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Comparing Medicare health insurance plan options — particularly between original Medicare and Medicare Advantage — can be a daunting task for most Americans.
Picking a plan that is right for you will depend on your health, financial constraints and willingness to take on financial risk.
[READ Medigap vs. Medicare Advantage: Which Should You Buy?]
What Is Original Medicare?
Medicare is the government health insurance program available for people age 65 and older, people with qualifying disabilities and people with either Lou Gehrig’s disease (also called amyotrophic lateral sclerosis, or ALS) or end-stage renal disease (permanent kidney failure requiring dialysis or transplant).
Original Medicare comes in two parts: Medicare Part A and Part B.
— Part A covers a portion of hospitalization costs.
— Part B covers doctor bills and other medical expenses, such as lab tests and some preventive screenings.
Individuals who opt for original Medicare also usually purchase a Medicare Part D prescription drug plan since most medications are not otherwise covered under Medicare except for medications used during hospital stays. You can also purchase a Medicare supplement plan, also known as Medigap, to help cover any costs not covered by Medicare, such as copays and deductibles.
With Medicare, patients can also see any provider in the country that accepts Medicare with no restrictions.
[Read: How to Choose the Best Medicare Advantage Plan]
What Is Medicare Advantage?
Medicare Advantage plans, also known as Medicare Part C, are run by private insurance companies regulated by the government, and they must offer coverage comparable to original Medicare.
Most Medicare Advantage plans usually include other benefits such as:
— Home health services
— Over-the-counter drugs allowance
— Prescription drug coverage
— Telehealth services
— Vision care
— Wellness visits
“Benefits vary from plan to plan and even across different states, so be sure to check the fine details of the Medicare Advantage plans you may sign up with,” says Lisa Humes, an independent insurance agent in Manassas, Virginia.
[Read: Medicare Advantage vs. Medicare Cost Plans: What’s the Difference?]
Key Differences Between Original Medicare and Medicare Advantage
| Original Medicare | Medicare Advantage | |
| Costs | Premiums, copays, deductible and coinsurance | Premiums, copays, deductible and coinsurance |
| Coinsurance | Members usually pay 20% of the total cost of services, which means the amount they pay will fluctuate based on the cost of the service. Most people purchase a Medigap plan to cover some or all of these copays. | Members usually have limited coinsurance or a set dollar copayment amount so they can expect what to pay. |
| Out-of-pocket costs | No limit to how much members may have to spend. Most people purchase a Medigap plan to limit out-of-pocket costs. | In 2024, the out-of-pocket maximum is $8,850, according to the National Council on Aging. (This amount may change in 2025.) You may need to pay more for out-of-network services. |
| Prescription drugs | You likely need to purchase Part D for prescription drug coverage. | Most plans include prescription drug coverage. |
| Supplemental benefits | None | Benefits vary by plan. |
| Provider network | Any provider who accepts Medicare | Providers must be in the plan’s network. |
| Referrals | No referrals | PPO (no); HMO (yes) |
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. They differ in terms of monthly premiums, provider networks, copays, coinsurance and out-of-pocket limits.
Some Medicare Advantage plans have a $0 monthly plan premium along with a tighter network of providers and facilities that you can utilize, while others come with a higher premium and a broader network. In essence, you have to shop for the best and most appropriate plan for you.
The trade-off for a lower plan premium (or $0 monthly plan premium), however, could include higher copays or coinsurance, smaller provider networks, more restrictions on the use of services, higher out-of-pocket limits or less generous coverage of prescription drugs. If you elect a Medicare Advantage plan, you must continue to pay your Part B premium.
“Individuals need to thoroughly examine the specifics of each plan and take into consideration their health, financial situation and willingness to take on financial risk,” advises Colleen Duewel with LionHeart Eldercare & Consulting of Falls Church, Virginia.
Pros and Cons of Original Medicare and Medicare Advantage
Prescription drugs
Original Medicare does not cover
most prescription medicines unless you enroll in a stand-alone prescription drug plan, known as Part D.
About 87% of Medicare Advantage members are enrolled in plans that include prescription drug coverage, according to KFF, a nonprofit, nonpartisan research institute. However, you can’t choose your prescription drug plan with a Medicare Advantage plan, so it’s important to review the details of any plan you’re interested in before signing on the dotted line.
On the other hand, if you enroll in original Medicare and take multiple prescription drugs, you may shop for a Medicare Part D prescription drug plan covering your medications at your preferred pharmacy.
Cap on out-of-pocket health spending
Original Medicare has no out-of-pocket maximum for most services, so you continually pay a portion of the cost of most services as you use them. As mentioned, many people with original Medicare purchase a Medigap policy to help minimize out-of-pocket liability.
Medicare Advantage plans, on the other hand, do have an out-of-pocket limit. Once you hit the out-of-pocket limit, the plan pays for all covered expenses. According to the NCOA, the maximum out-of-pocket limit for Medicare Advantage enrollees in 2024 is $8,850 for approved in-network services (out-of-network services may be higher, and this 2024 amount may change in 2025).
Enhancing your Medicare coverage with private Medigap
You might wonder whether having Medicare Advantage or original Medicare paired with Medigap insurance is better. Similar to capping your out-of-pocket health spending as Medicare Advantage plans do, Medigap plans, as mentioned above, cover or help cover some of the remaining costs not covered by original Medicare, such as deductibles, coinsurance and out-of-pocket costs.
Some Medicare Advantage plans — but certainly not all — may be more cost-effective than adding Medigap coverage to original Medicare. Scrutinize the plan details if this is your reason for considering Medicare Advantage.
Keep in mind that, in most states, you don’t have guaranteed issue rights to Medigap outside your Medicare initial enrollment period. In other words, if you initially enroll in Medicare Advantage, you may be unable to purchase a Medigap policy if you decide to switch to original Medicare later.
Coverage for vision and dental
Original Medicare does not cover vision or dental services that aren’t medically necessary. On the other hand, more than 95% of Medicare Advantage plans offer some coverage of these services, typically including preventive dental. According to the Commonwealth Fund, some cost-sharing and additional premiums may apply.
Choice of doctors and other medical providers
With original Medicare, you can see any provider in the country who accepts Medicare. Private insurance plans, including Medicare Advantage, tend to be restricted to a specific network. If you travel frequently, you may want to consider staying with original Medicare for this reason.
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. Most Medicare Advantage plans are either health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Medicare Advantage plans that are designated HMOs could require you to see a primary care doctor first as a condition of covering the cost of your visit. PPO plans may allow you to see a specialist without a referral, but seeing an out-of-network doctor or specialist would cost you more.
Who Is Original Medicare Best For?
If you meet the following criteria, then you might be a good candidate for original Medicare:
— You’re in good health.
— You have no major surgeries planned.
— You have good dental health (you just need regular cleanings).
— You do not take prescription drugs for chronic diseases.
— You have financial stability with robust savings to cover unexpected health issues.
— You travel frequently and require the flexibility of seeing providers out of network.
Who Is Medicare Advantage Best For?
If you meet the following criteria then you might be a good candidate for a Medicare Advantage plan:
— You need a hearing exam and potentially hearing aids.
— You have limited travel and are OK with restricted provider networks.
— You have limited income, so you need the lowest plan premium, and you’re healthy.
— You’re eligible for Medicaid.
— Your doctors only take a Medicare Advantage plan, such as Kaiser Permanente.
Enrolling in Medicare Advantage
If you decide to sign up for a Medicare Advantage plan outside of your initial enrollment period
and Medicare annual open enrollment, which runs from October 15 to December 7, you may enroll between January 1 and March 31 of each year. Your plan will start the first of the month after the plan receives your application.
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 costs and plan availability vary from county to county.
Frequently Asked Questions
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Medicare vs. Medicare Advantage: Which Is Right for You? originally appeared on usnews.com
Update 11/08/24: This story was published at an earlier date and has been updated with new information.
