If you already have Medicare Parts A and B (or soon will), you can choose to receive your Medicare benefits via a Medicare Advantage plan with a private insurance company. In fact, almost half of all eligible Medicare beneficiaries do, and the number of people enrolled in Medicare Advantage plans has more than doubled since 2007.
But deciding which route is best for you depends on a few factors. Which is more important: a wider choice of doctors or a cap on your annual expenses? Do you want additional benefits such as vision, hearing, and dental coverage? How much do you travel? And are you willing to risk more coverage hassles or denials for a lower cost? There’s no one-size-fits-all answer, but we can help you understand the differences between the options so you can make the best choice in light of your personal situation.
Original Medicare: Key Features
Original Medicare, also referred to as “traditional Medicare,” is a fee-for-service program that consists of two parts: Part A (hospital insurance) and Part B (medical insurance).
Fee-for-service means that you aren’t required to use in-network providers to get a preferred rate and you don’t need a referral to see a specialist; you can use any provider that contracts with Medicare.
Medicare Part A
Medicare Part A covers inpatient care in hospitals, skilled nursing facilities, hospice care, and limited home healthcare services. Most people do not pay a premium for Part A, as long as they or their spouse paid sufficient Medicare taxes while working. The Medicare Part A deductible is $1,632 in 2024.
Medicare Part B
Medicare Part B covers outpatient care, preventive services, medical supplies, and various doctor services. Part B requires a monthly premium, which is $174.70 in 2024. The Medicare Part B deductible is $240 in 2024.
Both Parts A and B charge coinsurance amounts or copays once you’ve met the deductible, meaning you'll still have to pay some out-of-pocket expenses for care. Original Medicare does not cover most prescription drugs, dental care, vision care, or hearing aids. It also does not place a limit on your annual maximum out-of-pocket expenses (unless you buy a Medicare supplement plan—Medigap—that does).
Part D Prescription Drug Coverage
If you have traditional Medicare and want prescription drug coverage, you’ll need to purchase a Part D prescription drug plan. Part D is a stand-alone prescription drug plan offered by private insurance companies approved by Medicare. The average total Medicare Part D monthly premium is $55.50 in 2024.
Each plan has a list of covered drugs (a “formulary”) and may have different pricing tiers, copayments, or coinsurance.
Medicare Supplement Plans (Medigap)
Medigap policies are sold by private insurance and help cover some of Original Medicare’s out-of-pocket costs, such as deductibles, copayments, and coinsurance. They are only available if you’re enrolled in Original Medicare. (If you have a Medicare Advantage plan, you can’t get a Medigap policy.)
Medigap policies are standardized, meaning that policies for each plan type offer the same benefits, regardless of the insurance company. Still, premiums for Medigap policies can vary, even for the same standardized plan, and may be more expensive if you miss Medigap open enrollment.
During your Medigap open enrollment period, which starts the month you turn 65 and are enrolled in Medicare Part B, you can buy any Medigap policy in your state, regardless of your health status. If you miss this window, you may not qualify for a Medigap plan or could pay a higher premium—making Medicare Advantage a stronger value proposition.
Medicare Advantage: Key Features
Medicare Advantage, also known as “Part C,” is an alternative way to receive your Original Medicare benefits, and most Medicare Advantage plans in 2023 (89%) included Part D prescription drug coverage as well. These plans are offered by private insurance companies approved by Medicare. Medicare Advantage plans cover the same services as Original Medicare plus additional benefits, such as dental care, vision care, and transportation benefits, among others.
A few Medicare Advantage plans do not include Part D prescription drug coverage. If you want one of these, you can purchase a separate Part D drug plan.
Almost all Medicare Advantage plans have a provider network; in 2023, 98% of available Medicare Advantage plans were either an HMO (58%) or a PPO (40%). In other words, you’ll either need to see in-network doctors and specialists (HMO) or you’ll have the choice to see out-of-network practitioners for an extra cost (PPO).HMOs also usually require a referral from your primary care doctor if you need to see a specialist.
Some Medicare Advantage plans may charge a monthly premium in addition to the Part B premium. However, most Medicare Advantage plans don’t charge any premiums and a few will pay a portion of the Part B premium for you. They make money from Medicare, which pays the insurers to administer plans.
Medicare Advantage plans often have lower out-of-pocket costs relative to Original Medicare. And all Medicare Advantage plans are required to cap your annual out-of-pocket spend at $8,850 for 2024, but many plans have a lower maximum out-of-pocket.
However, Medicare Advantage plans rely more heavily on prior authorization for covered services than Original Medicare does. This means doctors need to submit paperwork and have the coverage approved before they can provide it. In 2021, about 6% of Medicare Advantage prior authorization requests were denied. When they were appealed, the vast majority (82%) were fully or partially overturned. But the process delayed care.
Some Medicare Advantage plans have been shown to wrongly deny prior authorization requests for care. Medicare Advantage plans are required to provide the same coverage as Original Medicare. A government report found that about 13% of prior authorization denials by Medicare Advantage plans met requirements set by Medicare coverage rules and should have been authorized. This means thousands of enrollees didn't receive needed care, had to pay out-of-pocket for needed care, or received delayed care.
Note that if you have Medicare Advantage, you cannot sign up for a Medigap plan to help you cover copays and coinsurance.
Differences Between Original Medicare and Medicare Advantage
- Provider networks: With Original Medicare, you can see any doctor or specialist that accepts Medicare, without the need for a referral. Most Medicare Advantage plans have a provider network, which restricts your choice of healthcare providers.
- Maximum out-of-pocket costs: Original Medicare has no out-of-pocket maximum, while Medicare Advantage plans have annual out-of-pocket limits ($8,850 for 2024). This means that once you reach the limit, a Medicare Advantage plan will cover 100% of your Medicare-approved expenses for the rest of the year.
- Part D prescription drug coverage: Original Medicare does not include prescription drug coverage—you would need to purchase a separate Part D prescription drug plan. But since most Medicare Advantage plans include drug coverage, you can avoid the extra step and expense.
- Additional benefits: Most Medicare Advantage plans include dental, vision, fitness, hearing, and telehealth benefits. Original Medicare does not cover these costs.
- Travel considerations: Since Original Medicare doesn’t depend on a provider network, your Medicare benefits are good nationwide. However, Medicare Advantage coverage is limited to the plan’s service area, which means your plan may not cover you while traveling (except for emergency care).
- Medigap: Medigap is available to Original Medicare beneficiaries only and is designed to supplement that coverage, for an extra premium. However, many Medicare Advantage plans offer benefits similar to Medigap (coverage for Part A and B deductibles and coinsurance), but without the extra premium.
- Prior authorizations: Medicare Advantage plans are more likely to require advance approval for coverage, and this can lead to coverage delays.
Pros and Cons of Medicare Advantage Plans vs. Original Medicare
In a nutshell, most Medicare Advantage plans provide similar coverage to Original Medicare with a Part D prescription drug plan and a Medicare supplement plan. Premiums and overall costs tend to be lower with Medicare Advantage, especially if you expect to have high costs for care. (That’s because Original Medicare doesn’t limit your annual expenses, whereas Medicare Advantage does.)
The trade-off is that you need to seek care within a provider network, and will need to get referrals for specialists if you choose an HMO. With Original Medicare, you have much greater flexibility in choosing a physician and aren’t limited by geographical constraints when traveling.
Some Medicare Advantage plans have also been shown to deny coverage for services that would have been covered by Original Medicare, violating Medicare coverage rules.
It's crucial to compare the benefits offered by Medicare Advantage plans and Original Medicare in the context of your personal situation. For example, if you travel regularly within the United States, Original Medicare may be a better fit since you can see any Medicare-participating doctor in any domestic location for ongoing, non-emergency care.
Best Medicare Advantage Plans
When choosing a Medicare Advantage plan, consider factors such as the plan's network, benefits, coverage, out-of-pocket costs, and the insurance company's reputation for customer service and plan satisfaction. Below are the best Medicare Advantage plans.
AARP/UnitedHealthcare
UnitedHealthcare is one the largest providers of Medicare Advantage plans in the country. It offers a range of AARP-branded Medicare Advantage plans, including HMO, PPO, and private fee-for-service (PFFS) options with additional drug coverage in the Medicare donut hole (also known as the “Medicare coverage gap”).
Humana
The second-largest provider of Medicare Advantage plans, Humana provides a variety of Medicare Advantage plans and offers an over-the-counter drug benefit but features few plans with additional coverage in the Medicare donut hole.
Aetna
Aetna, a CVS Health company, offers more Medicare Advantage plans with additional drug coverage in the gap than any other provider we reviewed. Its plans are well-priced for the coverage and many feature $0 co-pays for primary care providers and specialists. It does not offer PFFS plans.
Cigna
Among the major companies offering Medicare Advantage, we found that Cigna has the lowest overall-cost plans compared to the largest providers. Cigna provides a selection of Medicare Advantage plans, including options with prescription drug coverage, dental, and vision benefits. Plans are available in 26 states. PFFS plans are not available.
Kaiser Permanente
Kaiser is a regional provider of Medicare Advantage plans, offering coverage in California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, Washington, and the District of Columbia. Kaiser has the highest star ratings from Medicare and the National Committee for Quality Assurance (NCQA) of the providers we reviewed. However, the company only offers HMO plans and does not include transportation benefits.
Frequently Asked Questions (FAQs)
Can I Switch From Original Medicare to Medicare Advantage?
Yes, you can switch from Original Medicare to Medicare Advantage during specific enrollment periods. Medicare Open Enrollment runs from Oct. 15 to Dec. 7 every year—during this time, you can change from Original Medicare to Medicare Advantage or vice versa.
Can I Switch From Medicare Advantage to Medigap?
Yes. You can switch from a Medicare Advantage plan to Original Medicare and then buy a Medigap policy during certain times of the year. You’re allowed to make the switch during the annual Medicare Open Enrollment or Medicare Advantage Open Enrollment periods, or if you qualify for a special enrollment period. Most likely, you’ll need to answer underwriting questions and gain approval to get a Medigap policy.
What Is the Best Medicare Advantage Plan?
To choose the best Medicare Advantage plan, consider factors such as the plan's provider network, coverage for the services you need, additional benefits, prescription drug coverage, out-of-pocket costs, and the insurance company's reputation. You can use the Medicare Plan Finder tool at Medicare.gov to compare plans available in your area.
What Happens If a Doctor Does Not Accept Medicare?
If your doctor does not accept Medicare, you may face higher out-of-pocket costs or need to find a new healthcare provider. However, you still may be able to file a claim for services rendered by providers considered “non-participating.” But you may need to pay the full amount at the time of service, and your provider is allowed to charge 15% over the Medicare-approved amount.
