The smart way to shop for any type of insurance is to steel yourself and imagine the worst. The house burns down. The car is totaled. With those “what-ifs” front and center, you’re more inclined to seek out coverage that provides the best protection.

The big what-if of Medicare Advantage

If you are lucky enough to be healthy when ready to enroll in Medicare — for most folks it’s at age 65 — the vital “what-if” you should consider: what plan you want if you are diagnosed with cancer or another serious illness that requires lengthy and costly medical care.

You will find that the Medicare option that looks so enticing when you’re healthy (likely with no extra premium and expanded coverage) becomes costly when you actually need to use it.

Medicare guide 2022: Here’s where to find help

Two types of Medicare

Original Medicare allows you to see any doctor and use any facility in the U.S. that accepts Medicare. Most do. But to get blanket protection with Original Medicare, it’s vital to also purchase a supplemental policy — referred to as Medigap — that picks up the portion of certain bills that Medicare doesn’t pay directly.

A Medigap policy that provides complete coverage (Medigap Plan G for those of you in shopping mode) might have a monthly premium of $100 to $300 or so, depending on where you live. That’s not nothing. But again, other than a basic deductible for Medicare Part B ($203 in 2021), you’re likely to have everything covered.

Medicare Advantage is the other way you can enroll in Medicare. Most Advantage plans work like a health maintenance organization. You are limited to a network of doctors and facilities based on where you live. Medical care beyond basic preventive care typically need preauthorization.


The allure of Medicare Advantage is that you don’t need to purchase any supplemental coverage. In fact, you’re not allowed to have a Medigap policy. Not spending $100 to $300 a month on Original Medicare + Medigap is undeniably attractive. At least when you are healthy.

But you buy insurance to protect you from the big what-if. And that’s where Medicare Advantage could disappoint. Remember, you can’t see every doctor who accepts Medicare. That means the specialist you really want to oversee your care may be out of reach.

The high cost to actually use Medicare Advantage

And once you start to use your Advantage insurance, you will likely run into coinsurance that will typically require you to pay 20% of your bills. With a serious illness, that can easily be a six-figure treatment that charges coinsurance.

Some good news is that the government limits your Medicare Advantage annual out-of pocket health care costs. This year, the maximum out-of-pocket is $7,550. Many Medicare Advantage plans set their out-of-pocket even lower. According to the Kaiser Family Foundation, a nonprofit health care research organization, the average out-of-pocket this year was around $5,000. (There is a separate out-of-pocket max for prescription drug coverage.)

Illness doesn’t care about calendar years

The out-of-pocket maximum is per calendar year. Many illnesses will span at least two years, possibly more. For instance, if you are diagnosed in September with cancer that requires chemotherapy, surgery and possibly radiation, you are still going to be in the thick of treatment the following year. That means you could face the out-of-pocket two times in just three, four or six months. That’s likely going to mean needing to pay more than $10,000 out-of-pocket in just a short period.

If you and a spouse both require extensive ongoing care simultaneously, your out-of-pocket costs would double.


Original Medicare: cost and coverage

Now let’s return to Original Medicare. It definitely costs more upfront, as it’s imperative to add a Medigap policy to cover the coinsurance costs that are embedded in all Medicare. Again, a premium for a Medigap Plan G (the most comprehensive option for anyone enrolling in Medicare today) might run $100 to $300 a month, depending on where you live. But for that premium you have no other out-of-pocket costs other than the standard deductible for Medicare Part B ($203 in 2021).

If you live in a high-cost area, that works out to $3,600 a year per person. Clearly that is a significant cost that you want to plan for. But then you don’t have to worry.

Making a clear-eyed Medicare choice

There is no clear-cut right or wrong choice. The key is to make an informed choice.

Ask yourself: If you develop a serious illness will you be OK with the network of care, and what will likely be high out-of-pocket costs for at least two years, if not more?

Don’t presume you can just switch to Original Medicare + Medigap when you get sick. In most states you will effectively be shut out of qualifying for a Medigap policy, which will make it impractical to make the switch.

That said, if you start with Original Medicare + Medigap, and you come to find the premium cost of a Medigap policy is too steep, you can easily switch to Medicare Advantage.