Despite what the football players and comedians hawk on TV, most Medicare plans aren’t actually free.

Medicare isn’t free, with the possible exception of Part A for qualified US citizens (see our Medicare at-a-glance Part A and B comparison chart for a quick overview). And even Part A isn’t technically free because we’ve all paid taxes to fund it along the way. Some Medicare Advantage plans feature a $0 monthly premium that can include additional benefits not covered under Original Medicare (Parts A and B). But the premiums are only the tip of the iceberg. Out-of-pocket costs can run deep.

Is Medicare Part A and B free at 65?

Medicare Part A has a $0 premium for people who are 65 and older and who meet the eligibility requirements. You’re eligible for premium-free Part A if you’re age 65 or older and you or your spouse have been employed and paid Medicare taxes for at least 10 years, and/or you are receiving retirement benefits from Social Security or the Railroad Retirement Board. Medicare Part A pays for the first 60 contiguous days in the hospital. After that, hospital costs are your responsibility, unless you have other Medicare coverage (Medicare Advantage or Medigap Supplement) to help mitigate the out-of-pocket costs. Part B covers costs from doctors and other providers. Parts A and B together are often referred to as Original Medicare. You have to enroll in Parts A and B to enroll in a Medigap supplement. Medicare Advantage, on the other hand, replaces parts A and B.

How does Medicare Advantage work? 

Medicare Advantage is an all-in-one combination of Original Medicare benefits (Parts A and B) and additional benefits. The federal government contracts with private insurance companies to administer Medicare Advantage plans. All the rights and benefits that come with Original Medicare are included in Medicare Advantage plans. In order to keep pricing down, private insurance companies compete for your business with low premiums and added benefits such as preventive care, dental, vision and/or prescription drug coverage, and disease management programs to help people better manage their health. 

To further manage costs, most Medicare Advantage plans contract with a network of doctors and hospitals their enrollees are expected not to deviate from. So if you want to see a specialist or other doctor that’s not in their network, you may have to pay more money out of pocket with a Medicare Advantage plan. You may even have to pay 100% of the cost. 

So, what’s the catch?

With Medicare Advantage plans, you can still be on the hook for deductibles, copays, and coinsurance for covered services and you’ll still have to pay the Part B premium. Though out-of-pocket costs have a limit, they can be several thousands of dollars or more, depending upon the Medicare Advantage policy you select. In many instances, providers will put Medicare Advantage patients on a waitlist behind others, because their negotiated rate is so low. So you may have to wait longer for care. And many people don’t know that it may be difficult or impossible to upgrade to a Medicare Supplement  plan down the road, when you need more healthcare.

What’s the option?

Often, when people learn all the facts about Medicare Advantage, they choose Medicare Supplement plans (Medigap) instead. With a “Medigap”/Medicare Supplement there are no network restrictions on providers, no copays or deductibles, and no dealing with an insurance company. Because whatever Original Medicare doesn’t pay, the supplement pays the provider directly without any direct contact with you. It’s hassle free. For these reasons, Medicare Supplement plans are a superior option for many people. Though the premiums are usually higher, so is the peace of mind from predictable healthcare costs on a fixed retirement budget, and ease of use.

In the long run, most people end up paying more out-of-pocket expenses with a $0 premium Medicare Advantage plan than for all of their healthcare combined in a Medicare Supplement plan. And at the end of the day, your retirement is a long run, not a sprint. 

For a personalized consultation on which plan may be right for your unique situation, contact Or call 941-567-6000