When it’s time to sign up for Medicare, one of the first and most substantial decisions you face is whether to choose Original Medicare or Medicare Advantage. In 2022, 45% of Medicare beneficiaries have a Medicare Advantage plan, according to data from The Chartis Group. The decision will depend on several factors, including where you live, your current and potential health care needs and your financial situation.

Both options provide coverage for your major medical needs. But your out-of-pocket costs and choices for doctors and hospitals will depend on the program you choose.

Original Medicare vs. Medicare Advantage: Overview
To better understand how to approach this choice, here’s some information on how these different programs work.

Original Medicare
Medicare is government health insurance coverage provided to people age 65 and older and younger people living with certain disabilities. Original Medicare includes two parts: Part A and Part B, which cover different aspects of your health care:

Part A is hospital insurance, covering things like inpatient hospital care, skilled nursing facility care, hospice care and some home health care.

Part B is medical insurance, covering things like doctor’s visits, preventive services and durable medical equipment.

If you opt for Original Medicare, you can see any medical provider or use any medical facility in the country that accepts Medicare.

Looking for Unbiased Medicare Advice?
Fair Square is a licensed Medicare Brokerage with over 2,500 5-star reviews. You can reach them at (888) 292-2091.
Fair Square
Medicare Supplement Insurance
There’s also Medicare Supplement Insurance, or Medigap, which is additional insurance you can buy from private health insurance companies to cover certain deductibles, copays and coinsurance that Medicare doesn’t cover. Because Medicare has no out-of-pocket spending cap for Parts A and B, experts recommend buying a Medigap plan if you opt for Original Medicare.

You can purchase a Medigap plan during the six-month period that starts once you’ve turned 65 and have enrolled in Medicare Part B. During that time, your health and medical history can’t be factored into insurers’ pricing or coverage decisions. Afterward, unless you live in one of four states with different rules (Connecticut, Massachusetts, Maine and New York), insurers can charge you more or deny you coverage based on your health status or medical history.

In other words, if you choose a Medicare Advantage plan, you may not be able to switch back later to Original Medicare with a Medigap plan.

“It doesn’t mean you can’t switch, and I’ve had people be able to switch,” says Katy Votava, who holds a doctorate in health economics and nursing and is president and founder of Goodcare — a consulting firm focused on the economics of Medicare. “But it’s certainly not guaranteed, and in many parts of the country it would be impossible.”

Medicare Advantage
Medicare Advantage — also called Medicare Part C — is a bundled alternative to Original Medicare sold by private health insurance companies that includes Medicare Part A and Part B and often additional benefits, which may include some coverage for dental and vision care. Most Medicare Advantage plans also include Part D prescription drug benefits. Many plans have no premium; however, you’ll still be responsible for paying your Part B monthly premiums, unless you sign up for a Medicare Advantage plan with a Part B give back benefit, which covers part or all of your Part B premium.

Medicare Advantage plans work like traditional health insurance plans you may have gotten through an employer, in which there’s a network of providers and you must stay within the network to have your care covered. You’ll typically pay for care as you seek it, in the form of a deductible, copays and coinsurance. If you’re healthy with no significant medical needs, you might spend very little on a Medicare Advantage plan. If you have a serious condition, the out-of-pocket costs can add up. Although these plans are required to have an out-of-pocket cap on spending, it can be as high as $8,300 in 2023.

Medicare Advantage networks and coverage can change year to year. It’s important to understand that if you have a serious health issue, you may not have access to the specialists you prefer if they’re out-of-network.

“The insurance carrier is in charge, and they get to decide what’s medically necessary or not, instead of the government,” says Scott Schwalich, a certified financial planner in Centerville, Ohio. “The insurance carrier is a little more profit conscious, and they’re a little bit more stringent on what is medically necessary in some situations.”