A Framework for Comparing Original Medicare and Medicare Advantage Costs

Why Sticker Prices Mislead

Path	Monthly cost	Costs when you use care	Yearly ceiling
Original Medicare alone	Part B premium, plus Part D	Deductibles and 20% coinsurance	None
Original Medicare with Medigap	Part B, Medigap and Part D premiums	Little or none, depending on plan letter	Very low, except uncovered services
Medicare Advantage	Part B premium plus plan premium, often none	Copays and coinsurance set by the plan	Yearly in-network limit, not counting drugs

Medicare costs come in layers. Some you pay every month whether or not you see a doctor, some you pay only when you use services, and some you pay only in a bad year. Original Medicare, which is Part A and Part B, has no yearly limit on what you could owe, so most people who choose it add a Medigap policy to fill in the gaps and a separate Part D plan for drugs. Medicare Advantage bundles the medical and usually the drug coverage into one plan with its own cost rules and a yearly limit on what you pay for covered in-network care.

Those are structurally different products, so one premium figure is not a fair comparison. The framework below breaks costs into five buckets so you can compare like with like. Our guide to how much Medicare costs covers the basic pieces if you want background first.

Bucket 1: The Fixed Monthly Costs

Start with what you pay every month regardless of how you use care.

• Part B premium. You generally pay this under both choices. It is $202.90 a month for most people, and it can be higher if your income is above certain levels. Our guide to IRMAA explains that surcharge.
• Original Medicare path: Part B premium, plus a Medigap premium, plus a Part D premium.
• Medicare Advantage path: Part B premium, plus the plan’s premium. Many plans charge no premium beyond Part B, and a smaller number reduce the Part B premium you pay. Drug coverage is usually built in.

The key point is that “no premium” on an Advantage plan means no premium beyond Part B, not no monthly cost. When you add up this bucket, include Part B in both columns. Then list the Medigap and Part D premiums on one side and the plan premium on the other. The monthly gap between the two is often significant, and it is the reason many people lean toward Advantage. It is also the number that tells you the least about a bad year.

Bucket 2: What You Pay When You Use Care

This is where the two paths feel different at the doctor’s office.

Under Original Medicare, you pay a Part A deductible of $1,736 for each benefit period, which begins when you are admitted to the hospital. After that, hospital days 61 through 90 carry a daily coinsurance of $434, and days beyond that draw on lifetime reserve days. For Part B, you pay a deductible of $283, then 20% of the Medicare-approved amount with no cap. A Medigap policy then absorbs some or all of those costs, depending on the plan letter. Some Medigap plans leave you with small copays, and others leave you with nearly nothing except the Part B deductible. Our comparison of Plan G and Plan N shows how two common choices split the costs.

Under Medicare Advantage, cost sharing is typically a mix of flat copays for primary care and specialist visits, a daily copay for hospital days, and sometimes coinsurance for certain services. These amounts vary a great deal from plan to plan, so use the plan’s own documents rather than a general rule.

To work with this bucket, list the services you actually use in a typical year: primary care visits, specialists, labs and imaging, therapy, outpatient procedures, and any planned surgery. Then price each against the plan’s copay schedule or against the Medigap plan’s rules. If you see a specialist often, small copays add up. If you rarely use care, per-visit costs may matter far less than the premium.

Bucket 3: The Ceiling in a Bad Year

Most people choose between these two paths because of what could go wrong, not what usually happens. So look at the worst case.

• Original Medicare alone has no yearly out-of-pocket limit. A long hospital stay or an expensive course of treatment could leave you with large bills if you have no supplemental coverage.
• Original Medicare with Medigap sharply limits that exposure. Depending on the plan, you may owe little beyond the premium, the Part B deductible and any copays. Medigap does not cap what is not covered, such as most dental care and long-term care.
• Medicare Advantage has a federal yearly limit on what you pay for covered services, and every plan sets its own limit at or below that ceiling. PPO plans may have one limit for in-network care and a higher combined limit that includes out-of-network care. The limit does not include your Part D drug costs, and it does not apply to the premiums you pay.

Medicare Advantage plans also cannot charge you more than Original Medicare would for certain services, such as chemotherapy, dialysis and skilled nursing care. Our guide to Medicare Advantage out-of-pocket maximums explains what is and is not counted.

The honest framing is this. A Medigap policy trades a higher, steadier monthly premium for a very low ceiling and wide choice of providers. An Advantage plan trades a lower premium for a higher potential ceiling and a network. Which is “cheaper” depends on whether you have a bad year, which no one can predict.

Bucket 4: Prescription Drugs

Drug costs belong in their own bucket because they cross both paths. Under Original Medicare, you add a stand-alone Part D plan. Under Advantage, you usually use the drug plan that is built in. Either way, the same questions apply:

• Are your medications on the plan’s formulary, and at what tier?
• Is your pharmacy in the network, and is a preferred pharmacy cheaper?
• Does the plan have a deductible, and does it apply to your drugs?
• Are there restrictions such as prior authorization or step therapy?

Costs for the same medicine can differ widely between plans, even between plans from the same insurer. Check the specific drugs you take rather than assuming a plan type is cheaper. Our post on the Part D out-of-pocket cap describes the annual limit that applies to covered drug spending in both paths.

Bucket 5: The Costs That Do Not Appear on a Bill

The last bucket is the one that is hardest to price. It covers the costs of access.

• Network. With Original Medicare and Medigap, you can generally see any provider in the country who accepts Medicare. With Advantage, you use the plan’s network, and going outside it can cost more or may not be covered. See our guide to checking a plan’s network.
• Prior authorization. Original Medicare rarely requires approval in advance, although CMS is running a pilot called WISeR in Ohio and five other states that has providers request prior authorization, or go through payment review, for a short list of services. It does not apply to Medicare Advantage. Nearly all Advantage plans require approval for some services. It can slow things down, and a denial can cost you time even if you win an appeal.
• Travel and second homes. If you spend part of the year away, or want care at a distant specialty hospital, check how each option handles care outside your home area.
• Extra benefits. Many Advantage plans include dental, vision, hearing, and sometimes allowances for over-the-counter items. These have value only if you would use them. Original Medicare does not include them, so they are a real reason some people choose Advantage, though the benefits and their limits change every year.
• Flexibility later. This one is easy to overlook and matters a great deal. If you start with Medigap, you can generally keep it as long as you keep paying the premium. If you start with Advantage and later want a Medigap policy, you may face health questions in many states. See our posts on Medigap underwriting and trial rights when leaving Medigap.

Putting It Together: Three Years Instead of One

A useful exercise is to test each option against three different years rather than a single average:

• A quiet year. You see your primary care doctor, get routine screenings and fill your regular prescriptions. Fixed costs dominate here.
• A typical year. A specialist, some imaging, perhaps a minor procedure. Per-use costs matter more.
• A hard year. A hospital stay, surgery or an extended course of treatment. The ceiling is the deciding factor.

For each path, add up the fixed costs, the per-use costs and the ceiling. Then ask yourself two questions. Could I afford the hard year under this option? And am I comfortable paying for the quiet year? Most people find that one question matters more to them than the other, and that answer points toward a choice.

Remember that this is a framework, not a verdict. Your doctors, your medications, your health history, where you live and your risk tolerance all matter, and they differ from person to person.

Where to Get the Numbers

Use primary documents rather than summaries. The Medicare Plan Finder tool on Medicare.gov estimates drug and total costs for specific plans. Each plan has an Evidence of Coverage that lists copays, limits and rules. If you are already in a plan, the Annual Notice of Change, which arrives each fall, tells you what is changing. Our guide to reading the Annual Notice of Change and our plan comparison checklist walk through the steps. Your State Health Insurance Assistance Program also offers free, unbiased counseling, and in Ohio that is OSHIIP.

A Step-by-Step Worksheet You Can Use

Here is a way to run the comparison from start to finish. It takes an evening, and it works for you or for a parent you are helping.

Step 1: Write down how you use care. List your doctors and specialists, how often you see each, any ongoing treatments, any procedure you expect in the next year, and every medication with its strength. Add where you live and whether you spend months elsewhere.

Step 2: Gather the real documents. For each Advantage plan you are considering, collect the Summary of Benefits, the Evidence of Coverage, the formulary and the provider directory. For the Original Medicare path, gather quotes for the Medigap plan letter you are considering and for a stand-alone drug plan. Use primary documents rather than advertisements.

Step 3: Fill in bucket 1. Write the monthly premiums for each path, remembering that Part B is in both.

Step 4: Fill in bucket 2 with a typical year. Using the plan documents, price your normal visits, tests and therapy. For Medigap, check what the plan letter leaves you responsible for.

Step 5: Fill in bucket 3 with a hard year. Assume a hospital stay or major treatment. Look up the Advantage plan’s out-of-pocket limit and what it excludes. For Original Medicare, add up what the deductible, coinsurance and any Medigap gaps would leave you owing.

Step 6: Run your drugs through Plan Finder. Enter each medication and your pharmacy and compare the estimated yearly drug cost for each plan.

Step 7: Check access. Confirm each doctor and hospital with a call to its office. Note prior authorization rules for services you expect to need.

Step 8: Decide what you are willing to risk. Some people choose a higher steady premium to avoid surprises. Others choose a lower premium and accept a higher ceiling. Neither is wrong, but be honest about which one you could live with in a bad year.

Step 9: Mind the calendar. The annual enrollment period runs October 15 to December 7. If you are newly eligible, your Initial Enrollment Period and, for Medigap, your six-month open enrollment window are the times when your options are widest.

How the Comparison Changes by Starting Point

The same five buckets apply to everyone, but the answers differ by coverage situation.

• Original Medicare with Medigap. Look at the Medigap plan letter closely. A plan that covers nearly all cost sharing leaves little in bucket 2 and a low ceiling in bucket 3. A plan with copays or a high deductible shifts some cost back to you.
• Medicare Advantage HMO. Often the lowest cost structure, with the tightest network and referral rules. Bucket 5 deserves the most scrutiny.
• Medicare Advantage PPO. More flexibility to see out-of-network providers, at higher cost. Compare the in-network limit and the higher combined limit.
• People with Medicaid or a Medicare Savings Program. Much of the cost sharing may be paid for you, which changes the comparison. A Dual-Eligible Special Needs Plan may be an option, and our guide to D-SNPs explains it.
• People with employer or retiree coverage. Compare the coverage you have now before changing, since some employers coordinate with Medicare in specific ways and joining an Advantage plan may end retiree benefits.
• Veterans and military retirees. VA care and TRICARE For Life work with Medicare in their own ways, and an Advantage plan can change how they coordinate. We’re an independent agency, not affiliated with the VA, TRICARE, or the Department of Defense, so confirm the specifics with them before you decide.

Three Hypothetical Comparisons

Picture a retiree who is healthy, travels often and sees a doctor once or twice a year. A low premium may look attractive, and a quiet year favors it. But travel makes the network and out-of-area coverage important, and a Medigap policy’s national reach may be worth considering. The ceiling matters less often, but it matters a great deal if it ever happens.

Picture someone managing two chronic conditions with regular specialist visits. Per-use costs dominate. A set of small copays can add up over a year, while a Medigap plan with minimal cost sharing may feel more predictable. If their specialists are all in one plan’s network, though, an Advantage plan could still work well.

Picture someone who takes several brand-name medications. Drug costs may outweigh everything else. The formulary, tiers and deductible become the main comparison, and the right plan can differ from the right medical coverage. Check the drug list at every enrollment period, because it can change.

Common Costly Mistakes

• Comparing only premiums. It is the number that tells you the least about a hard year.
• Forgetting the Part B premium. It belongs in both columns.
• Treating the out-of-pocket limit as a total cost cap. It excludes premiums and prescription drugs.
• Assuming your hospital is in the network. Confirm it by name, for the specific plan.
• Ignoring prior authorization. It affects timing and sometimes access, not just cost.
• Valuing extras you will not use. A dental or fitness benefit is worth something only if you use it.
• Dropping Medigap for a lower premium without a plan for the way back. Rejoining may involve health questions.
• Skipping the Annual Notice of Change. Plans change from year to year, and so can your costs.

What to Do If You Chose Wrong

• You are in an Advantage plan and it is not working. From January 1 to March 31, people in an Advantage plan can generally make one change, either to another Advantage plan or back to Original Medicare. You can also use the annual enrollment period each fall. Our post on switching back to Original Medicare explains the options.
• You want to go back to Medigap. Check whether any trial right or guaranteed issue right applies to you. If not, expect health questions in many states.
• A specific service was denied. Follow the appeal instructions in the denial notice and watch the deadline.
• You are unsure what to do. Your State Health Insurance Assistance Program offers free counseling, and 1-800-MEDICARE can explain your rights.

Keep your documents, the dates of your calls and the name of everyone you speak to. If a problem develops later, that record is valuable.

Frequently Asked Questions

Is Medicare Advantage cheaper than Original Medicare with Medigap?

Often it has a lower monthly premium, but total cost depends on how much care you use. Medigap usually costs more each month and leaves little in cost sharing, while Advantage costs less up front and can cost more when you use a lot of care.

Do I still pay the Part B premium with Medicare Advantage?

Yes, in most cases. You continue to pay the Part B premium, and the plan’s own premium is added on top of it. Some plans reduce the Part B premium you pay, but that varies.

Does Medicare Advantage have a cap on what I pay?

Yes. Every Medicare Advantage plan has a yearly limit on what you pay for covered services, but it does not include your Part D drug costs or your premiums. Original Medicare has no such limit.

What costs do people forget when comparing plans?

Common ones include the Part B premium, drug costs, copays for specialists and hospital days, out-of-network charges, and the cost of losing access to a doctor you rely on.

Can I switch if I choose wrong?

Sometimes. Rules and timing depend on when you enroll and where you live. See our post on switching from Medicare Advantage back to Original Medicare before you decide.