When you first enroll in Medicare, you need to make an important choice that will impact your healthcare coverage. You must decide whether to join Original Medicare provided directly by the government or a Medicare Advantage Plan offered by private insurance companies.
Understanding the major differences between Medicare and Medicare Advantage is critical to selecting the right coverage option when you become eligible at age 65.
What is Traditional Medicare?
Original Medicare consists of two parts – Part A and Part B:
- Medicare Part A covers inpatient hospital care, skilled nursing facility care, hospice care and some home health services. Most people do not pay a monthly premium for Part A.
- Medicare Part B covers doctor visits, preventive care, durable medical equipment, diagnostic tests, x-rays, dental care, outpatient procedures and other medical services. You pay a monthly premium for Part B coverage.
Original Medicare is managed directly by the federal government. It offers standardized coverage nationwide, so your benefits and costs for doctor and hospital visits are the same everywhere in the U.S.
You can go to any doctor or hospital that accepts Medicare. It does not require referrals to see specialists. When you receive care, you simply pay a portion of the Medicare-approved amount for covered services.
An important gap in Original Medicare is that it does not cover prescription drugs. You would need to purchase separate prescription drug coverage through a private Medicare Part D drug plan. Original Medicare also does not provide coverage for vision, dental or hearing care.
What is Medicare Advantage?
Medicare Advantage Plans are an alternative private insurance option for Medicare benefits. These plans are sold by insurance companies approved by Medicare.
With Medicare Advantage, you still have Medicare and must continue paying your monthly Part B premium. But your coverage is provided through the private Medicare Advantage Plan rather than Original Medicare.
Medicare pays the Medicare Advantage Plan a set monthly amount for your care based on average costs in your area. In return for this payment, the Medicare Advantage Plan must provide at least the same level of benefit coverage as Original Medicare offers under Parts A and B.
However, Medicare Advantage Plans have flexibility in how they structure other costs and coverage details within Medicare’s basic requirements. Some key ways Medicare Advantage Plans can differ from Original Medicare include:
- Provider networks – Plans may require you to use doctors and hospitals in their network except for emergency care. Out-of-network care often has higher costs.
- Referrals for specialists – Some Medicare Advantage Plans may require you to get a referral from your primary care doctor before seeing a specialist.
- Prescription drug coverage – Most Medicare Advantage Plans include Medicare Part D Plan with the medical benefits.
- Out-of-pocket limits – Medicare Advantage Plans have a yearly cap on your costs for covered medical services. Once you reach this amount, the plan pays 100% of covered costs for the rest of the year. Original Medicare does not have an out-of-pocket maximum.
- Extra benefits – Medicare Advantage Plans frequently include routine dental, vision, hearing coverage and fitness programs that Original Medicare does not cover.
- Plan rules – Medicare Advantage Plans can have different prior authorization requirements, provider access rules and approval processes for procedures and medications.
- Travel coverage – Original Medicare covers you nationwide whereas Medicare Advantage Plans only cover you within your service area if you need non-emergency care outside your plan’s network.
As you can see, Medicare Advantage Plans offer bundled medical and prescription drug coverage but have more plan-specific rules and restrictions compared to uniform Original Medicare benefits.
Key Differences Between Medicare and Medicare Advantage
The differences between Original Medicare and Medicare Advantage can be summarized as:
|Original Medicare||Medicare Advantage Plans|
|Managed by the federal government||Run by private insurance companies|
|Standardized benefits nationwide||Benefits can vary by plan|
|See any Medicare provider||Networks limit providers|
|No referrals required||May require referrals for specialists|
|Covers medical only||Covers medical and prescription drugs|
|No out-of-pocket spending limit||Has annual out-of-pocket spending limits|
|Does not cover vision, dental etc.||Often includes extra benefits like dental & vision|
|Higher Part B premium cost||Often has $0 premium plans available|
|Travels with you||Travel coverage may be limited outside service area|
As you can see, these are very different approaches to Medicare coverage. Choosing between Original Medicare or Medicare Advantage depends on your specific healthcare needs, budget and preferences.
Should You Choose Original Medicare or Medicare Advantage?
Important questions to think about when deciding between Original Medicare and Medicare Advantage include:
- How much will you pay in premiums, deductibles, copays and coinsurance throughout the year?
- Do you want the freedom to see any healthcare provider that accepts Medicare?
- Will your current doctors accept the Medicare Advantage Plan you’re considering?
- Do you take any prescription medications and need drug coverage?
- Do you have a complex medical condition that requires seeing specialists?
- Do you travel frequently and need national healthcare coverage?
- Are dental, vision and hearing benefits important to you?
- Do you prefer minimum plan rules and administrative hassles?
As you weigh these factors, think about your anticipated healthcare needs both locally and when traveling to determine if Original Medicare or Medicare Advantage better fits your lifestyle.
Neither approach is inherently better or worse. It depends on your individual circumstances, priorities and budget. Some people prefer Original Medicare’s simplicity and flexibility while others like Medicare Advantage Plans’ cap on out-of-pocket costs and extra benefits.
How to Enroll in Original Medicare vs Medicare Advantage
When you become eligible for Medicare at age 65, you have a seven-month Initial Enrollment Period to sign up:
- The three months before your 65th birthday month
- The month you turn 65
- The three months after your birthday month
To get Original Medicare, you simply enroll in Medicare Parts A and B. This provides coverage directly through the federal government.
To join a Medicare Advantage Plan, as a beneficiary you enroll in a specific plan offered in your area by a private insurance company. When you enroll in a Medicare Advantage Plan, Medicare services are covered through the plan rather than Original Medicare.
You can switch between Original Medicare and Medicare Advantage during Medicare’s annual Open Enrollment Period from October 15 to December 7 each year. Your coverage for the next year depends on your plan selection during this window.
Get Help Comparing Your Medicare Options
Trying to weigh Original Medicare against Medicare Advantage can feel confusing. For personalized assistance understanding your options, use free Medicare counseling services:
- Call 1-800-MEDICARE
- Contact your State Health Insurance Assistance Program (SHIP)
- Meet with an insurance broker
- Speak to a Medicare-approved health plan representative
Getting unbiased guidance can help you decide whether Original Medicare or Medicare Advantage better meets both your health needs and budget. Before making a decision, learn as much as you can about the significant differences between traditional Medicare vs Medicare Advantage coverage.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Think65 a Call at (719) 301-1220. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
What is the difference between Original Medicare and a Medicare Advantage Plan?
Original Medicare is a fee-for-service health plan run by the federal government that provides basic medical coverage. Medicare Advantage Plans are run by private insurance companies approved by Medicare. They provide all Part A and Part B coverage plus usually include prescription drug coverage and other extra benefits.
Can I get a Medicare Supplement Plan with a Medicare Advantage Plan?
No, if you enroll in a Medicare Advantage Plan you do not need a separate Medigap Plan. Medicare Advantage Plans are required to cover at least the same benefits as Original Medicare plus additional benefits. Medigap policies are only for use with Original Medicare.
Do Medicare Advantage Plans cover care outside the U.S.?
No, Original Medicare is the only Medicare Plan that covers some healthcare costs overseas. Medicare Advantage Plans only cover emergencies within the U.S. If you want coverage outside the U.S., consider buying a separate travel medical insurance plan.
Can I switch between Original Medicare and a Medicare Advantage Plan?
Yes, during the Annual Election Period you can switch between Original Medicare and a Medicare Advantage Plan. You can also switch to a different Medicare Advantage Plan during this period. This runs from October 15-December 7 each year.
Do Medicare Advantage Plans have networks like commercial insurance?
Yes, most Medicare Advantage Plans are HMO or PPO plans that have a network of medical providers you must use to get full coverage. You may pay more for seeing an out-of-network provider. Original Medicare does not have provider networks.