Medicare Parts Matrix

Medicare Part A/B/D/Medigap Matrix

Medicare is the federal health insurance program for Americans aged 65 and older and for people with certain disabilities. Its architecture—multiple parts with different coverage, different premiums, different cost-sharing structures, and supplemental options that layer on top—is confusing by design in the sense that it evolved over decades through separate legislative actions rather than being built as a coherent system. Understanding the full matrix of coverage, costs, and gaps before enrolling in Medicare is the prerequisite for making enrollment decisions that serve a retiree's actual medical and financial situation.

MEDICARE PART A: HOSPITAL COVERAGE

Part A covers inpatient hospital care, skilled nursing facility (SNF) care following a hospital stay, hospice care, and some home health care. For most enrollees, Part A has no premium—it is funded through the Medicare payroll taxes paid during the working years. Workers who have paid Medicare taxes for at least 40 quarters (10 years) receive premium-free Part A.

What Part A costs in 2024 (cost-sharing, not premium):

Inpatient hospital deductible: $1,632 per benefit period (not per year—a benefit period begins when you are admitted to a hospital and ends 60 days after discharge). If you are readmitted more than 60 days after discharge, a new benefit period begins with a new deductible.

Days 1–60 in hospital: No daily cost-sharing after the deductible. Days 61–90: $408 per day. Days 91–150 (lifetime reserve days): $816 per day. Beyond 150 days: No coverage. You pay 100%.

Skilled nursing facility care (following a 3-day hospital inpatient stay):

Days 1–20: No cost-sharing. Days 21–100: $204 per day. Beyond 100 days: No coverage. You pay 100%.

The critical insight: Part A does not have an out-of-pocket maximum. A long hospitalization or extended SNF stay creates open-ended financial exposure that Medigap is designed to cap.

MEDICARE PART B: MEDICAL COVERAGE

Part B covers outpatient care—physician visits, preventive care, lab tests, imaging, durable medical equipment, outpatient surgeries, mental health services, and some home health care. Unlike Part A, Part B always has a premium.

Standard premium in 2024: $174.70 per month. This premium is higher for enrollees with income above specific thresholds—the Income-Related Monthly Adjustment Amount (IRMAA), discussed in the IRMAA article.

Part B cost-sharing:

Annual deductible: $240. After deductible: 20% of the Medicare-approved amount for most covered services.

The 20% coinsurance has no annual out-of-pocket cap under traditional Medicare alone. A year with significant outpatient care—cancer treatment, cardiac procedures, multiple specialist visits—could produce Part B coinsurance bills of thousands of dollars. This open-ended exposure is Part B's central coverage gap.

What Part B does not cover: dental care, vision care, hearing aids, most prescription drugs (covered by Part D), routine foot care (with exceptions), and services not deemed medically necessary.

MEDICARE PART D: PRESCRIPTION DRUG COVERAGE

Part D covers retail prescription drugs through private insurance plans that contract with Medicare. Every enrollee has their own Part D plan (purchased separately from Parts A and B), with premiums, formularies, and cost-sharing structures that vary significantly across the hundreds of Part D plans available in any given geographic area.

Part D in 2024:

Average national premium: approximately $55 per month (though specific plans range from $10 to $120+/month).

Standard benefit structure: $545 deductible, then 25% copayment until the catastrophic threshold. Beginning in 2024, the out-of-pocket maximum for Part D was capped at $3,300 per year—a significant change from prior years when the "donut hole" coverage gap existed with no out-of-pocket cap.

IRMAA also applies to Part D: higher-income enrollees pay an income-related premium surcharge on Part D in addition to Part B.

Formulary management: Each Part D plan has its own formulary—the list of covered drugs and their tier assignments (which determine cost-sharing). The same drug may cost $25/month on one plan's formulary and $150/month on another. The Medicare Plan Finder tool at medicare.gov allows comparison shopping by entering specific medications to see coverage and costs across all available plans.

Late enrollment penalty: Enrollees who delay Part D enrollment without qualifying creditable drug coverage (typically an employer or union plan) pay a permanent late enrollment penalty of 1% of the national base premium per month of delayed enrollment. The penalty applies for life.

MEDIGAP (MEDICARE SUPPLEMENT INSURANCE)

Medigap is private insurance that supplements traditional Medicare by covering some or all of the cost-sharing gaps—the Part A deductible, the Part B 20% coinsurance, and (in some plans) excess charges and foreign travel emergency coverage.

Medigap is only available to people enrolled in traditional Medicare (Parts A and B)—not to people enrolled in Medicare Advantage. It is separate from and works alongside traditional Medicare.

Standardized plans: Medigap plans are standardized across all insurers by letter designation—Plan G from one insurer covers the same benefits as Plan G from another insurer. Premium differences across insurers for the same plan letter represent the only variable. Shopping across insurers for the same plan letter is pure price comparison.

Currently available Medigap plans for new enrollees (2024):

Plan A: Covers core benefits (Part A coinsurance and hospital costs, Part B coinsurance, first three pints of blood, hospice coinsurance). Plan B: Plan A benefits plus Part A deductible. Plan G: The most comprehensive plan available to new Medicare enrollees. Covers Part A deductible, Part B coinsurance (20%), excess charges, skilled nursing coinsurance, foreign travel emergency. Does not cover the Part B deductible ($240). Effectively provides near-complete cost protection. Plan N: Similar to G but with Part B copays ($20 for office visits, $50 for ER) and doesn't cover excess charges. Lower premium than G. Plan K, L, M: Partial coverage plans with lower premiums and higher cost-sharing; less commonly chosen.

Note: Plan F (the most comprehensive plan, covering the Part B deductible as well) is still available to enrollees who became eligible for Medicare before January 1, 2020. New Medicare enrollees after 2020 cannot enroll in Plan F.

THE FULL COVERAGE MATRIX: HOW THE PARTS WORK TOGETHER

Traditional Medicare + Medigap + Part D:

Part A covers hospital inpatient. Part B covers outpatient at 80% after the $240 deductible. Medigap Plan G covers the 20% Part B coinsurance and the Part A deductible. Part D covers prescription drugs. The enrollee's effective out-of-pocket is: Part B deductible ($240) + Part D out-of-pocket (capped at $3,300 in 2024) + Medigap premium.

For a retiree on Plan G with a $150/month Medigap premium:

Annual Medigap premium: $1,800 Part B deductible: $240 Part D potential maximum: $3,300 Maximum annual out-of-pocket: approximately $5,340 (plus the Part B premium of $174.70/month = $2,096/year).

This is the most predictable cost structure in Medicare—the Plan G combination turns Medicare's open-ended cost exposure into a calculable annual maximum.

MEDICARE ADVANTAGE (PART C): THE ALTERNATIVE ARCHITECTURE

Medicare Advantage plans (Part C) are private insurance plans approved by Medicare that provide all Part A and B benefits (and typically Part D) through a single plan. They operate with network restrictions (HMO or PPO), prior authorization requirements, and their own cost-sharing structures.

Medicare Advantage is not a type of Medigap—it replaces traditional Medicare rather than supplementing it.

Medicare Advantage considerations for retirees:

$0 premium plans: Many Medicare Advantage plans offer $0 additional premium beyond the Part B premium ($174.70/month), making them appear inexpensive relative to traditional Medicare + Medigap.

The tradeoffs: Network restrictions, prior authorization for specialist care, and maximum out-of-pocket limits (up to $8,850 in-network, $13,300 combined in 2024) that may be higher than the total exposure under traditional Medicare + Plan G.

Geographic stability: Medicare Advantage works well for people who live consistently in one geographic area and receive care primarily from in-network providers. It creates problems for snowbirds, travelers, and people who split time between geographic areas—because out-of-network care is typically not covered except in emergencies.

Switching from Medicare Advantage back to traditional Medicare is restricted: outside of the initial Medicare enrollment period, switching from MA to traditional Medicare and purchasing Medigap may require medical underwriting in most states—meaning pre-existing conditions can cause Medigap denial or significantly higher premiums. The window to switch freely is limited.

This switching difficulty is the primary reason financial planners often recommend starting with traditional Medicare + Medigap for people in good health who want flexibility—because switching to MA is always available later, while switching back from MA to Plan G with favorable underwriting may not be.

The matrix is complex, but the decision framework simplifies it: people who value predictable costs and network flexibility typically choose traditional Medicare + Plan G + Part D; people who want lower monthly premiums and are comfortable with network restrictions and prior authorization consider Medicare Advantage. The right choice depends on health, geography, financial priorities, and risk tolerance.