What’s the difference between Original Medicare and Medicare Advantage?
Original Medicare, also called Parts A and B, has been an option from the start of Medicare in 1965:
- Part A covers hospital stays.
- Part B handles physician visits, outpatient care, medical supplies and preventive services.
The Centers for Medicare and Medicaid Services (CMS) runs the national program. People with Original Medicare are also eligible for Part D and Medicare Supplement. Part D is a prescription drug benefit, while Medicare Supplement helps pay for out-of-pocket costs.
Meanwhile, private insurers offer Medicare Advantage plans with CMS oversight. Most people with Medicare have Original Medicare, but that’s changing.
CMS predicts that more than 33.8 million people will have Medicare Advantage in 2024. There will also be more plan options as private insurers plan to expand plan offerings.
A small number of carriers make up the most Medicare Advantage members, but many insurers have grown their Medicare Advantage membership over the past few years. According to the Kaiser Family Foundation, “four in ten (40%) beneficiaries can choose among Medicare Advantage plans offered by 10 or more firms."
Almost two-thirds of Medicare Advantage members are in HMOs. About one-third are in PPOs, which have higher premiums, but more flexibility, such as a larger network.
Most Medicare Advantage plans include prescription drug coverage. A separate Part D plan is not required. Added benefits include prescription drugs, vision and dental.
How much does Original Medicare costs?
Medicare Part A is free for most Americans -- as long as you paid Medicare taxes for at least 40 quarters. So, if you worked for 10 years and paid Medicare taxes, you won’t have to pay premiums for Part A.
People who didn't pay enough previous taxes pay between $274 and $499 monthly for Part A.
Part A had a $1,600 deductible in 2023 You’ll have to pay for health care services until you reach that deductible if you're hospitalized.
Here's how Part A costs work when you're hospitalized:
- A deductible and no coinsurance for days 1 to 60 of each benefit period.
- A coinsurance amount per day for days 61 to 90 of each benefit period.
- A coinsurance amount per “lifetime reserve day” after day 90 of each benefit period (up to 60 days over your lifetime).All costs for each day after you use all the lifetime reserve days (after day 150).
Part B costs $174.70 monthly for most Americans in 2024. Also, higher-income people may have to pay higher premiums.
The Part B annual deductible was $226 in 2023, which is $6 less than in 2022 but much lower than most Medicare Advantage plans. Once you reach the deductible, Medicare pays 80% of Medicare allowed amounts and you pay the other 20%.
How much does Medicare Advantage costs?
Medicare Advantage costs vary by state, insurer, plan type and specific offering.Insurers also offer plans with no premiums. However, you may pay more out of pocket for those plans when you need health care services because you may be paying a lower monthly plan premium.
Medicare Advantage plans vary widely. It’s essential to dig into each plan to find out which one works best for you.
For instance, you may find a plan with higher premiums, but with more supplement benefits. Nearly all Medicare Advantage plans have prescription benefits.
CMS has also expanded insurer Medicare Advantage options. Now, they can offer reimbursements for rides to doctor appointments, meal delivery and adult care services. While most plans offer dental, vision, and, or hearing, individuals on both Medicare and Medicaid are the beneficiaries most likely to receive these added benefits. People with chronic illnesses may also get help for grocery shopping, improved home environments and transportation for non-medical needs.
How much does Medicare Part D cost?
You can couple a Part D prescription drug plan with Original Medicare, which doesn’t have prescription benefits.
But the amount you pay for Part D deductibles, copayments, and/or coinsurance varies by plan.
The Medicare.gov website, which is managed by CMS, states that drug coverage costs vary depending on:
- Your prescriptions and whether they’re on your plan’s list of covered drugs (formulary).
- What “tier” the drug is in.
- Which drug benefit phase you’re in (like whether you’ve met your deductible, or if you’re in the catastrophic coverage phase).
- Which pharmacy you use (whether it offers preferred or standard cost sharing, is out of network, or is mail order). Your out-of-pocket drug costs may be less at a preferred pharmacy because it has agreed with your plan to charge less.
- Whether you get extra help paying your Medicare drug coverage costs.
How much does Medicare Supplement (Medigap) cost?
Medicare Supplement helps pay Medicare cost sharing for people with Original Medicare. There are 10 standardized Medicare Supplement plans, which enable you to compare apples-to-apples.
Private insurers offer Medicare Supplement policies. These plans help pay for Medicare co-payments, deductibles and coinsurance, including hospital stays, physician service or prescription drugs but do not pay for prescription drugs except for those covered under Part B.
The cost of Medicare varies, but you may find high-deductible policies under $100 a month. Other Medicare Supplement plans, which have lower deductibles, can cost more than $300 monthly.
Medicare Supplement premiums may vary based on beneficiary age and health conditions depending on the plan.
Costs by Medicare plan
Here's a breakdown of monthly premiums by Medicare plan. Make sure you understand the deductible for your specific plan and how that affects out-of-pocket costs. You may find a low-premium Medicare Advantage plan, but it may have much higher out-of-pocket costs than Original Medicare.
| Type of Medicare | Average monthly premiums |
|---|---|
| Original Medicare | $174.70* |
| Part D | Varies |
| Medicare Advantage | Varies |
| Medicare Supplement | Varies, as low as under $100 to more than $300 depending on policy |
*Medicare Part A is usually free. This is Part B and the most common amount paid. Some people with high income may have to pay more. Medicare Supplement costs may vary.
Silver plans provide a good balance of monthly premiums with out-of-pocket costs. Coinsurance is 70% with a silver plan, meaning you will pay 30% of the costs after your deductible is met, up to the out-of-pocket limit. Silver plans are a good choice for people who are in generally good health but don't want high out-of-pocket costs if something goes wrong. Bronze plans are a popular choice with those who value low monthly premiums and are willing to pay more when they need care. Coinsurance is set at 60%, meaning you will pay 40% if you do need care, up to the out-of-pocket limit. Bronze plans are good for those who don't expect to need many services outside of preventative care throughout the year.
ACA platinum plans have the highest monthly premiums, but the lowest out-of-pocket costs. You'll pay more monthly in return for lower deductibles, copays and coinsurance amounts. Coinsurance with platinum plans is 90%, which means you pay 10% after the deductible, up to your out-of-pocket limit. Platinum plans are good for those who anticipate a lot of medical needs throughout the year.
Gold plans cost a little less than platinum plans, and come with higher out-of-pocket costs. The coinsurance amount on a gold plan is 80%, which means you pay 20% after the deductible, up to your out-of-pocket limit. A gold plan is a good idea if you think you'll need a lot of care throughout the year, but don't want to pay platinum premiums.Health insurance finder tool
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Employer-sponsored health insurance
Preferred-provider Organization (PPOs)
Preferred-provider organization (PPOs) plans are the most common type of
employer-based health plan. PPOs have higher premiums than HMOs and HDHPs, but
those added costs offer you flexibility. A PPO allows you to get care anywhere
and without primary care provider referrals. You may have to pay more to get
out-of-network care, but a PPO will pick up a portion of the costs.
Find out more about the differences between plansHealth maintenance organization (HMO)
Health maintenance organization (HMO) plans have lower premiums than PPOs.
However, HMOs have more restrictions. HMOs don't allow you to get care outside
of your provider network. If you get out-of-network care, you'll likely have to
pay for all of it. HMOs also require you to get primary care provider referrals
to see specialists.
Find out more about the differences between plansHigh-deductible health plans (HDHPs)
High-deductible health plans (HDHPs) have become more common as employers look
to reduce their health costs. HDHPs have lower premiums than PPOs and HMOs, but
much higher deductibles. A deductible is what you have to pay for health care
services before your health plan chips in money. Once you reach your deductible,
the health plan pays a portion and you pay your share, which is called
coinsurance.
Find out more about the differences between plansExclusive provider organization (EPO)
Exclusive provider organization (EPO) plans offer the flexibility of a PPO with
the restricted network found in an HMO. EPOs don't require that members get a
referral to see a specialist. In that way, it's similar to a PPO. However, an
EPO requires in-network care, which is like an HMO.
Find out more about the differences between plans
Learn more about individual insurance plans
Know more individual insurance / ACA 
Know more individual insurance / ACA 
Choosing a Medicare plan
Whether you choose Original Medicare or Medicare Advantage depends on many factors:
- Plans offered in your area
- Costs
- Quality of care
- Other coverage, such as an employer group health plan
- Provider and hospital network
- Added benefits
- Type of plan
Your first step should be to see if your providers and favored hospitals and facilities are considered in-network. You don’t want to sign up for a Medicare Advantage plan only to find out that your doctor isn’t in-network.
Also, look into the plan specifics. For instance, a health maintenance organization might be a cheaper option but are you OK with only going to providers in-network? Consider whether your potential out-of-pocket costs are affordable.
CMS offers star ratings for plans. The federal agency rates plans with star ratings that come from membership surveys, quality and performance.
You can use CMS’ Medicare Plan Finder to compare Original Medicare and Medicare Advantage plans.
Costs are a critical piece when deciding on a Medicare plan, but make sure you understand your options before deciding.
Sources:
- Medicare.gov. “Costs.” Accessed August 2024.
- Medicare.gov. “Costs for Medicare drug coverage.” Accessed August 2024.
Medicare Advantage and Part D plans and benefits offered by the following carriers: Accendo, ACE-Chubb, Aetna Medicare, AFLAC, Allstate - National General, Anthem Blue Cross Blue Shield, Aspire Health Plan, Capitol, Centene Corporation, Cigna-HealthSpring, Dean Health Plan, Devoted Health, GlobalHealth, Health Care Service Corporation, Humana, Lumico - Elips, Manhattan Life - MAC, Molina Healthcare, Mutual of Omaha, Oscar Health Insurance, Premera Blue Cross, Medica Central Health Plan, SCAN Health Plan, Scott and White Health Plan now part of Baylor Scott & White Health, UnitedHealthcare®
Disclaimer:
Insurance.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage organization with a Medicare contract and/or a Medicare approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan available in your area. Currently we represent 18 organizations which offer 52,101 products in your area. Please contact Medicare.gov, 1800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Medicare evaluates plans based on a 5-star rating system. Part B Premium give-back is not available with all plans. Actual Part B premium reduction could be lower. Deductibles, copays and coinsurance may apply.
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