Original Medicare and Medicare Advantage offer the same Part A and Part B benefits. However, they have different healthcare professional network rules, prescription drug coverage, and availability of additional benefits.
Each Medicare plan has pros and cons. Both Original Medicare and Medicare Advantage have limitations and added benefits for their users.
This article compares Original Medicare and Medicare Advantage plans. It also explains the premiums that a person can expect to pay.
Glossary of Medicare terms
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Original Medicare is a government health insurance program that covers hospital and medical costs. It is made up of Part A and Part B.
Part A covers hospital costs. It includes inpatient care at a hospital, the care received in a skilled nursing facility while recovering from a health condition, and hospice care.
Part B covers medical costs as an outpatient. It includes preventive care services, doctor visits, laboratory tests, durable medical equipment, and some home health services.
There is limited coverage for prescription drugs with Original Medicare. However, a person can opt for a stand-alone Medicare Part D prescription drug plan.
Learn more about Original Medicare.
Private insurance companies that Medicare has approved administer Medicare Advantage plans. These plans are also known as Medicare Part C plans.
The plans offer an alternative to Original Medicare. They combine the benefits of parts A and B as well as, usually, Part D. Many plans also offer coverage for wellness programs and vision, dental, and hearing care.
There are four main types of Medicare Advantage plans, some of which have strict rules about network healthcare professionals.
In 2023, 30.8 million people were enrolled in Medicare Advantage plans, according to the nonprofit KFF. This accounts for 51% of the population who are eligible for Medicare.
As of January 2021, people with end stage renal disease (ESRD) can choose to enroll in either an Original Medicare or Medicare Advantage plan. Prior to this date, these individuals were rarely able to enroll in a Medicare Advantage plan.
Learn more about Medicare Advantage (Part C).
The table below shows the differences between the two different Medicare options:
| Original Medicare | Medicare Advantage | |
|---|---|---|
| Costs | Standard charges for Part A and Part B costs apply, including a monthly Part B premium. After paying the Part B deductible, a person will pay a 20% coinsurance for covered services with participating healthcare professionals. | Costs vary depending on the specific plan. A person may have a possible copayment for in-network care. Plans may charge a monthly premium besides the Part B premium, which is still payable to Medicare. |
| Supplemental insurance (Medigap) | An individual can pay an additional premium for Medigap to cover some out-of-pocket Medicare costs. | Medigap is not available. |
| Prescription drug coverage | A person may have limited prescription drug coverage in certain situations. | Most plans include drug coverage. |
| Healthcare professional access | A person can choose any doctor who accepts Medicare. Individuals do not need a doctor’s referral to see a specialist. | Some Medicare Advantage plans require individuals to use only in-network doctors and healthcare providers. A person may need a referral to see a specialist. |
| Extra benefits (e.g., vision, hearing, dental) | It does not offer any extra benefits. | Many plans offer extra benefits. |
| Covered services for travel anywhere in the United States | Yes, this is included. | Not all plans provide out-of-state coverage. A person can check with their plan provider for confirmation. |
| Out-of-pocket costs | Yes. Out-of-pocket costs include premiums, deductibles, and copays. | Generally, yes. Costs include premiums, deductibles, and copays. |
| Deductibles | Yes. The deductible is $240 before Original Medicare begins to pay. | Some plans have deductibles, which may vary by plan and location. |
| Coinsurance and copayments | Generally, yes. This is usually around 20% of covered costs. | Generally, yes. These will vary depending on plan and provider. |
| Premiums | Most people are eligible for premium-free Part A. Most people pay a Part B monthly premium. | Premiums vary but start at $0. People must also pay the Medicare Part B monthly premium directly to Medicare, not the plan provider. |
| Maximum out-of-pocket spending limit | No. | Yes. Plans pay full, eligible care costs after the insured person reaches a specified limit. |
Medicare premiums vary in cost depending on an individual’s circumstances.
Premium-free Part A
If a person or their spouse paid Medicare taxes for 40 quarters while working, they typically do not pay a premium for Part A. Medicare refers to this as premium-free Part A.
Part A
If someone has to buy Part A coverage in 2024, they will pay $505 per month if they paid Medicare taxes for fewer than 30 quarters, according to the Centers for Medicare & Medicaid Services (CMS).
Those who paid Medicare taxes for 30 to 39 quarters will pay a 2024 monthly premium of $278, per the CMS.
Part B
Medicare bases this premium on a person’s income from the previous 2 years.
The standard Part B premium in 2024 for people who made less than $103,000 in 2022 is $174.70 per month.
Part D
People wishing to include coverage for prescription medication may opt for a Part D plan, also known as a prescription drug plan. The monthly premiums for these plans vary. As with Medicare Advantage plans, private insurers administer Part D plans.
The national base premium in 2024 is $34.70. People who make more than $103,000 per year will have to pay extra fees on top of their monthly premiums.
Medicare Advantage
Medicare Advantage premiums vary depending on the selected plan.
Some insurance companies offer zero-premium plans with higher out-of-pocket expenses. In 2024, the average monthly premium for Medicare Advantage plans is $18.50.
People can compare Medicare Advantage plans using the plan finder tool on the government website.
Here we look at some of the most frequently asked questions relating to Original Medicare and Medicare Advantage coverage.
Do Medicare Advantage plans replace Original Medicare?
It would not be accurate to say that Medicare Advantage replaces Original Medicare. Medicare Advantage plans offer an alternative way to receive Medicare health coverage with possible extra benefits.
Medicare rules state that Medicare Advantage plans must offer at least the same benefits as Original Medicare. However, as private medical insurance companies administer the plans, they have the freedom to provide additional benefits that Original Medicare does not offer.
With Medicare Advantage, an individual still pays Medicare directly for their Original Medicare premiums, but they may also have to pay a separate premium to the plan provider.
How do I know whether I have Original Medicare or Medicare Advantage?
An individual can check their plan documentation, including their membership card, to confirm whether they have Original Medicare or Medicare Advantage.
Alternatively, they can access their policy information online at mymedicare.gov. Once an individual has logged in, they can see their plan name, along with their enrollment status information.
Another option is to contact Medicare at 800-633-4227. A customer service representative can provide the person with their plan information.
Which Medicare plan is right for me?
A Medicare plan that suits one person may not meet the needs of another person. The best plan for a person will depend on various factors and circumstances, including medical needs, finances, and location.
It is important that individuals carefully assess each plan and find the one that offers them the best healthcare coverage for their situation.
The State Health Insurance Assistance Programs (SHIP) National Network offers free and impartial advice to those who wish to discuss their health insurance plan options, including Medicare, in more detail.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Private insurance companies administer Medicare Advantage plans as another option for people who receive Medicare benefits.
People with a Medicare Advantage plan still receive their Original Medicare benefits.
Some people find that one option provides more significant cost savings than the other. The pros and cons of the different plans depend on an individual’s circumstances and location.
Independent advice is available through a person’s local SHIP center.