Original Medicare vs. Medicare Advantage

Alex Enabnit
Licensed Insurance Agent and Medicare Expert Writer
June 26, 2020

Your path to Medicare begins with one choice: Original Medicare or Medicare Advantage.

Whether you should choose Original Medicare or Medicare Advantage depends on what you need from your health insurance. We’ll discuss each option in depth, weigh the pros and cons, and help you make an informed decision about your future in Medicare.

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What’s the difference between Original Medicare and Medicare Advantage?

The biggest difference between Medicare and Medicare Advantage is the provider. The government provides original Medicare; private insurance companies provide Medicare Advantage. Both providers have different methods of administering health care.

What is Original Medicare and how does it work?

Original Medicare (sometimes called Traditional Medicare) is the government-provided option for health-care coverage for anyone 65 and older or people with qualifying disabilities. Original Medicare consists of two components: Part A and Part B.

Medicare Part A is colloquially called hospital insurance, although it covers more than just that. Part A covers hospitals and skilled nursing facilities as long as you’re admitted as an inpatient. Part A also covers hospice care. Most people get Part A for free if they (or their spouse) worked long enough and paid Medicare taxes—about 10 years total.

Medicare Part B is called medical insurance and covers just about everything else (with the notable exception of prescription drugs). Medicare Part B covers doctors, specialists, outpatient procedures, lab tests, durable medical equipment, and so on. Part B requires a monthly premium, which most people pay through a deduction on their Social Security payment.

Most people sign up for both Medicare Part A and Part B, although you don’t technically have to. You’ll never be forced to enroll in any part of Medicare you don’t want to. Just understand that if you decide later you want Part B, you’ll face some hefty late enrollment penalties.

Original Medicare: the à-la-carte approach

If you choose Original Medicare instead of Medicare Advantage, you can tailor your coverage in an à-la-carte fashion, adding up to two more components (each of which requires an additional monthly premium):

  • Part D covers prescription drugs. Private insurance companies sell standalone Part D plans that you may add to your coverage.
  • Medigap (or Medicare Supplement) plans lower your copayments, deductibles, and other Medicare costs. Private insurance companies sell Medigap plans as well. There are several plans to choose from with varying coverage amounts, and two Medigap plans—Plans K and L—provide the only means of getting an out-of-pocket limit within Original Medicare.
Pro Heading
Pros
Pro Bullet Coverage amounts consistent from year to year
Pro Bullet Standardized premiums, deductibles, and coverage amounts
Pro Bullet More flexible (no referrals required)
Pro Bullet Accepted nationwide
Pro Bullet More customizable to the individual
Pro Bullet You can keep your doctor if they accept Medicare
Con Heading
Cons
Con Bullet No out-of-pocket limit (unless you purchase Medigap Plan K or L)
Con Bullet No supplemental benefits (dental, vision, etc.)
Con Bullet Slow to adapt to new technology (like telemedicine)
Con Bullet Could be more expensive without a Medigap plan

What is Medicare Advantage and how does it work?

Medicare Advantage (often called Medicare Part C) is the privatized version of Medicare, consisting of individual health plans managed and sold by private insurance companies. Medicare Advantage resembles employer-sponsored health plans with components like networks, preferred providers, and out-of-pocket limits.

Medicare Advantage plans may have different management methods, but most often you'll see two kinds:

Medicare Advantage: The bundled approach

Medicare Advantage plans bundle Medicare coverage into one comprehensive package, including at least Part A and Part B coverage. Most plans also include Part D prescription drug coverage as well. There are also additional benefits that you cannot get through Original Medicare.

Here are a few of the extra benefits you may see in a Medicare Advantage plan:

  • Dental coverage
  • Hearing coverage
  • Vision coverage
  • Fitness membership (such as SilverSneakers or Silver&Fit)
  • Transportation for medical appointments
  • Telemedicine
  • Meal delivery
  • Over the counter medication allowance
  • Adult daycare services
  • In-home support services (cleaning, grocery shopping, etc.)

$0 premium Medicare Advantage plans: essential details

Companies may offer $0 Medicare Advantage plans—which can be fantastic—but don’t think those plans are free. If you sign up for Medicare Advantage, you’ll still pay a premium to Medicare for Part B (and Part A if you didn’t work long enough). 

Why do you have to pay for a service you’re not using, you might ask? Because when you sign up for Medicare Advantage, the federal government reimburses your plan sponsor for taking you on as a liability. So you pay the Part B premium to Medicare, and the federal government sends that money (and then some) to your Medicare Advantage plan sponsor.

In essence, a $0 premium Medicare Advantage plan means you won’t be paying more than you would for Original Medicare. But these plans can still be cheaper overall—especially if they include Part D prescription drug coverage. A standalone Part D plan with Original Medicare always requires an additional premium. Plus, the additional benefits (referenced above) add significant value to a plan that doesn’t cost a penny more than Traditional Medicare.

Pro Heading
Pros
Pro Bullet Supplemental benefits
Pro Bullet Out-of-pocket maximum limits liability
Pro Bullet Possibly cheaper, depending on level of care needed
Pro Bullet Bundled coverage often includes Part D
Pro Bullet Plans may come with no premiums or deductibles
Con Heading
Cons
Con Bullet Usually covers care only within a local/regional network.
Con Bullet Coverage, deductible, premium, etc., may change annually.
Con Bullet Bundled coverage is less customizable
Con Bullet You might not be able to keep your doctor (unless they’re contracted with the plan).
Con Bullet Each plan varies, so you have to do research to find one that works for you.

Original Medicare vs. Medicare Advantage: a comparison

To help you decide which option is better for you, here’s how Original Medicare and Medicare Advantage stack up to each other.

Original Medicare
Medicare Advantage

Cost Standardization

Medicare sets premiums, deductibles, copayments, and coinsurance.

Providers set different premiums, deductibles, copayments, and coinsurance for each plan.

Out-of-pocket spending

No limit.

Limits required on all plans.

Prescription drug coverage

Must purchase separate Part D coverage.

Included with most plans.

Additional benefits

None

Dental, vision, hearing, and fitness membership (plus more) included with most plans.

Provider access

Can visit any provider nationwide who accepts Medicare.

Must visit in-network providers. (Out-of-network providers may be available at a higher cost.)

Specialist access

No referrals required

May require referrals for specialists or procedures

Which is better: Original Medicare or Medicare Advantage?

After reading the comparisons, the pros, and the cons, you probably already have an idea which option may be best for you. But in case you need an extra nudge, here are some tips that can help you choose based on your lifestyle and budget.

Original Medicare is best for…

  • Snowbirds, sunbirds, RVers, or people who frequently travel.
  • People who want more customizable coverage.
  • People who expect higher health care (but only if the base coverage is supplemented with a Medigap plan)
  • Those who don’t mind paying extra for more coverage (Part D, Medigap, Dental insurance, etc.)

Original Medicare is usually the best choice for travelers. As long as you also have a Medigap policy, Original Medicare covers quite a bit of your costs and can turn higher medical bills into predictable monthly payments. And since Original Medicare allows you to add whatever Part D and Medigap plan you like, you can customize your coverage more than you can with Medicare Advantage.

However, all that customization doesn’t come cheap. Each component you add requires a monthly premium, which may be out of the budget for people on fixed incomes.

Medicare Advantage is best for…

  • Those who want supplemental benefits
  • People who prefer coverage similar to employer-sponsored plans
  • People who like bundled coverage
  • Anyone who doesn’t anticipate having high health needs
  • Those on a budget

With Medicare Advantage, you can generally get more for less: more perks, coverage for services not included in Original Medicare (like dental, vision, hearing), out-of-pocket limit, and so on. It's an excellent option for people on a budget since there are so many $0 premium plans out there, which often include Part D prescription drug coverage—coverage you’d need to pay an additional premium for if you were in Original Medicare. And the number of benefits packed into plans nowadays is a huge perk.

However, Medicare Advantage isn’t for everyone. Since plans can change each year, enrollees need to stay on top of the changes so they can determine whether a switch might be necessary. Similarly, if you anticipate frequently using your health care coverage, you may end up spending more than you would on Original Medicare.

What’s next?

Whether you choose Medicare Advantage or Original Medicare, you’ll need to sign up for Original Medicare first, before you can change your coverage. If you haven’t done that yet, read how to enroll in Original Medicare.

If you’re already in Original Medicare and that’s where you want to stay, you might consider adding a Part D plan and Medigap. See how to apply for each one in the following guides:

If you want to switch to a Medicare Advantage plan, we have a guide for that too.

Or, maybe you've made it through all this information, and you're still unsure what's the best choice for you. If so, you can call a licensed agent who can give you personalized help. They can even sign you up for a plan over the phone.

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Sources:

1. Henry J. Kaiser Family Foundation, "A Dozen Facts About Medicare Advantage

Content on this site has not been reviewed or endorsed by the Centers for Medicare & Medicaid Services, the United States Government, any state Medicare agency, or any private insurance agency (collectively "Medicare System Providers"). Eligibility.com is a DBA of Clear Link Technologies, LLC and is not affiliated with any Medicare System Providers.

Alex Enabnit
Written by
Alex Enabnit
Medicare and geriatric care expert, Alex has one motivation behind every word he writes, and that’s finding you the best medical coverage for your situation. Alex has been featured on Bloomer Boomer, Best Company, HealthPopuli.com, the Daily Ledger on the One America News Network, WBAP News radio, and more. Outside of work, you can find him hiking with his wife and pup or (occasionally) going to the gym.
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