Key Takeaways

  • People must make a choice about how they want to receive their Medicare coverage.

  • The options include (1) Original Medicare, Part D and potentially Medigap; (2) Part C and Part D; and (3) Part C.

Original Medicare and Part D vs. Medicare Advantage

When enrolled in Medicare, there are three options to choose from for comprehensive medical and prescription drug coverage:

  • Parts A & B (Original Medicare), Part D and potentially Medigap,

  • Part C (Medicare Advantage Plan) and Part D, or
  • Part C (Medicare Advantage Plan)

When comparing coverage, it is important to look at the two core options first: Original Medicare and Medicare Advantage. Note that Medicare Advantage plans are administered by private companies and come in many types (the most common are HMO and PPO) and must cover the same benefits as Original Medicare.

It's also important to consider the potential to add a Medigap policy to Original Medicare to help cover some of the costs of Parts A & B. It is not possible to have both a Medigap policy and a Medicare Advantage plan.

Part D is the Medicare stand-alone prescription drug benefit that is run by private companies.

Costs and coverage will differ between plans. Compare options holistically, taking into account desired coverage, premiums and routine out-of-pocket costs. Here are how the 4 major plan packages stack up in some key areas.

Original Medicare & Medicare Advantage Plans At-a Glance

  Original Medicare
(Parts A+B)		 Original Medicare
+ Medigap		 HMO Part C
(Medicare Advantage)		 PPO Part C
(Medicare Advantage)
What do I pay? Part B premiums, deductibles and coinsurances Medigap premiums, Part B premiums, generally no copayment Medicare premiums and plan premium; your plan sets its own deductibles and copays Medicare premiums and plan premium; your plan sets its own deductibles and copays
Can I go to any doctor? Yes, if they accept Medicare You can go to any doctor, regardless of if they accept Medicare No, you must go to in-network providers Yes, though PPOs have provider networks, you may go out of network for a higher copay
Where can I get routine, non-emergency care? Anywhere in the country Anywhere in the country For most plans, in your local geographic area For most plans, in your local geographic area
Where can I get emergency care? Anywhere in the country Anywhere in the country Anywhere in the country Anywhere in the country
How do I get prescription drug coverage? Part D Part D You must join a plan that includes drug coverage, also called MA-PD You must join a plan that includes drug coverage, also called MA-PD
Will I need a referral to see a specialist? No No, unless you have a Medicare SELECT plan Usually No, but you may pay more out of pocket if you go to a provider who is out of network
Is there a limit to my out-of-pocket spending? No No Yes, all Medicare Advantage plans must have limits on out-of-pocket spending Yes, all Medicare Advantage plans must have limits on out-of-pocket spending
Will it pay for extras, like vision and hearing aids? No, Medicare does not cover dental, hearing or vision No Maybe; some plans offer these additional benefits Maybe; some plans offer these additional benefits

Based on 2020 costs

When making the decision about which plan type to choose, there are other questions that should be investigated, below are a few key areas to compare: 

Which option is more stable from year to year? 

Each year, Part C (Medicare Advantage) plans choose if they want to stay in Medicare. They can also change costs, providers, and benefits each calendar year. Original Medicare will always be there, but its deductibles increase each year. 

How can I measure quality for the various plans? 

Medicare uses a 5-star rating system to assess the quality of Medicare Advantage and Part D plans, with 5 stars being excellent, 4 being above average and 3 being average. These ratings are based on a variety of factors, including how well the plans help members manage chronic diseases, member satisfaction and how often members get screening exams and vaccines, among others. The ratings are posted on the Medicare Plan Finder website at Medicare.gov. 

What are the cost differences? 

If enrolled in Parts A & B (Original Medicare), out-of-pocket costs include the Medicare Part A deductible and coinsurance, Part B premium, deductible, and coinsurance. If enrolled in Part D, out-of-pocket costs may include the Part D premium, deductible, and copayments. Coinsurance is required by Medicare, which is generally 20% of the cost for a service. Many beneficiaries purchase supplemental Medigap insurance to cover some of their out-of-pocket costs. 

If enrolled in a Part C (Medicare Advantage) plan, out-of-pocket costs may include Medicare B premium, Medicare Advantage premium, copays, and deductibles. There is a wide variation in the costs of these plans and in the benefits they offer. Medicare Advantage plans may have lower out-of-pocket costs than Original Medicare because they have a legal maximum limit on annual out-of-pocket costs. Still, limits vary by plan and can be fairly high. The maximum out-of-pocket limit is $7,550 in 2022. This out-of-pocket limit does not include prescription drugs costs, as is the case for Part D generally. 

If you want help comparing plans and pricing, see if you qualify to connect with a licensed Benefits Advisor or talk with the State Health Insurance Program (SHIP) in your community by taking our assessment.