Does Having Only Original Medicare Ever Make Sense?

Relying on Original Medicare alone — without any supplemental insurance — can be a costly financial risk.

Some people may choose this option if they can’t afford higher premiums. But it tends to cost more in the long run with higher overall out-of-pocket costs. And a sudden major medical condition or accident could make it an expensive choice.

Original Medicare — Medicare Part A and Part B — covers basic medical and hospitalization costs. These include doctor visits, hospitalization and several related services and items.

But Original Medicare doesn’t cover every health care need and requires you to share the cost of the care you receive.

Without supplemental insurance, there is no limit on out-of-pocket expenses you might have to pay.

For instance, if you have heart surgery that costs $100,000 — you could be on the hook for $20,000 or more in out-of-pocket costs.

Medigap — also known as Medicare Supplement insurance — covers most out-of-pocket costs if you have Original Medicare. You can also add a Medicare Part D plan to help cover the costs of prescription drugs.

Medicare Advantage is another option to help with out-of-pocket costs. These plans replace Original Medicare and usually provide prescription drug coverage along with other benefits that Original Medicare does not include.

Medicare Advantage plans have varying maximum out-of-pocket (MOOP) limits, but it tops out at $8,300 in 2023.

Having only Original Medicare alone may be an option for Medicare beneficiaries with limited income who cannot afford higher premiums for supplemental insurance. But this could still leave you open to higher out-of-pocket costs.

For a 65-year-old couple retiring in 2022, total retirement lifetime health care costs are estimated to be $673,587, according to an analysis by HealthView Services.

Going with Original Medicare alone — without some type of supplemental Medicare insurance — not only exposes you to potentially high medical bills. It also exposes you to a late enrollment penalty if you later choose to add Medicare Part D prescription drug coverage.

If you miss your Medigap open enrollment period, you may also find it difficult, more expensive or impossible to get a Medigap plan if you change your mind later on.

But some people still choose to go without any supplemental insurance.

A 2021 analysis by the Kaiser Family Foundation determined that only about 90% of Medicare beneficiaries either had Original Medicare with some type of supplemental insurance — Medigap, Medicaid or employer-sponsored insurance — or had a Medicare Advantage plan in 2018. Medicare Advantage plans have a degree of built-in supplemental insurance.

But among people with Original Medicare, nearly one in five had no supplemental coverage.

People with no supplemental coverage generally spend the least on premiums — $1,697 per year. But the most on total out-of-pocket costs — $7,473 per year — according to the Kaiser Family Foundation analysis. That’s 31% more than the average out-of-pocket costs for people on all forms of supplemental insurance.

Adding supplemental coverage makes sense if it will reduce your out-of-pocket costs — including premiums, copays, coinsurance, deductibles and prescription drug costs.

The best plan or combination of plans depends on your health care needs.

Medigap can be added to Original Medicare. It covers most of your out-of-pocket costs associated with Medicare.

It makes sense if you plan to travel. Most plans partially cover emergency medical services abroad. And all plans cover services anywhere in the United States so long as the doctor, hospital or other health care provider takes Medicare.

Medigap won’t give you many additional benefits. It cannot be used to cover anything that is not covered under Medicare Part A and Part B already.

If you have a lot of prescriptions — or expensive prescriptions — it may make sense to add Medicare Part D prescription drug coverage.

Prescription drug prices have been rising faster than the overall inflation rate in recent years, according to the U.S. Department of Health and Human Services. HHS tracks the prices of 1,216 prescription drugs. It found that in a one-year period ending in July 2022, the average inflation rate for these drugs was 31.6% — compared to the overall 8.5% inflation rate.

Original Medicare and Medigap do not cover prescription drugs you take at home. Medicare Part D plans can reduce what you pay out-of-pocket for medications. But you should check a plan’s formulary to make sure your medications are on the list — or if there is a substitute on the list you can take instead.

Medicare Advantage plans may be an attractive alternative to Original Medicare if you don’t mind using doctors and hospitals in a limited network and want additional benefits. These may be a better option if you are in good health with no family or personal history of chronic or serious medical issues.

Medicare Advantage plans are private insurance policies designed to replace Original Medicare. They are required to cover everything Medicare Part A and Part B cover — but they typically provide more benefits.

Most plans come with Part D benefits built-in. Medicare Advantage plans may also cover hearing, dental and vision services along with other benefits.

You still have to pay Medicare Part B premiums in addition to any Medicare Advantage premium. But many Advantage plans have no premiums and some offer rebates — making them cheaper than Original Medicare premiums.

You can’t have a Medigap plan with Medicare Advantage plans, so your out-of-pocket costs can be much higher than Original Medicare with Medigap.

Editor Samantha Connell contributed to this article.