Medicare Advantage vs. Original Medicare: The Real Tradeoff

Key takeaways

• Medicare Advantage plans with drug coverage average $15 a month in supplemental premiums (75% of enrollees pay $0 beyond Part B) and cap annual out-of-pocket spending at $9,250 in-network (up to $13,900 combined) in 2026, but require prior authorization for some services in 99% of plans^(2,4).
• Original Medicare has no out-of-pocket ceiling on its own; a Part B premium of $202.90 a month plus a Medigap policy is what most people use to bound that exposure, at a higher predictable monthly cost⁽³⁾.
• The six-month Medigap Open Enrollment Period, starting the month you turn 65 and enroll in Part B, is generally the easiest time to buy a Medigap policy without medical underwriting⁽⁵⁾.
• Network restrictions and prior authorization requirements are part of the real cost of a Medicare Advantage plan, even when the premium and out-of-pocket cap look favorable.
• The right choice depends on your specific doctors, your health trajectory, and how much monthly cost you're willing to carry in exchange for less exposure to a bad year.

More than half of people with Medicare, 55%, are now enrolled in a Medicare Advantage plan⁽¹⁾. That number keeps climbing every year, and the pitch is easy to understand. You get lower premiums, extra benefits, and one card that covers almost everything. But the tradeoff underneath the pitch rarely gets explained clearly.

• Original Medicare comes with no cap on what you could owe in a bad year.
• Medicare Advantage comes with a hard ceiling on your costs, but a narrower network and more paperwork standing between you and the care you need.

Neither structure is wrong. They're designed for different kinds of risk. This article walks through what each option costs, where the real exposure sits, and how to think about which structure fits your situation.

Why this comparison matters more than the marketing suggests

Every fall, Medicare's open enrollment period fills mailboxes and inboxes with plan comparisons that lead with premium prices. That's the easiest number to advertise and the least useful one for understanding what you'll actually pay in a given year.

The premium is the cost of admission. The out-of-pocket maximum, or the absence of one, is what determines your real financial exposure if you get sick.

Among Medicare Advantage enrollees in individual plans with drug coverage, the average supplemental premium in 2026 is $15 a month, and three-quarters (75%) of enrollees pay no premium beyond the standard Part B premium at all⁽²⁾. Original Medicare's Part B premium is $202.90 a month in 2026 for most enrollees⁽³⁾, and that's before you add a Medigap policy, which averages somewhere between $165 and $220 a month at age 65 depending on the plan and state.

On premium alone, Medicare Advantage looks like the clear winner. But premium is only one side of the ledger. Medicare Advantage plans are legally required to cap your annual out-of-pocket spending on Part A and Part B services, at $9,250 for in-network care or $13,900 if the plan covers out-of-network care, in 2026⁽²⁾. Original Medicare has no such cap. If you need extended hospital care, multiple surgeries, or a long course of treatment in a single year, your 20% Part B coinsurance and Part A hospital costs can keep accumulating with no ceiling⁽³⁾.

That's the real tradeoff. A Medicare Advantage plan trades a lower, more predictable monthly cost for a bounded, but potentially large, annual exposure. Original Medicare trades a higher monthly cost, especially once you add a Medigap policy, for protection against that exposure. Whether that trade makes sense depends on your health situation, your risk tolerance, and how much financial cushion you have for a bad year.

What Original Medicare actually costs

Original Medicare is Part A (hospital insurance) and Part B (medical insurance).

In 2026, the numbers break down like this:

• Part B premium: $202.90 a month for most enrollees, though higher earners pay an income-related surcharge that pushes the premium as high as $689.90 a month depending on income⁽³⁾.
• Part B deductible: $283 a year, after which you typically pay 20% coinsurance on most doctor visits and outpatient services, with no upper limit⁽³⁾.
• Part A hospital deductible: $1,736 per benefit period if you're admitted to the hospital⁽³⁾.
• Part A hospital coinsurance: $434 a day for days 61 through 90 of a hospital stay, and $868 a day if you're drawing on your 60 lifetime reserve days⁽³⁾.
• Skilled nursing facility coinsurance: $217 a day for days 21 through 100 of a covered stay⁽³⁾.

None of these have a ceiling. A single serious hospitalization, especially one that stretches past 60 days or requires extended skilled nursing care afterward, can generate tens of thousands of dollars in coinsurance with Original Medicare alone. That's the gap Medigap exists to close.

Where Medigap fits in

A Medicare Supplement (Medigap) policy is designed to cover the coinsurance and deductible gaps Original Medicare leaves open. Depending on the plan letter, a Medigap policy can bring your out-of-pocket exposure for covered services down close to zero. The difference is the premium. Medigap plans are sold by private insurers and priced by age, location, gender, and plan type, and the range is wide.

Policies can run anywhere from roughly $100 to $300 a month for the most commonly chosen plans, with some plans priced lower and some considerably higher depending on state and underwriting method.

The timing matters here more than most people realize. You get a six-month Medigap Open Enrollment Period that starts the month you're 65 or older and enrolled in Part B. During that window, insurers in your state have to sell you any Medigap policy they offer, regardless of your health history⁽⁵⁾. If you miss that window, in most states an insurer can medically underwrite you, meaning a chronic condition could mean a higher premium or an outright denial. There are specific guaranteed issue situations that reopen that door later, for example if a Medicare Advantage plan you're enrolled in leaves the market, but those exceptions are narrower than most people assume. If you think you might want a Medigap policy eventually, the six-month window right after you enroll in Part B is the lowest-friction time to buy it.

Add Part D prescription drug coverage on top of Part B and a Medigap policy, and Original Medicare's monthly cost stack is real, but so is the protection. Between Medigap and Part D's own $2,100 out-of-pocket cap in 2026, a well-chosen Original Medicare setup can leave you with very little exposure to a catastrophic year, at the cost of paying more, predictably, every month.

What Medicare Advantage actually costs

Medicare Advantage, or Part C, replaces Original Medicare with a private plan, usually an HMO or PPO, that's required to cover everything Original Medicare covers and often bundles in Part D drug coverage plus extras like dental, vision, or hearing.

• Average premium: $15 a month, on average, for the supplemental premium on individual Medicare Advantage plans with drug coverage in 2026, including the 75% of enrollees who pay no premium beyond Part B⁽²⁾.
• Out-of-pocket maximum: Capped at $9,250 for in-network services or $13,900 for combined in-network and out-of-network spending in 2026. These are the legal ceilings; the actual enrollment-weighted average limit is lower, $5,421 in-network and $9,825 combined⁽²⁾.
• Part D within MA plans: A separate $2,100 out-of-pocket cap applies to drug spending, the same as under standalone Part D⁽²⁾.

On paper, that out-of-pocket cap is the headline advantage. You know the worst-case number going into the year. Compare that to Original Medicare without a Medigap policy, where a bad year has no ceiling at all, and the appeal is obvious for anyone worried about a catastrophic scenario.

The part the premium comparison leaves out

The out-of-pocket maximum only protects you for covered, in-network care. Medicare Advantage plans use provider networks, and stepping outside that network, intentionally or because your usual doctor isn't in it, can mean higher costs or no coverage at all, depending on the plan type.

That’s important to understand if you split time between two states, travel frequently, or have a specialist you're not willing to give up.

Prior authorization is the other part that doesn't show up in a premium comparison. Virtually all Medicare Advantage enrollees, 99%, are in a plan that requires prior authorization for at least some services, most commonly higher-cost care like inpatient hospital stays, skilled nursing facility admissions, and chemotherapy⁽⁴⁾.

In 2024, Medicare Advantage insurers processed nearly 53 million prior authorization requests, and fully or partially denied 7.7% of them⁽⁴⁾. Original Medicare, by contrast, generally does not require prior authorization for the same categories of care. For someone managing a complex or chronic condition, that difference in administrative friction can matter as much as the dollar figures.

None of this means Medicare Advantage plans are worse. Many enrollees never run into a denied prior authorization request or an out-of-network problem, and the combination of a low premium, a real out-of-pocket cap, and bundled extra benefits is a genuinely strong deal for a lot of people. It means the difference is structural, not just financial. You're accepting network and authorization rules in exchange for the premium savings and the cost ceiling.

Premium vs. out-of-pocket max, side by side

How to think about which structure fits you

There's no universal right answer here, but a few questions tend to separate people who feel good about their choice from people who end up wishing they'd chosen differently.

• How attached are you to specific doctors or hospitals? If you have a specialist you trust, a surgeon you're mid-treatment with, or a hospital system you want to keep access to no matter where you travel, check that provider's network status before anything else. Original Medicare works with any provider that accepts Medicare, nationwide, with no network to check. Medicare Advantage requires that homework every year, since networks can change at renewal.
• What does your health look like over the next five years, not just this year? A healthy, fit 66-year-old with no chronic conditions may reasonably take on a Medicare Advantage plan's network and authorization in exchange for the lower monthly cost, especially since Medicare Advantage's out-of-pocket cap limits the downside. Someone managing a chronic illness, recovering from a major surgery, or anticipating a significant procedure has more to weigh, since prior authorization requirements and network limits show up most often around exactly that kind of care⁽⁴⁾.
• How much monthly cost can you absorb versus how much unpredictability can you absorb? This is really the whole question restated. A fixed monthly budget that can't stretch for a $200-a-month Medigap premium makes Medicare Advantage's low or zero premium more attractive. A household with the monthly room to pay more but little appetite for an unpredictable five-figure bill in a bad year will lean the other way.
• Do you already have coverage that limits your options? If you have retiree health benefits from a former employer, or you're weighing Medicaid eligibility alongside Medicare, those existing arrangements often change the calculus enough that the general premium versus out-of-pocket-max described here doesn't fully apply. Those situations deserve a conversation with a licensed advisor who can see the whole picture.

None of these questions have a universally correct answer. They're meant to move the decision away from "which plan has the lowest premium" and toward "which structure matches how I actually expect to use my coverage."

Here are a few common mistakes people make comparing the two

• Comparing premium alone. The plan with the lowest monthly cost isn't necessarily the lowest-cost plan for the year. A $0-premium Medicare Advantage plan and a $220-a-month Medigap policy can end up costing about the same over 12 months if you have a significant health event, once you weigh the out-of-pocket difference.
• Assuming you can switch back to Medigap anytime. Once you're past your initial Medigap Open Enrollment Period, switching from Medicare Advantage back to Original Medicare with a Medigap policy isn't guaranteed. Outside specific guaranteed issue situations, an insurer can medically underwrite you, and a health condition picked up along the way could make that switch expensive or impossible⁽⁵⁾. Decide with the long game in mind, not just this year.
• Not checking whether your specific doctors and hospitals are in-network. A Medicare Advantage plan's average network breadth doesn't tell you whether your cardiologist or your preferred hospital system is actually on the list. This has to be checked plan by plan, provider by provider.
• Treating the out-of-pocket max as the whole story. The Medicare Advantage out-of-pocket cap applies to Part A and B services. It doesn't apply to Part D drug spending, which has its own separate $2,100 cap in 2026⁽²⁾. If prescription costs are a major factor in your budget, they need to be evaluated on their own.

Compare your options before you decide

Rate figures, plan availability, and network details change by location and by year. The comparison that matters is between your specific doctors, your prescriptions, and your health history, not national averages.

Medicare plan availability and costs vary by location. Contact a licensed Medicare advisor or visit Medicare.gov to compare plans available in your area.

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