO)
Referrals Needed?	No referrals required for specialists	Often required within network
Prescription Drugs	Must purchase Part D plan separately	Usually included in the plan
Extra Benefits	Not included (must purchase separately if desired)	Often includes dental, vision, hearing, fitness, etc.
Out-of-Pocket Costs	Very low with Medigap—many plans cover nearly all expenses	Capped annually, but often higher copays when used
Monthly Premiums	Higher premiums (Part B + Medigap + Part D)	Often lower premiums (some as low as $0)
Travel Flexibility	Excellent—coverage across the U.S., sometimes abroad	Limited or no coverage outside service area
Plan Stability	Medigap and Part D plans are stable year to year	Plans, networks, and coverage can change annually
Simplicity	Requires managing 3 parts: Medicare, Medigap, and Part D	All-in-one coverage through a single insurer