Original Medicare or Medicare Advantage- Which is Better?

There are so many decisions to make with Medicare, including whether to choose Original Medicare or Medicare Advantage. Which is better?

Benefits

First let’s talk about Benefits. What exactly does Original Medicare cover?

Part A covers:

• Inpatient Care
• Home Health Care
• Nursing Home/Skilled Nursing Facility Care
• Hospice

Part B covers:

• Preventative Services
• Medically Necessary Services
• Ambulatory Services
• Outpatient Care
• Durable Medical Equipment
• Mental Health
• Limited Prescription Drugs

Now let’s compare that with Medicare Advantage. Medicare Advantage plans must offer at least the same benefits as Original Medicare. However, many plans offer additional benefits such as dental, vision, hearing, prescription drugs and many more.

But what do these benefits cost?

For most people there is no premium for Part A. Part B is determined by your income. In 2024, the base Part B premium is $174.70.

Because Medicare Advantage plans are offered by private carriers, premiums vary from carrier to carrier. There are plans that are offered at $0, but you will still need to pay for Part B at the very least.

Deductible

Another charge to be aware of is your deductible. This is the amount that you must meet out of pocket before your insurance begins to contribute to the cost share. Deductibles for Original Medicare can be a little tricky.

Part A has a $1600 deductible that is applied per benefit period. Part B has a once annual deductible of $240.

For Medicare Advantage, the deductible is determined by your plan and carrier. You may have a $0 deductible but your deductible cannot be higher than the Original Medicare deductible.

Copays/Coinsurance

When you actually use your medicare, you will have a copay or coinsurance.

However, you can choose to enroll in a Medigap plan aka Medicare supplement plan. These will step in to help pay for your coinsurance, copays or deductibles, possibly entirely. That means you could pay an additional monthly premium to partially cover or even entirely cover all of your medical bills. 

For Medicare Advantage, it’s entirely variable. Usually costs for your PCP or even a specialist will be rather low. For prescriptions, it is dependent upon the tier of the drug. Hospital services will of course be more expensive, but these are outlined in the terms of your plan. 

Out of Pocket Maximum

Your out of pocket maximum is the maximum you might have to pay yearly for your covered in network services. If you reach your OOP MAX in  you plan’s calendar year, your insurance plan would step in to cover the remainder of your medical bills.

Unfortunately, Original Medicare does not have an OOP MAX. Unless of course, you enroll in a Medigap plan. So, without a Medigap plan, if you have very large medical needs, you may have very large medical bills.

MA plans on the other hand, do offer OOP Max. Usually a few thousand dollars. This can really save you if you have large medical needs. 

Networks

On the flip side, there is the issue of neworks. Original Medicare does not have networks. And almost all doctors and hospitals accept Original Medicare.

For MA plans, there are networks and they can be extremely restrictive. Many people report having to travel long distances to find a doctor who accepts their plan. This is absolutely unacceptable if you are in need of serious or regular care. 

There is also the issue of preauthorization with MA.

So who is the winner? Well, despite the potential cost savings and extra benefits offered by MA, we have to say Original Medicare is still the winner. The absence of networks and preauthorization cannot be overstated. And if you are able to supplement your coverage with a Medigap plan, you are sure to have top notch health coverage.