Understanding Medicare and Medicare Advantage
Medicare and Medicare Advantage are two different ways to receive your Medicare benefits. Traditional Medicare, also known as Original Medicare, includes Part A (hospital insurance) and Part B (medical insurance). Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
Medicare Advantage (Part C) is an alternative offered by private companies approved by Medicare. These plans include Part A and Part B coverage and often provide additional benefits like prescription drugs, dental, and vision care. Medicare Advantage plans may also offer wellness programs and other services not covered by Original Medicare.
Part D is the Medicare prescription drug benefit. It is available to anyone with Medicare and provides coverage for prescription medications. Part D plans are offered by private insurance companies and can be added to Original Medicare (Parts A and B) or included in a Medicare Advantage plan that offers prescription drug coverage (MA-PD). This allows beneficiaries to choose a plan that best meets their medication needs and budget.
Medicare Gap Plans
Medicare gap plans, also known as Medigap plans, are supplemental insurance policies designed to cover the out-of-pocket costs not covered by Original Medicare (Parts A and B). These plans help pay for expenses such as deductibles, coinsurance, and copayments, which can add up quickly and become a financial burden.
Medigap plans are standardized and labeled with letters (e.g., Plan A, Plan B, Plan F, Plan G), and each plan offers a different level of coverage. For example, Plan F provides the most comprehensive coverage, including all deductibles and coinsurance, while Plan G covers everything except the Part B deductible.
One of the key benefits of Medigap plans is that they offer predictable costs, making it easier for beneficiaries to budget for their healthcare expenses. Additionally, Medigap plans do not have network restrictions, allowing beneficiaries to see any doctor who accepts Medicare patients, and they provide coverage for emergency medical care while traveling abroad 1 2 3.
Note:
- Medicare Supplement Plan F is no longer available for new enrollees as of January 1, 2020. However, if you were eligible for Medicare before this date, you can still enroll in or keep your existing Medicare Plan F coverage 4 5. This change was part of legislation aimed at encouraging enrollment in Medicare Advantage plans 4.
- If you were already enrolled in Plan F before January 1, 2020, you can keep your coverage as long as you continue to pay your monthly premium 2. For those who became eligible for Medicare after January 1, 2020, Plan F is not an option, but there are other Medicare supplement plans available that offer similar coverage, such as Plan G 5.
Expected Cuts in Medicare Advantage
In 2026, Medicare Advantage plans are expected to face several cuts. These plans, which have been popular due to their additional benefits, will see a reduction in supplemental benefits. This includes non-medical benefits such as over-the-counter medications, transportation services, and nutrition services. The new guardrails on what can be offered under Special Supplemental Benefits for the Chronically Ill (SSBCI) will exclude non-healthy food, alcohol, tobacco, and life insurance 6. These changes are part of a broader trend of private insurers paring back MA plan supplemental benefits 6.
Traditional Medicare Cost Increases
Traditional Medicare costs are projected to rise in 2026. Monthly premiums for Medicare Part B are expected to increase by 11.6%, from $185 to $206.50, and the Part B deductible is expected to go up by 12%, from $257 to $288 6. Deductibles for Part D plans are also expected to increase by an average of 4.2% 6. These cost hikes are tied to inflation and the rising cost of healthcare, which can strain budgets, particularly for seniors on fixed incomes 6.
Major Changes in Medicare Enrollment for 2026
- Rising Costs: Monthly premiums for Medicare Part B are projected to rise by 11.6%, from $185 to $206.50, and the Part B deductible is expected to increase by 12%, from $257 to $288. Deductibles for Part D plans are also expected to increase by an average of 4.2% 6 7.
- Part D Catastrophic Threshold: The Inflation Reduction Act (IRA) instituted a cap on out-of-pocket drug costs for people with Medicare Part D. This catastrophic threshold will increase in 2026 from $2,000 to $2,100 6.
- Medicare Advantage Plan Changes: Medicare Advantage plans will have new guardrails on what they can offer under Special Supplemental Benefits for the Chronically Ill (SSBCI). These plans must exclude non-healthy food, alcohol, tobacco, and life insurance 6.
- Prior Authorization Requirements: Six states—Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington—will test a new model that requires pre-authorization for an expanded set of services if you have Original Medicare (Parts A and B). These services include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis 6.
- Negotiated Drug Prices: The IRA gave Medicare the authority to directly negotiate the price of high-cost, single-source drugs with pharmaceutical manufacturers. In 2026, the first set of negotiated prices will take effect for drugs such as Eliquis, Enbrel, Entresto, Farxiga, Imbruvica, Januvia, Jardiance, Fiasp/NovoLog, Stelara, and Xarelto 6.
Call to Action
Navigating Medicare enrollment can be complex, but you don’t have to do it alone. Kastler Financial Planning offers a no-charge downloadable PDF that will help you understand the enrollment process and make informed decisions about your healthcare coverage. Visit our website Resource Center to access this valuable Medicare resource. Then contact your Medicare insurance representative for help on your specific situation. There is no cost for these services. If you don’t have a Medicare insurance representative, I can provide you a list of 3 (Michigan only).
👉 Download Medicare Enrollment Flowchart here:
Resources – Kastler Financial Planning
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Mike Kastler has been performing financial planning and retirement planning since 2015. He has a Master of Science in Finance and the prestigious designation Retirement Income Certified Professional®. As a Fee-Only, Fiduciary, and Independent professional it is a client-first/planning-first approach. No commissionable products are sold and Assets Under Management (AUM) services are provided as a flat-fee service, not a % of AUM. More About Us here: KastlerFinancialPlanning.com/about
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Resources
- https://www.medicare.gov/health-drug-plans/medigap/basics/compare-plan-benefits
- https://health.usnews.com/medicare/best-medicare-plans/medicare-supplement-plans
- https://www.uhc.com/medicare/medicare-education/medicare-supplement-plans.html
- https://insuredandmore.com/why-did-medicare-get-rid-of-plan-f
- https://www.mutualofomaha.com/medicare-supplement-insurance/im-on-medicare-supplement-plan-f-whats-going-to-happen-to-my-coverage
- https://www.investopedia.com/9-major-medicare-changes-for-2026-whats-coming-for-premiums-drug-prices-and-program-cuts-11831673
- https://www.aha.org/news/headline/2025-10-15-medicare-open-enrollment-2026
