Q: Why do most Medicare beneficiaries purchase additional coverage?

A: Because Original Medicare doesn’t cover everything.

While Original Medicare provides a foundation for hospital and medical coverage, many beneficiaries find it insufficient for covering all potential healthcare expenses. Learn why most people choose to purchase additional coverage and under what circumstances you may rely on Original Medicare alone.

Understanding the Basics

Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance). For Medicare beneficiaries who are considering whether Original Medicare is sufficient, individual circumstances and financial resources play a significant role. While it covers many essential healthcare services, it leaves several gaps:

❌ No cap on out-of-pocket costs.

❌ Excludes outpatient prescription drugs

❌ No routine coverage for dental or vision services.

When It Might Be Enough

Original Medicare could suffice in certain situations, particularly for low-income individuals who qualify for additional assistance, or those who have robust private coverage.

Medicaid

Full Medicaid coverage pays for deductibles, coinsurance, and services not covered by Medicare, such as dental and vision care. Medicare Savings Programs (MSP) help pay Medicare premiums and, in some cases, other out-of-pocket expenses.

Private Insurance

Private insurance, such as employer or union-sponsored plans, often cover prescription drugs, hospital, and medical care. Be sure to check with your benefits administrator to see if enrollment in Original Medicare is even necessary in this case.

Wealthier Individuals

Some beneficiaries with significant financial resources might opt to cover potential costs out-of-pocket.

If you don’t have the above-mentioned insurance or the means to self-pay, having Original Medicare alone poses a financial risk for unforeseen medical expenses.

Why Most Don’t Rely on Original Medicare Alone

For those who don’t qualify for Medicaid or don’t have the opportunity to get private coverage elsewhere, gaps in coverage can lead to substantial out-of-pocket expenses. Many seek extra coverage to fill these gaps, which explains why only 11% of beneficiaries rely solely on Original Medicare.

Example of Out-of-Pocket Costs with Original Medicare

Using 2025 cost-sharing figures, a prolonged inpatient hospital stay could result in exorbitant expenses:

• $1,676 deductible
• $419 copay per day for days 61-90
• $838 copay per day for days 91-150

Original Medicare’s lack of an out-of-pocket maximum leaves beneficiaries vulnerable to significant expenses during extended hospital stays or ongoing treatments. For outpatient treatments like dialysis, the costs can quickly add up. Medicare Part B covers 80% of dialysis costs, but patients are responsible for 20% and there is no cap on how much you could spend.

Additional Coverage

To address these gaps, many beneficiaries turn to additional coverage sources, such as:

• Medigap (Medicare Supplement) Plans- works with Original Medicare to help cover deductibles, coinsurance, and other costs not paid by Original Medicare.
• Medicare Advantage Plans (Part C)- replaces Original Medicare with a network plan, often bundling Part A, Part B, and Part D coverage with additional benefits like dental and vision.
• Part D Prescription Coverage- covers the cost of outpatient prescription drugs, which Original Medicare does not include.

If you rarely get sick, require minimal prescription medications, and prefer a leaner approach to healthcare costs, you might feel comfortable relying on Original Medicare alone. However, predicting future healthcare needs is impossible, and a lack of sufficient coverage could leave you financially vulnerable.

Making the Best Choice for Your Needs

Choosing whether to enhance Original Medicare depends on your financial situation, health status, and risk tolerance. Original Medicare provides a strong foundation for healthcare coverage, but its gaps can lead to substantial financial risks. It’s best to discuss your options with a licensed Medicare advisor who can help you find the best fit for your healthcare needs.

For help with Medicare plans – or any questions you may have about Medicare – contact AMAC’s Medicare Advisory Service at 1-855-611-4856 or request a quote here.