With upcoming Medicare Open Enrollment, learn key factors about your important choices.
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Deciding how to enroll in Medicare is one of your most important retirement decisions because it will impact your health, longevity, and wallet for the rest of your life. If you’re new to Medicare or considering making a change during Medicare’s upcoming Annual Enrollment Period (October 15 to December 7 this year), you’ll want to make sure you understand the fundamentals about Medicare coverage before signing up or electing a change.
There are two ways you can enroll in Medicare: You can sign up for Original Medicare (aka Traditional Medicare) or Medicare Advantage (aka MA). Let’s look at the basic features, then the key differences of each.
Key Features Of Original Medicare
Original Medicare is a fee-for-service model, similar to the health insurance plan you might have enjoyed while you’re working. Medicare pays your health care providers the costs of eligible medical services that you incur, and then you’re billed for deductibles and copayments. You can work with any health care provider that accepts Medicare payments; you can also self-refer to health care providers, including any specialists you may need to see.
However, there are also key differences from the health insurance plan you might have had at work. Original Medicare has two parts: Part A covers hospital expenses, and Part B pays for outpatient services. Most retirees don’t need to pay a monthly premium for Part A, but all retirees are subject to a monthly premium for Part B ($185 for 2025, although high-income retirees might pay more due to IRMAA surcharges).
Parts A and B each have their own deductibles and copayments, which can be quite large. As a result, most people enrolled in Original Medicare purchase a Medicare Supplement Plan (aka Medigap Plan) from a private insurance company to cover the cost of large deductibles and copayments under Parts A and B.
Medicare Supplement Plans typically have one feature that might surprise you: You’re only guaranteed to be able to buy such a plan during your Initial Enrollment Period. Thereafter, if you want to enroll in a Medicare Supplement Plan, you may be subject to exclusions for pre-existing conditions. This feature may not apply if you live in one of four states (Connecticut, Massachusetts, New York, and Maine).
But you’re not done yet. Original Medicare also doesn’t cover most of the costs of prescription drugs. So, you’ll need to purchase another insurance policy under Part D of Medicare to cover the cost of prescription drugs. A Part D plan also has its own set of premiums, deductibles, and copayments.
In all, most people who elect to participate in Original Medicare will have to deal with four different coverage plans (Medicare Parts A, B, and D, and a Medicare Supplement Plan).
Key Features Of Medicare Advantage
Medicare Advantage (MA) Plans typically combine all the coverage of Medicare—for hospital, outpatient, and prescription drugs—into one plan. However, you’re usually restricted or incentivized to use the health care providers in the plan’s managed care network.
Many MA Plans also pay for some services that Original Medicare doesn’t cover; examples include some dental, vision, and hearing services.
You’ll still pay the usual Medicare Part B monthly premium. In addition, many MA Plans charge an additional premium for all the plan’s services. Some MA Plans charge no additional premium—these plans are known as “zero-premium plans.” However, you’ll still pay for out-of-pocket costs such as deductibles and copayments.
Important Differences Between Original Medicare And Medicare Advantage
You’ll want to understand the key differences between Original Medicare and Medicare Advantage:
- MA Plans are simpler than Original Medicare when it comes to enrollment and choosing health care providers.
- When selecting health care providers, however, Original Medicare is more flexible when than MA, which can restrict you to using providers in their network.
- MA Plans could have lower monthly premiums when compared to the premiums you’ll pay with Original Medicare, a Medicare Supplement Plan, and a Part D prescription drug plan. MA Plans might have higher copayments, however, so you need to look at your potential total out-of-pocket expenses.
- Original Medicare doesn’t have an annual limit to the out-of-pocket expenses you might incur, whereas MA Plans do have such a limit (no more than $9,350 in 2025). However, a few Medicare Supplement Plans have out-of-pocket limits for people enrolled in Original Medicare.
- Medicare Advantage Plans might offer services not covered by Original Medicare.
- If you elect an MA Plan during your initial enrollment and later want to switch to Original Medicare, you might be excluded from electing a Medicare Supplement Plan due to pre-existing conditions. Note that you can still switch to Original Medicare, but you could end up paying all the costs of its deductibles and copayments.
By now, your head might be swimming, and that’s understandable. Yet this post highlights only the important differences between Original Medicare and Medicare Advantage—there are even more details you’ll need to learn before choosing or changing coverage. The official Medicare website is a great place to start as it outlines much of the information you should know. You can also download a helpful booklet titled “Medicare and You.”
If you need help deciding between Original Medicare and Medicare Advantage, work with a Medicare consultant you trust, someone who isn’t just trying to sell you an insurance policy. Considering the stakes, it could be well worth the money you might spend.
