10 key differences between Medicare Advantage and traditional Medicare

Medicare Advantage is growing in popularity — almost half of Medicare beneficiaries were enrolled in the program in 2022. 

Here are 10 ways the public-private partnership differs from traditional Medicare. 

1. Payments differ between the two programs. In Medicare Advantage, insurers are paid a set amount per beneficiary, depending on their age and health status. Insurers then pay providers for beneficiaries' health expenses. Traditional Medicare uses the fee-for-service model, where providers are paid per service delivered.
   
   
2. Medicare Advantage enrollees typically have a set network of providers for non-emergency care. Traditional Medicare enrollees can receive care from any provider that accepts Medicare.
   
   
3. Most Medicare Advantage plans offer supplemental benefits not included in traditional Medicare. In 2022, almost all Medicare Advantage plans offered vision, hearing, fitness and dental benefits, according to Kaiser Family Foundation. Traditional Medicare enrollees can choose to add Medicare supplement plans to cover additional costs Medicare Parts A and B do not pay for.
   
   
4. Medicare Advantage beneficiaries may spend less overall on their healthcare costs than their counterparts in traditional Medicare. Fee-for-service Medicare members spend about 7 percent more on average for healthcare compared to Medicare Advantage members, according to a study published by AHIP, the trade association representing insurers. MA members may need less retirement savings to cover their healthcare costs, according to the Employee Benefits Research Institute.
   
   
5. The main reasons MA and traditional Medicare enrollees choose their coverage differ. The top reason MA enrollees say they chose their coverage was more benefits, followed by out-of-pocket cost limits. The top reason traditional Medicare enrollees said they chose their coverage was more provider choice, according to a survey from the Commonwealth Fund. 
   
   
6. Traditional Medicare enrollees are more likely to reside in rural areas than MA beneficiaries. Data from the Commonwealth Fund's analysis of the "2018 Medicare Current Beneficiary Survey" shows 24 percent of traditional Medicare beneficiaries live in non-metro areas, compared to 14 percent of MA members.
   
   
7. The racial and ethnic and income-level distribution of Medicare Advantage and traditional Medicare are similar, excluding special needs plans, according to the Commonwealth Fund. Special needs Medicare Advantage plans offer care for members dually eligible for Medicare and Medicaid and members with certain chronic conditions. 
   
   
8. Some studies have identified better care outcomes for Medicare Advantage beneficiaries compared to their fee-for-service counterparts. Medicare Advantage beneficiaries are less likely to be hospitalized for ambulatory care-sensitive conditions but receive this care in other settings, one study found.
   
   
9. MA enrollees are also less likely to receive low-value care services than those in traditional Medicare, a study published in JAMA Open Network found.
   
   
10. Traditional Medicare and MA enrollees generally report equal satisfaction with their coverage but have different worries about their healthcare, a survey from eHealth found. Medicare supplement enrollees were more likely to list having their Medicare benefits reduced as their top future healthcare worry. Medicare Advantage enrollees were more likely to report concerns about not being able to afford their care.