Once you turn 65, you'll generally have the option to get health coverage through Medicare. From there, you can choose between original Medicare and Medicare Advantage.
Original Medicare consists of Part A, which covers hospital care, and Part B, which covers outpatient care and diagnostics. Enrollees in original Medicare also need a Part D drug plan to cover the cost of prescriptions. And it's common to purchase supplemental insurance known as Medigap to help enrollees cover the cost of expenses like deductibles and coinsurance.
Image source: Getty Images.
Medicare Advantage, meanwhile, is coverage offered by private insurers and is similar to the health coverage workers get through their employers. Medicare Advantage plans are required to provide at least the same level of coverage as original Medicare, but in some cases, they do it at a lower cost.
Medicare Advantage plans are usually all-in-one plans, so a separate drug plan often isn't needed. And Medigap isn't available to enrollees in Medicare Advantage.
If you're nearing the age when you'll be eligible for Medicare, you may be eager to learn more about Medicare Advantage. Here are some key data points to keep in mind.
1. Enrollment is strong
Data from the Kaiser Family Foundation (KFF) found that, as of late 2023, 51% of the eligible Medicare population was enrolled in an Advantage plan. That's nearly 31 million enrollees in total.
This clearly sends the message that Medicare Advantage plans are pretty popular. But don't automatically assume that makes it the right choice for you.
Medicare Advantage can be a cost-effective alternative to original Medicare, but it isn't always. One major drawback is that Advantage plans often limit enrollees to a narrow network of healthcare providers.
Imagine not being able to see your trusted doctors later in life because they're not part of your health-plan's network. With Medicare Advantage, that's a possibility you might face.
2. Plan choices are abundant for the average enrollee
The KFF reports that the average Medicare beneficiary has access to 43 Medicare Advantage plans this year. That's more than twice the number of plans offered back in 2018.
That said, if you live in a rural or remote part of the country, your Medicare Advantage plan choices may not be robust. Having more plan choices is a bit of a mixed bag because, while it's good to have options, it's not always easy to narrow down your choices when you have several dozen plans available to you.
Once you're ready to sign up for a Medicare Advantage plan (if you decide you want to go this route), look at local plan ratings on Medicare's site to see how satisfied enrollees are with their coverage. That could at least help you whittle down your options.
3. Most Advantage plans won't cost extra from a premium standpoint
Seniors who enroll in Medicare Advantage don't get out of paying a premium for Medicare Part B. But the KFF says that among Medicare Advantage plans that include drug coverage (which is 89%), two-thirds don't charge an added premium on top of the cost of Part B in 2024. Not only that, but 19% of Medicare Advantage plans offer some reduction in the cost of Part B.
That said, there are plenty of Advantage plans that do charge an added premium. And you'll need to determine whether it's worth paying, based on the benefits you have access to. Even if you happen to enroll in a $0 premium Medicare Advantage plan, your total out-of-pocket costs might come in higher than with original Medicare if you have a lot of health issues.
4. Most Advantage plans offer supplemental benefits
That KFF says that in 2024, 97% of Medicare Advantage plans offer some vision, fitness, hearing, or dental benefits. These are services original Medicare typically won't pay for.
But it's important to dig deeper into those benefits. Your Medicare Advantage plan might cover dental cleanings, but services beyond that point, like fillings, may not be covered.
Also, it's not uncommon for Medicare Advantage plans to put a cap on the annual benefit enrollees are eligible for in the context of these extra services. For example, if you have a number of eye issues, you may end up spending money out of pocket after exceeding your plan's yearly allowance.
All told, it's a good idea to educate yourself about Medicare Advantage if it's something you may be interested in. While these statistics may be a good starting point, be sure to look beyond them in the course of your research. Definitely take the time to become familiar with the details of different plans if you're gearing up to commit to one.
