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Understanding Original Medicare vs. Medicare Advantage can help you choose coverage that best fits your health and budget needs. Read our guide and learn about these Medicare options.

By Valencia Higuera
Updated June 30, 2020

Key Takeaways:

  • With Original Medicare, health insurance benefits come directly from the federal government.

  • Medicare Advantage plans include benefits of Medicare Part A and Part B, but are sold by private health insurance providers.

  • If you have Original Medicare, you can add a prescription drug plan or supplement insurance to lower your healthcare costs.

  • You can only enroll in Original Medicare and a Medicare Advantage plan during certain enrollment periods.

Original Medicare and Medicare Advantage provide similar benefits, but these plans aren't the same. Original Medicare is health insurance through the federal government. Medicare Advantage plans, on the other hand, are sold by private Medicare-approved health insurance providers.

If you're eligible for Medicare, it's important to understand your options to ensure getting the coverage you need.

What is Original Medicare?

Original Medicare is a fee-for-service health plan offered by the federal government. It includes two parts: Medicare Part A and Medicare Part B.

Medicare Part A (hospital insurance)

  • Inpatient hospital care

  • Skilled nursing care

  • Nursing home care

  • Hospice care

  • In-home health care

Medicare Part B (medical insurance)

  • Doctor appointments

  • Labs and tests

  • Preventative care

  • Outpatient care

But although Original Medicare offers many services, it doesn't cover everything. Typically, Medicare only covers about 80% of healthcare costs within the U.S. These plans don't pay for routine hearing, routine dental, routine vision, or long-term care.

Original Medicare also doesn't cover prescription drugs. If you have Original Medicare and need prescription drug coverage, you must purchase Medicare Part D prescription drug coverage as a standalone policy.

There's also the option of buying a Medicare Supplement insurance plan to help cover some of the costs that Original Medicare doesn't.

Who is Eligible for Original Medicare?

You can receive Medicare if you're age 65 or older and a U.S. citizen. If you're not a citizen, you must be a permanent U.S. legal resident for at least five years before you're eligible for benefits.

If you receive Social Security benefits before the age of 65, you don't need to sign up for Medicare. You're automatically enrolled once you're eligible.

If you don't receive Social Security benefits, you can enroll in Original Medicare during your Initial Enrollment Period. This is the seven-month period that starts three months before the month you turn 65, and ends three months after the month you turn 65.

This isn't the only time you're able to sign up for Original Medicare. If you don't sign up during your Initial Enrollment Period, you can enroll during the General Enrollment Period from January 1 through March 31 of each year.

If you need a prescription drug plan with Original Medicare, you can also enroll in Medicare Part D during your Initial Enrollment Period. If you miss this window, you can sign up during Medicare Open Enrollment from October 15 to December 7 of each year.

If you need Medicare Supplement insurance with Original Medicare, the Initial Enrollment Period for supplement insurance is the six-month period starting the month you turn 65. Insurers will guarantee your acceptance during this period. If you sign up at a later date, enrollment is subject to medical underwriting.

How Much Do You Pay for Original Medicare?

The good news is that most people don't pay a premium for Part A benefits. Premiums are based on time worked.

Time Worked

Part A Premium

At least 10 or more years

$0

Between 7.5 and 10 years

$252

Less than 7.5 years

$458

The deductible for Medicare Part A in 2020 is $1,408.

The Medicare Part B premium is typically $144.60 per month (higher depending on your income). You'll pay a deductible of $198 for Part B in 2020, and 20% coinsurance after reaching your deductible.

Pros of Original Medicare

  • You can use any doctor or hospital that accepts Medicare

  • You can use your coverage when traveling anywhere within the U.S.

  • Most people don't pay a Medicare Part A premium

Cons of Original Medicare

  • It doesn't cover 100% of your medical expenses (no routine vision, routine dental, or routine hearing)

  • It doesn't include prescription drug coverage

  • It doesn't provide coverage outside of the U.S.

find a medicare plan that fits your lifestyle

What is Medicare Advantage?

Medicare Advantage (Part C) is an alternative to Original Medicare. It also provides benefits of Part A and Part B. The difference is that Medicare Advantage plans include more covered services.

Not only will you receive Part A hospitalization and Part B health insurance, many Medicare Advantage plans sold today also include Medicare Part D prescription drug coverage.

Other covered benefits with a Medicare Advantage plan include:

  • Routine vision

  • Routine dental

  • Routine hearing

  • Transportation to medical-related services

  • Wellness benefits

Medicare Advantage plans usually require choosing doctors, hospitals, and pharmacies within a specific network.

Who is Eligible for a Medicare Advantage Plan?

You can get a Medicare Advantage plan as soon as you're eligible to receive Medicare, but you must first enroll in Medicare Part A and/or Part B.

The Initial Enrollment Period for a Medicare Advantage plan is the same as Original Medicare — the seven-month period starting three months before and after the month you turn 65. You can sign up for a Medicare Part C plan with or without Medicare Part D drug coverage.

If you don't sign up during your initial enrollment, you can sign up during Medicare Open Enrollment each year from October 15 to December 7. During this six-week period you can:

  • Switch from Original Medicare to a Medicare Advantage plan

  • Switch from a Medicare Advantage plan back to Original Medicare

  • Switch from one Medicare Advantage plan to another one

  • Switch from a Medicare Advantage plan with prescription drug coverage to a Medicare Advantage plan without prescription drug coverage, and vice versa

If you're already enrolled in a Medicare Advantage plan, you can change Medicare Advantage plans or disenroll during Medicare Advantage Open Enrollment from January 1 to March 31 of every year.

You can also modify your Part C plan during Special Enrollment Periods (or extenuating circumstances), such as if you lose your coverage or move outside of a plan's service area.

How Much is a Medicare Advantage Plan?

Medicare Advantage Part C plans are sold by private health insurance companies. Monthly premiums will vary depending on the covered benefits, but you can expect premiums between $0 to $200 a month.

These plans feature deductibles, copays, and coinsurance. You'll need to shop around and compare plans to limit the amount you pay out-of-pocket each year.

Pros of a Medicare Advantage Plan

  • Includes additional benefits such as drug coverage, routine vision, routine hearing, routine dental, and wellness programs

  • Although some plans charge a monthly premium in addition to a Part B premium, what you pay could be cheaper than buying Medicare Supplement insurance to accompany Original Medicare

  • Part C provides all-in-one Medicare coverage

Cons of a Medicare Advantage Plan

  • There's less freedom to choose your own doctors, hospitals, and pharmacies

  • Part C plans are area specific. If you move, you'll have to enroll in a new plan

  • You typically need a referral to see a specialist

  • You cannot combine Medicare Part C with Medicare Supplement insurance

Final Word on Original Medicare vs. Medicare Advantage

Original Medicare and Medicare Advantage Part C plans offer similar services, but you'll receive more benefits under Part C. Healthcare costs can increase with age, so it's vital to understand your options and choose the right plan to limit your out-of-pocket expenses.

To compare the cost of Medicare Advantage plans, speak with a licensed Medicare insurance agent and they can guide you through the steps to make the best enrollment choice for you.

Valencia Higuera is a personal finance writer with more than 10 years of professional writing experience. She resides in Chesapeake, Virginia.