Medicare vs. Medicare Advantage: How to Choose

DECODING MEDICARE health insurance plan options can be daunting for Medicare beneficiaries. People usually qualify for Medicare at age 65 and may be automatically signed up if they’re receiving Social Security payments, unless they take steps to opt out. Original Medicare comes in two parts: Part A and Part B. Part A covers a portion of hospitalization expenses, and Part B applies to doctor bills and other medical expenses, such as lab tests and some preventive screenings.

But some individuals may find better value in Medicare Advantage plans. Such plans are run by private insurance companies regulated by the government, and they must offer coverage that’s comparable to Original Medicare parts A and B. Most Medicare Advantage plans also include prescription drug coverage, which is an optional add-on called Part D for beneficiaries who keep Original Medicare.

[Read: Medicare Fall Open Enrollment: What You Need to Know.]

Some Medicare Advantage plans have a $0 monthly premium, while others come with a higher monthly premium. You must continue to pay your Part B premium, which is $144.60 per month for most beneficiaries in 2020. Medicare Advantage plans are similar to individual health insurance policies you may have received through your employer or signed up for on your own through the individual insurance market, in that they have different monthly premiums, provider networks, copays, coinsurance and out-of-pocket limits. The trade-off for a lower premium (or $0 premium) could be higher copays or coinsurance.

Whether or not a Medicare Advantage plan costs more, it could be better or worse for you than Original Medicare. Consumers have to carefully review the details of each plan and make a clear-eyed appraisal of their circumstances, including their health, budget and tolerance for financial risk.

The Pros and Cons of Medicare vs. Medicare Advantage if…

You take prescription drugs. As stated, Original Medicare doesn’t cover prescriptions unless you enroll in stand-alone Prescription Drug Plan (PDP) Medicare. (The monthly cost of Part D ranged from $0 to $76.40 per month, based on annual income, in 2020.) By contrast, about 86 percent of Medicare Advantage plans include prescription drug coverage, according to the Kaiser Family Foundation, a nonprofit, nonpartisan research institute. In some cases your monthly premium will exceed the amount you’d pay for Medicare Part D. The federal government and licensed insurance brokers like have online tools where you can check how much you’ll pay for the medications you need. (U.S. News has a revenue-generating agreement with eHealthInsurance, which owns

You want a cap on your out-of-pocket health spending. Original Medicare has no out-of-pocket maximum. You keep paying a portion of the cost of services as you use them. Medicare Advantage plans, by law, have an out-of-pocket maximum of no more than $6,700 per year, although plans can choose to have a lower out-of-pocket maximum. Once you hit that limit, the plan pays for all covered expenses.

You want an alternative to enhancing your Medicare coverage with private “Medigap” (Medicare Supplement) insurance. Medigap plans cover or help cover certain deductibles, coinsurance and out-of-pocket costs of Original Medicare. Some Medicare Advantage plans, but certainly not all, will be more cost-effective than adding Medigap coverage to Original Medicare. Scrutinize the plan details if this is your reason for considering Medicare Advantage.

You want an alternative to the 20 percent coinsurance charged by Original Medicare for most services. Medicare Advantage plans structure costs differently and have an out-of-pocket maximum, which limits how much you’re required to spend on your medical care each year.

You want coverage for vision and dental. Original Medicare doesn’t cover these services. Certain Medicare Advantage plans do.

You want the broadest possible choice in doctors and other medical providers. More providers accept Original Medicare than private Medicare Advantage insurance. Private insurance plans tend to be restricted to a specific network, like a Health Maintenance Organization network. If you travel frequently, you may want to consider staying with Original Medicare for this reason.

You want maximum flexibility when seeking medical specialists. Under Original Medicare, you don’t need prior authorization from a primary care doctor to see a specialist who is enrolled in Medicare and accepting new Medicare patients, whereas Medicare Advantage plans that are designated HMOs could require you to see a primary care doctor first. Preferred Provider Organization plans may allow you to see a specialist without a referral, but seeing an out-of-network doctor or specialist would cost you more. Most Medicare Advantage plans are either HMOs or PPOs.

You’re still employed and covered by your employer. You might end up paying an unnecessary premium for Medicare Advantage or could lose your employer-provided coverage. Check with your human resources department and the Social Security Administration for specifics.

You have employer-sponsored retiree health benefits that supplement Original Medicare. These benefits wouldn’t help with Medicare Advantage, so check with your human resources department before signing up for a Medicare Advantage plan.

You qualify for Medicaid or a Medicare Savings Program. Low-income Medicare beneficiaries have other options and should contact their state Medicaid office.

If you decide to sign up for a Medicare Advantage plan, you may enroll between Oct. 15 and Dec. 7 — the period known as Medicare Annual Election Period — in order for your coverage to start the first of the following year. (Original Medicare has separate enrollment periods for beneficiaries who aren’t automatically enrolled.) Because of government regulation, Medicare Advantage premiums are not influenced by age, health status or the method by which a consumer signs up (through a licensed insurance agent, for example, or directly through an insurer). Monthly cost — and plan availability — varies from county to county.

More from U.S. News

Medicare and Medigap: What’s the Difference?

Medicare vs. Medicaid: What Is the Difference?

5 Steps for Picking a Medicare Plan

Medicare vs. Medicare Advantage: How to Choose originally appeared on

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