The Pros and Cons of Original Medicare, Medicare Advantage, Medicare Supplement Insurance and Medicare Part D

• by Christian Worstell
• January 12, 2024
• Reviewed by John Krahnert

Over 64.5 million Americans were enrolled in Medicare in 2022.¹

Such a large number of beneficiaries rely on some type of Medicare health coverage, but what are some of the benefits and drawbacks Medicare beneficiaries may face?

This guide takes an in-depth look at both the advantages and disadvantages of Medicare. We look at the potential benefits and disadvantages of:

• Original Medicare (Part A and Part B)
• Medicare Advantage plans (Part C)
• Medicare Supplement Insurance (Medigap) plans

What are the advantages of Medicare?

Some of the potential advantages of Original Medicare coverage include:

Low monthly premiums

Most people receive Medicare Part A (hospital insurance) without having to pay a premium.

Medicare Part B (medical insurance) is optional. The standard Part B premium is $174.70 per month in 2024.

By comparison, the average benchmark premium cost of a health insurance plan under the Affordable Care Act (Obamacare) marketplace is $456 per month in 2023.²

Broad eligibility

To be eligible for Medicare Part A and Part B, you typically must be:

• At least 65 years old
• A U.S. citizen or a legal permanent resident for at least five years
• Under age 65 but have a qualifying disability or condition, such as Lou Gehrig’s Disease (ALS) or End-Stage Renal Disease (ESRD)

Broad acceptance

Medicare is accepted by more than 90 percent of physicians.³

Medicare may be used in all 50 states and the District of Columbia. Medicare Part A and Part B overage can also be used in:

• Puerto Rico
• S. Virgin Islands
• Guam
• American Samoa
• Northern Mariana Islands

What are the disadvantages of Medicare?

Original Medicare can include a few disadvantages, which can include some of the following.

No vision, dental, hearing or retail prescription drug coverage

Medicare Part A and Part B cover a wide range hospital and medical benefits, but they still leave many things not covered.

Original Medicare doesn’t typically cover items or services such as:

• Prescription drugs
• Routine dental care or dentures
• Routine vision care or eyeglasses
• Routine hearing care or hearing aids
• Fitness club or gym memberships

Out-of-pocket costs

Medicare Part A and Part B include out-of-pocket costs that beneficiaries should consider.

• In 2024, you must meet your Part A deductible of $1,632 per benefit period before your Part A coverage kicks in. You could potentially pay additional coinsurance costs of up to $816 per day in 2024 for inpatient hospital stays of over 90 days.
  
  Though this is a rare situation, it’s worth considering.
  
  
• Medicare Part B includes a deductible of $240 per year in 2024. After you meet your Part B deductible, you are typically responsible for paying 20 percent of the Medicare-approved cost for your covered services or items.
  
  
• There is no cap on this 20 percent coinsurance or copayment, which means you could potentially face high out-of-pocket costs for your Part B medical care services.

Medicare beneficiaries can consider enrolling in a Medicare Supplement Insurance plan that can help cover some of their out-of-pocket Medicare costs, such as certain deductibles and copayments.

No out-of-pocket limit

Original Medicare does not have an out-of-pocket limit. This means that Medicare beneficiaries have no limit to the amount of money they may be required to pay out of their own pocket for covered health care services in a single year.

All Medicare Advantage plans include an out-of-pocket spending limit.

Certain Medicare Supplement Insurance plans also include an out-of-pocket spending cap.

Advantages and disadvantages of Medicare Advantage plans

Medicare Advantage plans are an alternative to Medicare Part A and Part B. Medicare Advantage plans must cover at least the same benefits as Original Medicare.

One advantage of joining a Medicare Advantage plan is that some plans will also cover some benefits not found in Original Medicare. 

You can also choose from different types of Medicare Advantage plans, such as health maintenance organization (HMO) plans and preferred provider organization (PPO) plans, depending on where you live.

It is better to have Medicare Advantage or Medigap?

Medicare Advantage plans and Medicare Supplement Insurance (Medigap) are not the same thing. You cannot have a Medicare Advantage plan and a Medigap plan at the same time.

If you're choosing between Medicare Advantage vs. Medicare Supplement plans, you may want to consider the following:

• Do you prefer to pay more of your health care costs up front (in the form of premiums) in exchange for lower or zero costs when you receive care?
  
  
• Do you prefer to pay lower out-of-pocket health care costs up front and potentially pay more in costs later on if and when you receive care?

If you prefer lower or no coinsurance and copay costs in exchange for higher monthly premiums, you may want to consider a Medicare Supplement plan.

If you prefer to pay lower monthly premiums and don't plan on receiving frequent health care services, you may want to consider a Medicare Advantage plan.

A licensed insurance agent can help you compare your options and discuss your eligibility for different types of Medicare plans.

What are the pros and cons of Medicare Supplement Insurance?

Medicare Supplement Insurance plans can help cover certain Medicare deductibles, coinsurance, copayments and other out-of-pocket expenses faced by Medicare beneficiaries.

One advantage of Medigap plans is that all 10 standardized Medigap plans that are sold in most states cover Medicare Part B coinsurance or copayments, at least partially.

Depending on the types of Part B services you receive and how often you need them in a year, this could help save you money.

Another advantage of Medigap plans is that they are accepted by every doctor and health care provider who accepts Medicare.

One disadvantage of Medicare Supplement insurance is that insurance companies aren’t required to sell Medigap policies to people younger than 65.

Some states do require insurance companies to sell Medigap to people under 65, but even in those cases, you could pay higher premiums if you are younger than 65. Check with your state’s department of insurance to learn more about Medigap rules where you live.

How do I sign up for a Medicare Advantage plan?

A licensed insurance agent can help you compare Medicare Advantage plans that are available in your area.

You can review information such as plan costs, prescription drugs that might be covered by the plan and whether your doctor is part of the plan’s provider network.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

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