Difference between Medicare and Medicare Advantage

The chart below compares the differences between Medicare Advantage vs Original Medicare. You can use the chart (updated for 2020) to compare benefits and costs side by side. For example, you can compare differences in coverage, deductibles, doctors and hospitals. Furthermore, the chart shows you the pros (green) and cons (red). For instance, Original Medicare pros include access to any doctor and hospital nationwide with no referrals. In contrast, Medicare Advantage plan cons include limited access to local or regional networks and referrals for HMOs.

medicare advantage vs medicare
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2020 Cost Comparison – Traditional Medicare vs Medicare Advantage

This chart compares the cost differences in 2020 between traditional Medicare vs Medicare Advantage. For example, in traditional Medicare you pay 20% coinsurance. In contrast, with Medicare Advantage you pay fixed copays. Another cost difference is deductibles.

Deductible Differences 2020 – Medicare Advantage vs Medicare

Deductibles are out of pocket expenses you must pay before Medicare pays for your care. The chart shows your deductible cost may be as little as $0 on a Medicare Advantage plan. Conversely, traditional Medicare requires you to pay Part A deductible $1408 in 2020. Furthermore, you must pay Part B deductible $198 in 2020. 

2020 Medicare Supplement Plans pay your Part A deductible

Any Medicare supplement (Medigap) plan will pay your $1408 Part A deductible in 2020. Instead of coming out of pocket this amount, you can pay a more affordable monthly Medigap premium. This is a fixed monthly cost that pays your Part A deductible during your coverage period. For example, you get hospital care twice a year with no Medigap plan costs you ($1408 x 2) $2,816. In contrast, having a Medicare Supplement plan will costs you less.

Premium Costs 2020 – Medicare Advantage vs Medicare

Both Medicare Advantage and traditional Medicare requires you to pay Part B premium. In 2020, the standard premium for Part B is $144.66. Anyone with a Medicare Advantage plan is also required to pay a monthly premium. In 2020, the average Medicare Advantage premiums are as follows:

  • HMO $23
  • Local PPO $39
  • Reginal PPO $44

Prescription Drugs Costs 2020 – Medicare Advantage vs Medicare

A big “advantage” of a Medicare Advantage plan is covering prescription drugs. As the chart shows, HMO plans often cover prescription drugs. Other Medicare Advantage plans such as PPO and PFFS may cover prescription drugs. 

On the other hand, a big disadvantage of traditional Medicare is not covering prescription drugs. As the chart shows, you can only get prescription drug coverage with Original Medicare by adding Part D. Furthermore, the chart shows the 2020 Part D base premium of $32.74 based on the annual release from CMS.

Max Out-of-Pocket Limit 2020 – Medicare Advantage vs Medicare

As the chart shows, the maximum you pay for Medicare Advantage plan in 2020 is $6,700. In other words, you will never pay more than $6,700. However, you may pay less than $6,700 depending on your plan. 

Original Medicare, as shown by the chart, has no out-of-pocket limit. Therefore, the amount you pay for Medicare services may be more than $6,700. For example, you could pay $10,000 or more. To reduce your out-of-pocket expenses, we recommend you consider a Medicare Supplement (Medigap) plan. 

What is the difference between PPO and HMO?

The chart below compares the differences between PPO vs HMO. You can use the chart to compare benefits and costs side by side. The green letters show pros and red letters show cons. For instance, HMO pros include lower cost for deductibles and premiums. However, PPO pros include no referrals, out of network coverage, and larger network size.

Click table to embed or download infographic

Referral difference between PPO and HMO

The chart identifies referral differences between PPO and HMO. As shown on the chart, PPO (Preferred Provider Organization) does not require referrals. However, HMO (Health Maintenance Organization) may require referrals. For example, some HMO plans may require a referral from your primary care physician (PCP) to see a specialist or have a special test done. 

Coverage difference between PPO and HMO

A second important difference between PPO and HMO is coverage. With a PPO you can see a doctor outside your network, but it may cost you more. However, an HMO does not provide coverage outside your network. Thus, you pay all health care costs for services outside your HMO network.

Cost differences between PPO and HMO

Typically, PPO plans cost more than HMO. Both have two costs: deductibles and premiums. PPO plans have better coverage and cost more than HMO plans. 

Network size difference between PPO and HMO

HMOs have the smallest network of doctors and hospitals. Thus, your choices are more limited with an HMO. On the other hand, PPO plans offer larger networks than HMO. As shown in the chart, PPO may be local or regional. For example, a local PPO may include a county or part of a county. Conversely, a regional PPO serves a single state or multi-state area. 

More Benefits and Costs – Medicare Advantage vs Original Medicare

What is not shown in the chart is Part D deductible costs. This is an annual out-of-pocket amount you must pay before Medicare coverage begins. Your Part D deductible amount will vary from plan to plan. For example, some Part D plans have $0 deductible. Medicare sets a limit on the maximum cost for Part D deductibles. In 2020, the maximum Part D deductible is $435. In other words, Part D deductibles must be $435 or less in 2020.

Medicare Advantage may offer the following benefits which are not available with Original Medicare:

  • Dental
  • Vision
  • Hearing
  • Gym membership