Medicare vs. Medicare Advantage: Which is Right for You?

What Is Original Medicare?

Medicare is the government health insurance program available for people ages 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).

With Original Medicare, patients can see any provider in the country that accepts Medicare with no restrictions.

Original Medicare comes in two parts: Medicare Parts A and B.

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.

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 parts A and B.

Most Medicare Advantage plans usually include other benefits such as:

“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 Hume, an independent insurance agent in Manassas, Virginia.

Key Differences Between Original Medicare and Medicare Advantage

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) 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,” says 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 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 the Kaiser Family Foundation, 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. The federal government and licensed insurance brokers have online tools that allow you to estimate how much you’ll pay for the medications you need. (U.S. News has a revenue-generating agreement with eHealthInsurance, which owns PlanPrescriber.com.)

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 services as you use them. Many people with original Medicare purchase a Medigap policy to help minimize out-of-pocket liability.

On the other hand, Medicare Advantage plans 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 National Council on Aging, the maximum out-of-pocket limit for Medicare Advantage enrollees in 2024 is $8,850 for approved services.

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 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 – 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.

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. However, 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:

Who Is Medicare Advantage Best For?

If you meet the following criteria then you might be a good candidate for a Medicare Advantage plan:

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 varies from county to county.