There are many factors to consider when choosing which Medicare plan is right for you—especially now that there are more options available than ever before.
We’re here to help ease your uncertainty about which plan best fits your lifestyle, budget, and medical needs. Use this guide to compare and contrast Original Medicare vs. Medicare Advantage so that you can make an informed and confident decision.
Original Medicare vs. Medicare Advantage
As with any insurance shopping process, you need to understand all of your options so you can select the best coverage for your situation—and at the best value possible. That means examining the ins and outs of Original Medicare and Medicare Advantage to determine which plan better aligns with your specific situation. After all, insurance is not a one-size-fits-all product.
While both plans offer Medicare coverage, they differ when it comes to costs, coverage and benefits, and access to providers.
First, let’s explore a brief overview of the two programs:
- Original Medicare: The US government created Medicare more than 50 years ago to help cover the medical expenses of older Americans. This federal health insurance plan is for people who are 65 years of age or older (or certain younger individuals with disabilities or end-stage renal disease). There are different parts of Medicare dedicated to helping cover specific services, including Part A (hospital stays and hospice), Part B (doctor’s visits and medical supplies), and Part D (prescription drugs).
- Medicare Advantage: Private Medicare plans, like those offered by Medicare Advantage, aren’t new—they have been available since Medicare’s inception in 1966. This coverage is also known as Part C, an all-in-one plan that bundles Parts A, B, and sometimes D. These plans are legally required to cover all of the services Original Medicare covers, and they often go beyond that coverage to offer even more benefits. As of 2017, one in three people with Medicare is enrolled in a Medicare Advantage plan1.
Now, let’s examine some of the key differentiators:
Compare Original Medicare vs. Medicare Advantage
|Original Medicare||Medicare Advantage|
|Costs||Medicare sets premiums, deductibles, copayments, and coinsurance||Each individual plan sets its own premiums, deductibles, copayments, and coinsurance|
|Out-of-pocket spending||No limits||Limits required on all plans ($6,700 max)|
|Prescription drug coverage||Must purchase separate Part D coverage||Included with many plans|
|Additional benefits||None||Dental and vision coverage included with many plans|
|Provider access||Can visit any provider who accepts Medicare||Must visit in-network providers (out-of-network providers available at a higher cost)|
|Specialist access||No referrals required||May require referrals|
|Plan||Parts A and B||Part C (and sometimes Part D)|
Data effective 1/30/19. Information provided is subject to change.
Now that you have a better understanding of the basic elements of each plan, it’s time to dive deeper into the nuances and what they mean for you. Let’s examine the five most frequently asked questions:
Who manages each plan?
Because the federal government manages Original Medicare, the benefits are exactly the same for every enrollee. As such, there are no pre-existing condition limitations or waiting periods to worry about.
On the other hand, private insurance companies manage Medicare Advantage. This means that they must offer at least the same amount of coverage you’d receive under Original Medicare. They can also offer enhanced coverage, such as vision and dental care, wellness programs, and discounts on gym memberships.
Which plan offers the greatest provider flexibility?
If you prefer to have greater access to a larger pool of providers, then Original Medicare may be the best fit. You’ll have the freedom to visit any provider who accepts Medicare, you won’t have to choose a primary care provider, and therefore you won’t need a referral to see a specialist. This is also the ideal plan if you travel frequently or have a seasonal home because you have access to the broadest network possible.
Conversely, Medicare Advantage has a more limited network because it is a private insurance plan. Medicare Advantage can also drop providers from its network throughout the plan year, which may prevent you from seeing your preferred physician.
Which plan offers extra perks?
Certain Medicare Advantage plans offer additional benefits, such as routine vision and dental coverage, hearing aids, and prescription eyewear. Also, most of these plans offer prescription drug coverage (see below for additional details).
Finally, some Medicare Advantage plans also offer discounts on gym memberships, medical nutrition therapy, educational programs related to various medical conditions, 24-hour access to nurse hotlines, personal emergency response systems in case of a medical event or fall, and more.
Which plan covers prescription drugs?
Original Medicare does not offer prescription drug coverage, which means you will need to sign up for Medicare Part D separately. Even if you aren’t on any prescriptions now, that could easily change down the road. But if you wait and then choose to sign up for Part D when that need arises, you will face a monthly late enrollment penalty (the severity of which depends on how long you went without coverage) that will last for as long as you have a Part D plan.
Alternatively, most Medicare Advantage plans include prescription drug coverage.
Which plan is most budget-conscious?
Original Medicare has no out-of-pocket maximum, which means you’ll pay a portion of the cost of your medical services throughout the year. This can make it difficult to estimate how much to allocate to your medical expenses each year, particularly if you’re on a fixed income.
On the other hand, all Medicare Advantage plans have an out-of-pocket maximum of $6,700 per year (some will be lower). Once you reach that limit, the remainder of your expenses for the year will be covered.
Who is Original Medicare best for?
Still wondering which plan is right for you? Choosing a Medicare plan is a very personal decision—what makes the most sense for your individual situation may not be the best choice for your spouse, neighbor, or friend.
You might benefit from selecting Original Medicare if you . . .
- Travel or have a second home. You can use any Medicare-accepting provider across the country, which can be especially helpful to snowbirds.
- Desire ease of use. You won’t need to choose a primary care provider or obtain a referral to see a specialist.
- Have pre-existing conditions. You will not be denied coverage by Original Medicare if you have a pre-existing condition.
- Don’t want to pay an additional premium. Most people get Original Medicare Part A at no cost, so the only premium you’ll likely pay is for Part B coverage.
- Don’t mind purchasing supplemental coverage. If you’re concerned that Original Medicare may result in too many out-of-pocket costs, you can purchase Medicare Supplement insurance, or Medigap, to help offset the costs.
- Don’t take any or many prescription medications. While Original Medicare doesn’t offer drug coverage, you can always buy a separate Part D plan that does.
Who is Medicare Advantage best for?
Do you think that Medicare Advantage might be the right choice for you? You might benefit from selecting Medicare Advantage if you . . .
- Have a limited budget. Medicare Advantage plans offer lower premiums (and some plans have no premium) and cap out-of-pocket expenses at $6,700 per year by law.
- Want ancillary benefits. Many Medicare Advantage plans offer vision and dental coverage, among other health and wellness-related options.
- Take prescription medications. About 82 percent of Medicare Advantage plans include prescription drug coverage, according to the Kaiser Family Foundation, so you won’t need to purchase separate Part D coverage.
- Have low medical usage. Medicare Advantage tends to appeal to those who rarely visit the doctor because you pay for your services as you use them versus paying a higher upfront premium.
- Prefer convenience. You may find it easier to receive all of your Medicare benefits in one simple plan with one monthly premium.
You’ll also have a decision to make regarding HMOs vs. PPOs if you choose Medicare Advantage. Here is a quick explanation of each option:
- HMOs. Health Maintenance Organizations (HMOs) have closed provider networks. You’ll choose a primary care physician and will likely need to get a referral to see a specialist.
- PPOs. With Preferred Provider Organizations (PPOs), you won’t have to choose a primary care doctor or get a referral to see a specialist—but you’ll want to stay within your network to save money on your medical care.
Be sure to read up on all of the upcoming Medicare Advantage plan changes before finalizing your decision, as these updates could further complicate your assessment.
What if you change your mind?
Even with all of the information you’ve now learned, we understand just how daunting this decision can be. Take comfort in knowing that you’re not making a lifelong decision. In fact, if you choose Medicare Advantage and are not happy with that selection for whatever reason—your doctor leaves the network or you don’t want to get referrals to see specialists—you can return to Original Medicare during specific times of the year.
How? Each year, the Centers for Medicare & Medicaid Services (CMS) enacts changes to Medicare—and one of the biggest changes for 2019 is the new Medicare Advantage Open Enrollment Period, which runs from January 1 through March 31. If you have already enrolled in a Medicare Advantage plan and want to switch Medicare Advantage plans, leave your Medicare Advantage plan and return to Original Medicare, or add a Part D plan (if returning to Original Medicare), you may do so during this period. To find out more about other opportunities throughout the year to make the switch, consult this guide.
Before you leave your current coverage, do your research. For instance, you’ll want to make sure you will be approved for Medigap coverage (Medicare Supplement insurance). You’ll also want to set up your Part D coverage so that your transition will be seamless and you aren’t hit with unexpected bills or penalty charges down the road.
Ready to compare specific Medicare plans?
If you feel as though you have enough information on Original Medicare vs. Medicare Advantage and are ready to start exploring the individual Medicare health plan options, give a licensed Medicare expert a call today.. It’s advisable to compare plans from multiple companies—taking into account your location, your current state of health, benefits coverage, Star Ratings, and more—to ensure you make the most informed decision possible.
1. The Commonwealth Fund, “The Evolution of Private Plans in Medicare”
2. Henry J. Kaiser Family Foundation, “Medicare Advantage 2017 Spotlight: Enrollment Market Update”
3. Henry J. Kaiser Family Foundation, “Medicare Advantage”
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