Traditional Medicare vs. Medicare Advantage: What are the differences?

By Devoted Health Team
November 13, 2024

When you’re ready to sign up for Medicare, your first step is to decide: Traditional Medicare or Medicare Advantage? Not sure about either one? Totally understandable. Medicare is complex and confusing for a lot of people.

There are many plans to choose from, and when it comes to your personal healthcare needs — and your budget — making a decision can be tricky. So let’s break it down!

What is Traditional Medicare?

Traditional Medicare (also known as Original Medicare) is a health insurance program designed by the U.S. government to help provide protection against healthcare costs. People ages 65 and older qualify, but if you’re younger and have disabilities or certain medical conditions, you might qualify as well. Traditional Medicare is made up of Part A and Part B, with the option to add Part D if you require drug coverage.

Note: In the descriptions below, you’ll see a few mentions of “deductible” and “coinsurance.” A deductible is the amount of money your insurance plan requires you to pay out of pocket before it begins to cover any expenses. Coinsurance is the percentage of costs that you’re responsible for paying after you meet your deductible.

Traditional (Original) Medicare is made up of 2 parts:

Medicare Part A

Medicare Part A covers inpatient care — like when you have to go to the hospital. Most people don’t pay a premium (a monthly cost) for Part A, but there are deductibles and coinsurance.

In addition to hospital care, other covered Part A services may include:

• Skilled nursing facility care and rehabilitation services after a qualifying hospital stay
• Home healthcare and physical therapy
• Hospice and pain-management care for terminally ill patients

Medicare Part B

Medicare Part B helps pay for medical care that’s not covered by Part A, like doctor visits. There’s a monthly premium and a yearly deductible for Part B. And once you meet your deductible, you typically pay 20% coinsurance for most Part B services.

In addition to doctor visits, Part B also covers:

• Preventive screenings and wellness visits
• Routine and emergency medical services
• Lab tests, X-rays, and other imaging
• Medical equipment such as wheelchairs and prosthetics
• Mental health services

Medicare Part D

Need drug coverage? That’s where Medicare Part D comes in. Medicare Part D is a prescription drug benefit program that’s offered by private insurance companies — either as a standalone Part D plan, or through a Medicare Advantage plan that includes drug benefits.

You’re not required to sign up for Medicare Part D, but keep in mind:

• If you don't join a Medicare Part D plan when you're first eligible for Medicare
  but decide to join later, you may need to pay a late enrollment penalty.
• Medicare Part D covers many drugs across different categories. The specific brands of drugs covered — and what you pay out-of-pocket — can vary by plan.

What is Medicare Advantage?

Medicare Advantage (also known as Medicare Part C) is a health insurance plan you get through private companies that work in partnership with Medicare. Many Medicare Advantage plans have low monthly premiums, and some even have $0 premiums — but in most cases, you’d still need to pay the Part B premium.

With Medicare Advantage, one insurance card covers all the benefits you get with Traditional Medicare Parts A and B, and may cover the prescription benefits of Medicare Part D. Most plans also cover:

• Extra benefits like dental, vision, and hearing
• An out-of-pocket maximum: Meaning that after you’ve paid a certain dollar amount, you no longer pay any copays or coinsurance — Traditional Medicare does not have a limit on what you could spend out of pocket

What are the pros and cons of Traditional (Original) Medicare and Medicare Advantage?

It’s all about finding the plan that works best for your personal healthcare needs and financial situation. Take a look at the comparisons listed below:

• Network restrictions: With Traditional Medicare, you can go to any U.S. doctor or hospital that takes Traditional Medicare. With Medicare Advantage, there can be limitations as to what doctors and providers you can see, depending on the plan’s network and service area.
• Specialist referrals: With Traditional Medicare, you don’t need a referral to see a specialist. With Medicare Advantage, you may need a referral, depending on your plan.
• Out-of-pocket costs: With Traditional Medicare, you generally pay 20% of the Medicare-approved amount for Part B services (coinsurance) — but there’s no yearly limit as to what you’ll have to pay out-of-pocket. With Medicare Advantage, out-of-pocket costs can vary, but there is a yearly max, and the dollars you’re using toward Part A and Part B services count toward that.
• Premiums: With Traditional Medicare, you pay the monthly premium for Part B and a separate premium for drug coverage with a private company (Part D). With Medicare Advantage, some plans have $0 premiums or low monthly premiums, and many include drug coverage.
• Medigap: With Traditional Medicare, you can choose to buy Medigap insurance to help pay for out-of-pocket costs. Remember, there’s no limit as to what you could pay out of pocket on a Traditional Medicare plan. With Medicare Advantage, you can’t buy a Medigap policy, but your out-of-pocket costs are capped at a certain dollar amount.
• Extra benefits and savings: With Traditional Medicare, most medical services and supplies are covered for hospitals and doctors’ offices — but services like eye exams and dental care aren’t covered. With Medicare Advantage, many plans will cover medical services and supplies and also offer extra benefits toward vision and dental services.

Can I switch from Traditional (Original) Medicare to Medicare Advantage?

Yes! You can switch from Traditional Medicare to Medicare Advantage — and a lot of people are switching. Medicare Advantage enrollment has been steadily increasing because these plans typically offer low or no premiums and extra benefits like dental, vision, hearing, and more.

What if I want to switch from Medicare Advantage back to Traditional Medicare?

No problem. If you change your mind, you can switch back to Traditional Medicare from Medicare Advantage. Just keep in mind: You could lose some benefits that come with your Medicare Advantage plan because they may not be included with a Traditional Medicare plan. Also, you may not be able to buy a Medigap plan. Check your plan details carefully!

When can I switch from Medicare Advantage to Traditional Medicare, or vice versa?

You must make any changes during official Medicare enrollment times. In addition to
the initial enrollment period (a 7 month period that begins 3 months before the month
a person turns 65 and ends 3 months after), there are 2 main Medicare enrollment periods:

Annual Enrollment Period (AEP):
October 15 to December 7 each year. If you switch during this time, your new coverage will begin on January 1 of the following year.

Medicare Advantage Open Enrollment Period (MA OEP):
January 1 to March 31. During this time, you can make a one-time switch from a Medicare Advantage plan to Traditional (Original) Medicare — or to a different Medicare Advantage plan. You cannot switch from Traditional Medicare to a Medicare Advantage plan. Any changes will take effect the first of the month after you make the request.

There are also Special Enrollment Periods (SEPs).

Qualifying Life Events:
You can enroll or make changes to your Medicare coverage outside the main enrollment periods due to changes such as:

• You move out of your plan’s service area
• Your current plan isn’t being offered anymore
• You have life changes (like disability) which affect eligibility for financial assistance
• You want to switch to a 5-Star plan

Employment past age 65:
If you’ve delayed Medicare enrollment because you have health insurance through an employer, there is an 8 month SEP that begins when your employment ends or when your employer coverage ends.

What are the key things to remember when choosing a Medicare plan?

Remember that you can only change plans during specific Medicare enrollment periods.
Look carefully at each plan’s benefits and think about whether it’s a good fit for your current healthcare needs and budget.

The Devoted Health team is here to help you!

Devoted Health has licensed representatives available to help answer any questions about Devoted Health Medicare Advantage plans. Call us at 1-800-483-8066 (TTY 711) for personalized assistance.

You can also learn more about your Medicare options in this free Medicare Comparison Guide.

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