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Nov 29, 20236 min read

What is the Big Difference Between Medicare and Medicare Advantage?

Updated: Oct 10

Medicare is a federal health insurance program that provides coverage for Americans aged 65 and older, as well as younger people with certain disabilities. But navigating Medicare and its various parts can be complex. Two of the most commonly confused elements are Original Medicare (Parts A and B) and Medicare Advantage (Part C). While both offer valuable medical coverage, there are substantial differences to understand before enrollment.

A Brief Background

Original Medicare consists of Part A, which covers hospital stays and skilled nursing services, and Part B, which covers doctor visits and outpatient care. Medicare Advantage (also known as Part C) bundles all the benefits of Parts A and B together and is offered by private insurance companies approved by Medicare. These plans often include additional benefits not provided by Original Medicare.

With two very different Medicare options available, it is crucial to weigh them both when deciding on coverage during open enrollment each year. Evaluating network flexibility, costs, and specific benefits included will provide the details needed to determine if Original Medicare or Medicare Advantage better suits your healthcare priorities.

Original Medicare: The Federal Program

Original Medicare includes Part A hospital insurance and Part B medical insurance. Together these cover medically necessary services and supplies in hospitals, skilled nursing facilities, home health agencies, doctor’s offices, and other healthcare settings.

Part A (Hospital Insurance):

Covers inpatient hospital stays, skilled nursing facility care, home health care, and hospice care
Most people do not pay a premium for Part A since sufficient work credits cover costs
In 2023, there is a $1,600 deductible per benefit period for hospitalizations

Part B (Medical Insurance):

Covers doctor visits, preventative screenings, ambulances, lab tests, medical equipment, and more
Current monthly premium amount is $164.90 for most beneficiaries
Annual deductible amount is $226 in 2023

While Original Medicare covers the basics, there are some key areas missing from coverage:

Prescription drug coverage (Part D must be purchased separately)
Routine vision, dental, or hearing coverage
Fitness benefits like gym memberships
Care when traveling overseas

Without supplemental coverage, these costs would need to be paid mostly out-of-pocket.

Medicare Advantage: Private Plan Alternatives

Medicare Advantage Plans are an alternative way to get Medicare benefits offered by private health insurance companies instead of directly from the federal program. Each plan must cover at least the same amount as Original Medicare, but many offer expanded coverage for vision, hearing, dental, and more.

Here’s a high-level overview:

Bundles Original Medicare benefits together in one plan
Frequently offers prescription drug coverage
Often covers extra benefits not included with Original Medicare
Plans have provider networks and service area restrictions
Out-of-pocket costs can be higher than Original Medicare

Providers customize plan designs to attract customers in a competitive marketplace. Most include perks like no referrals needed to see specialists, meal delivery after hospitalization, transportation services, and other unique additions. Many Medicare Advantage Plans even subsidize gym memberships to encourage regular exercise.

Distinct Differences to Understand

While both Medicare and Medicare Advantage aim to provide quality healthcare coverage, there are inherent variances impacting flexibility, costs, and total benefits received.

Freedom of Provider Choice

Original Medicare lets beneficiaries access any doctor or hospital participating in Medicare across the entire country. There are no networks or referrals required. Medicare Advantage Plans have restricted provider networks and may require referrals to specialists within their approved network.

Out-of-Pocket Cost Responsibility

With Original Medicare, beneficiaries must pay Medicare deductibles, applicable coinsurance or copays for covered services, and any non-covered care out-of-pocket. There is no annual limit on these costs. Medicare Advantage Plans have annual out-of-pocket maximums, capping personal expenses. But coinsurance, copays and non-covered services also apply before the limit is reached.

Comprehensive Health Services

While dental, vision and hearing services are not part of Original Medicare, many Medicare Advantage Plans incorporate these as covered benefits. Additional services like transportation, meal delivery, bathroom safety devices and care coordination may also be offered by Medicare Advantage Plans as extra perks.

Key Decision Factors to Weigh

When evaluating Medicare vs Medicare Advantage coverage, focus on how personalized needs align with the options. Consider specific healthcare priorities, budget parameters, and overall experience.

Weigh Coverage Needs

Does routine dental work rank high on priority lists? Do vision expenses impact adherence to diabetes care? Determine must-have coverage. Original Medicare requires purchasing extra benefits separately. Medicare Advantage may bundle desired services together under one plan.

Assess Budget Limitations

While Medicare Advantage offers caps on annual healthcare costs, the combined deductibles, copays and coinsurance paid out-of-pocket could exceed Original Medicare expenses for those utilizing extensive treatment. Run cost projections based on anticipated medical services required.

Compare Healthcare Interactions

Prefer no constraints on provider access? Value comprehensive care coordination? Medicare allows complete choice flexibility to manage personal health decisions without interference. Medicare Advantage exchanges networks and referrals for expanded benefits and customized guidance. Decide which path optimizes the care experience.

Selecting the Best Medicare Approach

As healthcare needs and financial considerations vary, only personalized evaluations reveal if Original Medicare or Medicare Advantage better fulfills individual circumstances. Fortunately, Medicare’s annual open enrollment period enables modifications allowing adjustments as priorities shift. Stay informed on plan updates and costs when making selections each year. With sound analysis, beneficiaries can find the ideal Medicare solution.

Frequently Asked Questions

Can you explain the difference between Original Medicare and Medicare Advantage?

Sure, Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). You pay the government-issued Part B premium and use any doctor or hospital nationwide that accepts Medicare. Medicare Advantage (Part C) is an alternative to Original Medicare coverage. These "bundled" plans include Part A, Part B and usually Part D (prescription drug coverage). They are offered by private insurance companies approved by Medicare and may offer additional coverage, like vision, hearing, dental and/or health and wellness programs. The services, costs, and rules can vary by plan.

What is a Medicare Supplement (Medigap) and can it be used with a Medicare Advantage Plan?

A Medicare Supplement, also known as Medigap, is health insurance sold by private companies that can help pay some of the health care costs that Original Medicare doesn't cover, like copayments, coinsurance, and deductibles. Medicare Supplements cannot be used with Medicare Advantage. You can only buy a Medigap policy if you're enrolled in Original Medicare.

How does choosing between Original Medicare and a Medicare Advantage Plan impact my coverage?

Original Medicare allows you to go to nearly all doctors and hospitals in the U.S. that accept Medicare. In contrast, Medicare Advantage Plans may have a network of doctors and hospitals that you need to use to get full coverage. Your costs, coverage, and rules will vary depending on the Medicare Advantage Plan you choose. Therefore, it's important to check the specific plan's details before enrolling.

Can I change from Original Medicare to Medicare Advantage or vice versa?

Yes, you can switch from Original Medicare to Medicare Advantage or from Medicare Advantage back to Original Medicare during certain periods. You have a right to switch during the Medicare Open Enrollment Period, which is October 15 through December 7 each year.

How does Medicare Supplement insurance work with the various types of Medicare?

Medicare Supplement insurance, also known as Medigap, works only with Original Medicare (Part A and Part B). Medigap policies cover out-of-pocket costs that Original Medicare doesn't. You cannot use Medigap with a Medicare Advantage Plan.

What is the difference in cost between Original Medicare and Medicare Advantage?

The cost can vary widely between Original Medicare and Medicare Advantage. Original Medicare has a Part B premium, and costs for services like deductibles, copays, and coinsurance. Medicare Advantage premiums can range from $0 to over $100 per month, depending on the plan and coverage. Plus, you still have to pay the Part B premium. So, it's crucial to compare all costs when choosing a plan.

Do all Medicare Advantage Plans include prescription drug coverage?

Most Medicare Advantage Plans include prescription drug coverage (Part D). If a Medicare Advantage Plan includes prescription drug coverage, you cannot get a standalone Part D Plan. If you want prescription drug coverage, you need to choose a Medicare Advantage Plan that includes it.

Are there any differences between traditional Medicare and a Medicare Advantage health plan in terms of service coverage?

Both Traditional Medicare and Medicare Advantage cover medically necessary services. However, some Medicare Advantage Plans may also provide benefits that Original Medicare doesn't cover, like dental care, hearing aids, vision care, and wellness programs. The specific service coverage will vary by plan.

What happens if I go with Original Medicare and then decide I want a Medicare Advantage Plan?

If you wish to switch from Original Medicare to a Medicare Advantage Plan or vice versa, you can do so during the Medicare Open Enrollment Period, which is October 15 through December 7 each year.

When is the best time to buy a Medigap policy in relation to enrolling in Original Medicare?

The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period which begins on the first day of the month in which you're 65 or older and enrolled in Part B. During this period, you can buy any Medigap policy sold in your state, even if you have health problems.