Whether you’re approaching 65, caring for an aging loved one or thinking about changing your Medicare plan, you might find yourself wondering what’s Medicare versus Medicare Advantage? In other words, what are the significant differences between original Medicare — the traditional fee-for-service program offered directly through the federal government — and Medicare Advantage, a type of private insurance offered by companies that contracts with the federal government?
In a 2022 review, researchers at the Kaiser Family Foundation (KFF) found a large majority of beneficiaries in both groups were satisfied with their care — findings that don’t exactly make your decision much easier. Making this choice is personal and requires you to take a hard look at your health, budget and need for flexibility.
“Both Medicare Advantage and original Medicare plus a Medicare Supplement (Medigap) policy offer great coverage options depending on individual risk, health and long-term financial objectives,” explains Fred Roth, president of Medicare Supplement at Humana. “Health care coverage beyond age 65 is not a one-size-fits-all solution, and investing the time to fully comprehend the options can eliminate or mitigate surprises down the road.”
Here Roth and experts offer tips and advice to help you make an informed coverage decision that’s right for you or your loved one.
What to know about original Medicare
Original Medicare requires piecing together two parts of the Medicare pie along with any additional pieces you decide to add on — except Medicare Advantage. Get your calculator ready!
- Part A: Covers in-patient hospital and skilled nursing facility care. If you’ve paid Medicare taxes for at least 10 years, there is no premium for Part A. However, the inpatient hospital deductible is $1,632 in 2024.
- Part B: Generally covers out-patient care, doctor bills, physical occupational and speech therapy, x-rays, lab tests, durable medical equipment and some preventive services. In 2024 the monthly premium is $174.70 (with the cost deducted from your Social Security check), an annual deductible of $240, and then a 20% copay for all services.
If you’re planning on traveling a lot in your golden years, it’s worth knowing original Medicare covers emergency care on cruise ships within six hours of a US port. However, there is no coverage for any medical costs incurred internationally. Since original Medicare does not have an out-of-pocket maximum or cap on what you may spend each year on your health care, it could be a big financial risk to travel abroad. Many people purchase a Medicare Supplement (Medigap) policy to help cover copays and other out-of-pocket costs.
“Medigap works a lot like car insurance,” says Roth. “You pay every month — even when you don’t use it. You pay a deductible to reduce what you pay every month, and you buy it to reduce financial exposure in case you get sick.”
The monthly premiums for Medigap vary by policy and where you live. In the state of Pennsylvania, for example, the 2024 monthly Medigap premiums range from $90 to $175. Roth acknowledges that these policies can be pricey; the national average is around $150 per month, and it does not include basic prescription drug coverage (Part D). In 2024, the average basic monthly premium for Part D plans is $34.50 with prices varying somewhat by location.
In addition to prescription drugs, a downside of original Medicare is that it doesn’t cover many common items and services that you may need as you get older such as:
- Most dental care and dentures
- Long-term care
- Eye exams for prescription glasses and contacts
- Routine physical exams
- Hearing aids and exams for fitting them
Given that close to 30 million adults living in the US have some degree of hearing loss, the FDA recently created a brand new category of over-the-counter (OTC) hearing aids, which are available without a prescription at stores like Walmart, CVS and Walgreens. If you or a loved one is on original Medicare, these OTC hearing aids could be a good alternative option.
“Health care coverage beyond age 65 is not a one-size-fits-all solution, and investing the time to fully comprehend the options can eliminate or mitigate surprises down the road.”
— Fred Roth, president of Medicare Supplement at Humana
What to know about Medicare Advantage
Medicare Advantage plans (Part C) provide the benefits of Part A, B and often D (referenced above) along with other benefits not included in original Medicare like vision, dental, hearing aids and gym memberships — but can do so with different rules, restrictions and costs. These bundled plans have grown in popularity in recent years, and it’s easy to see the appeal: The 2024 monthly premium average is only $27.94.
While domestic and foreign travel coverage varies, Medicare Advantage plans do offer nationwide emergency room coverage at any hospital that accepts Medicare. In addition, many plans are offering supplemental (non-medical) benefits for groceries, home-delivered meals and transportation.
“As a baby boomer, I am very used to PPOs and HMOs so the Medicare Advantage benefit design was very familiar to me,” says Thomas Campanella, a Medicare Advantage member living in Ohio who notes the key healthcare providers he uses have been in his chosen plan. “I’m very happy with my decision. I have low-cost premiums, comprehensive benefit coverage that includes drug and dental and additional wellness benefits.”
“As a baby boomer, I am very used to PPOs and HMOs so the Medicare Advantage benefit design was very familiar to me. I’m very happy with my decision. I have low-cost premiums, comprehensive benefit coverage that includes drug and dental and additional wellness benefits.”
— Thomas Campanella, a Medicare Advantage member living in Ohio
While some enrollees, like Campanella, are happy with their coverage, others can feel misled by the lack of transparency and benefits standardization.
“Many calls I receive are Dual-Eligible Special Needs Plan (D-SNP) members [those with both Medicare and Medicaid] complaining about their dental benefit or not understanding the benefit and thinking they don’t even have a dental benefit,” says Amy Paez, an independent medical sales representative. This may mean, for example, a beneficiary is expecting they can get really expensive dental work like crowns or bridges, but their plan only covers an annual cleaning and an X-ray.
D-SNPs are required to provide greater coordination of benefits than other Medicare Advantage plans to “improve coordination across programs and patient outcomes,” according to a KFF report. However, it is not clear how well D-SNPs coordinate with Medicaid to provide the full range of benefits to dual-eligible enrollees. From her perspective, Paez doesn’t feel enough education is being done. “Many D-SNP members are enrolled in a plan with dental benefits without even knowing it.”
Dr. Gerda Maissel, a board-certified physician and former health system leader now working as a private patient advocate, notes that Medicare Advantage plans are great when you are well, but they can have major drawbacks once you have a significant medical problem. For example, narrow networks can successfully provide coverage for preventative care and less complex illnesses where expertise is abundantly available.
But if you’re one of 1.9 million Americans diagnosed each year with cancer, your Medicare Advantage plan may put you at a disadvantage.
It’s also worth noting some Medicare Advantage plans have an annual out-of-pocket maximum as high as $8,850 in 2024 — a significant amount for those on fixed incomes.
Frequently asked questions about original Medicare vs. Medicare Advantage
A big part of caring for a loved one involves finding that person the right Medicare plan. Here are some common questions to help your loved one navigate their coverage and make decisions about their future.
Which Medicare plans offer flexibility in choosing providers?
With original Medicare, you can go to any healthcare provider that takes Medicare anywhere in the United States. On the other hand, Medicare Advantage plans typically require that you have a primary doctor within their network, receive referrals to see specialists and get pre-authorization for certain services.
Eric Hansen, CEO of Burst Medical Billing, recommends asking your preferred doctors and hospitals the following questions when deciding on a plan:
- Do you accept original Medicare?
- Do you accept Medicare’s assigned rates?
- Do you participate in the network for any Medicare Advantage plans?
- Which specific Medicare Advantage plans is the doctor in network for?
If you or your loved one has multiple doctors, you might find it more challenging to find a plan that encompasses all of them. For example, research in the Annals of Surgery found many Medicare Advantage plans excluded highly reputed providers of cancer care.
It also bears noting that some hospital systems are also opting out of Medicare Advantage plans due to “steep losses amid excessive prior authorization denial rates and slow payments from insurers,” according to Brian Murphy, branding director of Norwood, a health care staffing and consulting company. A recent episode of his podcast, “Off the Record,” featured a guest whose employer, Scripps Health, decided to opt out of its Medicare Advantage plans. In such cases, Hansen says a Medigap plan along with original Medicare might better suit your needs.
Are there differences in coverage for nursing homes and rehabilitation?
As anyone who has toured skilled nursing facilities (SNF) can attest, there is a great variation in quality, payer mix and cost factors. Research in the journal Health Affairs found beneficiaries in Medicare Advantage plans are more likely to go to home health agencies and nursing homes with lower quality ratings — meaning Medicare Advantage plans may therefore by contracting with lower-quality SNF providers. Rehabilitation benefits under Medicare Advantage can also be limited and you’ll have to get pre-approval for the care you need.
Regardless of how you receive your Medicare benefits, you always have the right to appeal any coverage decisions you don’t agree with. However, more often than not, a difficult choice must be made between ending the rehabilitation services Medicare has denied coverage and paying privately.
Case in point: Andrew Sokolowski, founder of LiveWell Health, a Naples, Florida-based company providing in-home senior functional fitness services, says he recently spoke with a family caregiver whose father was denied admission to a local rehabilitation hospital. Denial of coverage happens quite often for Medicare Advantage members, he says, because agencies, hospitals and care providers can choose whether or not to participate. “You’ll want to call your agent or insurance provider to understand the details and benefits of your individual policy — including which nursing homes may be used for rehabilitation,” says Sokolowski.
“You’ll want to call your agent or insurance provider to understand the details and benefits of your individual policy — including which nursing homes may be used for rehabilitation.”
— Andrew Sokolowski, founder of LiveWell Health
Pro tip: If you’re a senior who wants a loved one to be able to call Medicare on your behalf, you’ll need to add them as a representative in your MyMedicare.gov account (go to “manage my representatives”). You can also fill out and mail in a hard copy of form 10106 to CMS.
Are newer prescription medications covered by Medicare?
Most Medicare Advantage plans include Part D drug coverage, so unlike with original Medicare, you won’t need to buy it separately. On the other hand, each Medicare Advantage plan also has its own preferred drug list (called a drug formulary) that determines how much you pay for prescriptions.
Newer and more expensive drugs may be covered differently by different Medicare Advantage plans or not at all. Additionally, there are medications that neither original Medicare or Medicare Advantage plans are currently covering, such as drugs in the glucagon-like peptide-1 (GLP-1) agonists class like Ozempic and Trulicity.
“My mom just turned 65 and got into an Aetna Medicare Advantage plan after moving to Florida from Missouri,” explains Brett Jansen, host of “Show Me the Value,” a weekly health care podcast. “I was hoping when she moved here we could find a plan that would cover GLP-1s since she meets all the clinical criteria: She’s overweight, has high cholesterol and is pre-diabetic with an authorization written for the diabetes.”
Since the medication isn’t covered under Medicare, Jansen’s mom is currently paying out-of-pocket for the compound formulary of the drug. “It’s completely draining her savings,” says Jansen. “I don’t understand why a very large at-risk population entering into Medicare who also fit the criteria for these drugs can’t get them.”
Is there a Medicare plan with better coverage for people with dementia?
“If you have elderly parents or other loved ones with changes in memory or an established dementia diagnosis who are on Medicare Advantage, you may want to consider switching them to original Medicare,” says Dr. Dona Murphey, co-Founder and Managing Partner of PrognosUs, a digital health company that screens and stages dementia and connects caregivers to place-based community and clinical trials.
Dementia affects more than 6.7 million Americans in 2023, with 14 million projected cases by 2060. Under Medicare Advantage, Dr. Murphey notes beneficiaries will not qualify for CMS’ new Guiding an Improved Dementia Experience (GUIDE) Model of interdisciplinary care — which includes an annual $2,500 respite care stipend for caregivers.
To be eligible, you need to be an original Medicare beneficiary and find a provider in your community who is participating in the GUIDE Model. CMS is posting a list of participating providers this summer, as the program officially kicks off July 2024.
Who can help me choose and enroll in the right Medicare plan?
Your initial Medicare enrollment period begins three months before you turn 65 and ends three months after your 65th birthday month. If you find that the plan you have chosen does not work in your favor, you can always make a change during Medicare Open Enrollment the following year. Medicare’s fall open enrollment is from October 15 to December 7 and Medicare Advantage open enrollment is from January 1 to March 31.
Almost one in three Medicare beneficiaries age 65 or older rely on brokers or licensed Medicare agents to help them choose coverage, according to The Commonwealth Fund, a foundation that supports independent research on health care issues and makes grants to improve health care practice and policy.
“Medicare agents provide a valuable service,” adds Dr. Maissel. “I know ethical agents who work hard to help the client select their best option regardless of the money they earn.”
State Health Insurance Assistance Programs (SHIPs) also offer local, personalized counseling and assistance to people with Medicare and their families. Check their website to find a list of contacts in your state.
The bottom line on original Medicare vs. Medicare Advantage
Whether opting for a Medicare Advantage plan or sticking with original Medicare while adding a Medicare Supplement plan, you’ll want to weigh different factors such as your budget, lifestyle, medication and provider coverage, tolerance for financial risk and long-term planning.
Roth recommends that people who transition to Medicare at age 65 first start with original Medicare with a Medigap policy since you cannot be denied coverage as a part of your Initial Enrollment Period: “Starting with Medicare Advantage can limit your ability to move back to a Medigap policy later. That said, starting with original Medicare may be the best bet. That way you can always move to Medicare Advantage later, if you choose.”
