Original Medicare vs. Medicare Advantage

Last update:

Most Medicare beneficiaries choose 1 of 2 options for their coverage:

Option 1: Original Medicare + Medicare Supplement Insurance (Medigap) + Part D Plan

Pros:

  • Nationwide Acceptance: Medigap plans are accepted by any healthcare provider that accepts Medicare. More than 98% of all healthcare providers in the U.S. accept Medicare.
  • Few Restrictions: You won’t need to fuss with pre-authorizations or referrals to see a specialist. As long as the provider accepts Medicare and the service is covered by Medicare, you are good to go.
  • Predictable Costs: Medigap plans offer much lower and predictable out-of-pocket expenses, making budgeting easier.

Cons:

  • Premium Costs: Medigap plans typically have higher monthly premiums compared to other Medicare options.
  • Limited Enrollment Periods: Beneficiaries may face medical underwriting and possible coverage denials if they apply for Medigap outside of their initial enrollment period.

Option 2: Medicare Advantage (Part C) w/ Part D included

Pros:

  • Additional Benefits: Medicare Advantage plans often include prescription drug coverage (Part D) and extra benefits like dental, vision, hearing, and fitness programs.
  • Cost Predictability: Some plans have out-of-pocket maximums, providing financial protection against high medical costs.
  • Low Monthly Cost: Most Medicare Advantage plans will cost you little to nothing per month, after your Part B premium is paid.
  • Care Coordination: Many Medicare Advantage plans offer care coordination and disease management programs.

Cons:

  • Network Restrictions: Beneficiaries may need to use in-network providers, limiting their choice of doctors and specialists.
  • Plan Limitations: Some plans have prior authorization requirements and may not cover certain out-of-network services.
  • Regional Variations: The availability and benefits of Medicare Advantage plans can vary significantly by location.
  • Higher Cost Exposure: While out-of-pocket maximums do indeed cap your costs for covered medical services, these maximums can reach close to $10,000 per year.
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AUTHOR

Andy Stroman is the founder of Stroman Insurance Advisors. He is a second-generation licensed health insurance broker who specializes in Medicare and Individual Health Insurance.

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