What is a Medicare Advantage plan? Insure.com

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Medicare Advantage plans are a type of Medicare offered by private companies. The companies contract with Medicare to provide you insurance.

Nearly all Medicare Advantage plans are health maintenance organizations (HMOs) or preferred provider organizations (PPOs). HMOs and PPOs have provider networks. In most HMOs, you can only see providers in your network or pay the full costs of health care services. In PPOs, you can go outside your provider network but will usually pay more for car if you elect to do so.

How do Medicare Advantage plans work?

Medicare Advantage plans are similar to private health insurance plans. You buy coverage through a private insurer, who contracts with doctors, hospitals and other facilities.

The provider bills the insurer, which reviews the medical claim and decides how much to pay. The member pays the rest of the bill.

That’s different from Original Medicare. In Original Medicare, also called Parts A and B, the government pays your healthcare providers.

Key Takeaways

Medicare Advantage payers have provider networks and contract with doctors and facilities for payment.
Medicare Advantage plans, also known as Part C, may provide supplemental benefits not found in Original Medicare, such as vision and dental care.
Some private insurers also offer benefits like hearing aids, meal delivery, housekeeping and transportation as a part of their Medicare Advantage plans.
Medicare Advantage plans usually provide prescription drug coverage as part of their standard benefits. Original Medicare members may opt to get a Part D prescription drug plan to get help with prescription drugs.

Medicare parts explained

Medicare is broken down into two types of coverage: Original Medicare and Medicare Advantage.

Original Medicare is Parts A and B
Medicare Advantage is Part C

Here are the differences between each part.

Medicare Part A

What is Medicare Part A?

Part A is paired with Part B to make up Original Medicare.

Part A is for inpatient care, such as hospital, some skilled nursing facilities, hospice care and home health care in some instances.

Part A is free for most Americans. You don’t pay for Part A as long as you paid at least 10 years’ worth of Medicare taxes. If you didn’t pay Medicare taxes for at least 40 quarters, you may have to pay a monthly premium up to $506 for Part A.

Part A also has a deductible of $1,632 in 2024. Members must meet the deductible before Medicare begins paying for care.

Medicare Part B

What is Medicare Part B?

Part B is the second part of Original Medicare.

It covers things like doctor visits, outpatient care, medical supplies and preventive services.

Part B costs $174.70 monthly for most Americans in 2024*. However, premiums can be more than double that cost for higher-income people.

Part B’s annual deductible is $240 for 2024. After you reach the deductible, you’re responsible for 20% of the costs.

Medicare Part C

What is Medicare Part C?

Part C is another name for Medicare Advantage. Private insurance companies contract with the federal government to offer Medicare Advantage plans.

Medicare Advantage premiums vary based on coverage. Deductibles also vary by plan, but they’re often much higher than Part B deductibles.

Make sure to look at deductibles and out-of-pocket costs when comparing plans. The cost of the plans can also vary depending on where you live. Also, you may pay more or all of the costs for services outside your plan’s provider network, so make sure your providers accept that specific Medicare Advantage plan.

Medicare Advantage plans may offer supplemental benefits that Original Medicare does not. These additional benefits include vision, hearing, dental, prescription drugs, telehealth, expanded palliative care, adult day care services, food delivery after hospitalization and transportation to medical-related appointments.

There are also Medicare Advantage plans that focus on particular health issues like diabetes and congestive heart failure.

Not all Medicare Advantage plans have these supplemental benefits, so check to make sure to ask the plan about supplemental benefits before enrolling.

Find out more about Medicare costs.

Medicare Part D

What is Medicare Part D?

Part D is prescription drug coverage available to all Medicare Members. Many Medicare Advantage members may get this coverage as part of their Medicare Advantage plan, but those who do not can opt to purchase a standalone PDP, just like those with Original Medicare.

What are the advantages and disadvantages of Medicare Advantage plans?

Medicare Advantage plans have their pluses, but also some minuses.

You may notice the following pros and cons of Medicare Advantage plans:

Advantages

Chance to find the right plan for you — Most parts of the country have multiple Medicare Advantage options with myriad plan options, including different plan types and cost structures. This is unlike Original Medicare, which is a one-size-fits-all.
Expanded benefits — Medicare Advantage plans may have additional benefits not found in Original Medicare. Private insurers in Medicare Advantage may offer vision, hearing and dental care and a host of other benefits not in Original Medicare.
Prescription drug benefits — Medicare Advantage plans usually include prescription drug benefits as part of their coverage offerings. Meanwhile, Original Medicare beneficiaries must sign up for a Part D plan to get prescription drug benefits.
Managed care — Medicare Advantage is managed care, which means your providers and health plan coordinate your care.
Familiarity — If you previously had a private insurer from your employer, a Medicare Advantage plan will feel very familiar.

Disadvantages

Smaller provider networks — Medicare Advantage plans have smaller provider networks than Original Medicare. So, you may have more trouble finding a provider with a Medicare Advantage plan. It’s a good idea to check a plan’s provider network before signing up for a plan.
More out-of-pocket costs — Depending on the Medicare Advantage plan, you may pay well more in out-of-pocket costs than Original Medicare. Medicare Advantage plans may have higher deductibles, which could mean more costs when you need care.
Few plan choices in some areas — Some parts of the country don’t have many Medicare Advantage plan options, so you may have trouble finding one that fits your needs.

Why are some Medicare Advantage plans free?

Some Medicare Advantage plans are more restrictive on what doctors you can see in and out-of-network. Some of these plans may also have copayments, coinsurance and deductibles, as well. The trade-off to a low premium is that you might have higher deductibles and coinsurance when you need healthcare.

Medicare Advantage plans without premiums can save healthy seniors money but can cost more in the long run if they use many health care services, including doctor visits and prescription drugs.

Frequently asked questions

How do you join a Medicare Advantage plan?

You can join a Medicare Advantage plan when you turn 65, before 65 if you have a qualifying disability, end-stage renal disease, ALS, or during enrollment periods:

The Medicare Annual Enrollment Period is October 15 to December 7 each year
The Medicare Advantage Open Enrollment period is January 1 to March 31 each year

Only those who already have Medicare can join a Medicare Advantage plan during the Medicare Annual Enrollment Period. The Medicare Advantage Open Enrollment Period is for those who already have a Medicare Advantage Plan and wish to switch to either another Medicare Advantage Plan or switch back to Original Medicare. Keep in mind you are allowed only one change outside of Special Enrollment Periods (SEPs).

Consider the following when choosing a Medicare Advantage plan:

Look at what doctors and hospitals are in the plan’s network. Provider networks can change each year and even mid-year. If you visit particular doctors or hospitals, make sure they’re part of the plan you choose.
Not all providers accept Medicare Advantage. Your long-time doctor may accept Original Medicare, but that doesn’t mean the physician accepts a specific Medicare Advantage plan. It’s best to check with your physician’s office before signing up with a plan just to make sure.
Look at drugs and your usage when selecting a plan. If you’re taking prescription drugs, examine the plan’s list of covered medications carefully. It may be worth your time to set up a spreadsheet with your medications and the costs to better understand your prescription needs.
Consider the plan’s maximum out-of-pocket costs. You may want a plan that has a low out-of-pocket maximum. If you’re healthy and don’t plan to use much health care, you might want to risk a higher out-of-pocket maximum.
Compare plans. A good resource for choosing the best Medicare Advantage Plan is the Medicare Plan Finder.

After determining the Medicare Advantage plans in your area, go to the plan’s website to double-check what suits your needs.

You also can call the plan and talk to a plan representative. If you speak with a representative to confirm that the plan you want covers all your drugs and that the doctors, hospitals and pharmacies you want to use are in its network, take notes. Keep a record of whom you spoke with and what was said.

Visit the plan’s website to see if you can sign up online.

You can also call Medicare directly: 1-800-MEDICARE (1-800-633-4227).

You can’t buy Original Medicare or Medicare Advantage plans on state health insurance exchanges. The exchanges sell only individual and family health insurance.

Who can enroll in a Medicare Advantage plan?

Anyone eligible for Medicare with both Parts A and B can sign up for a Medicare Advantage plan.

Those eligible for Medicare include:

People 65 and over
People with disabilities
People with End-Stage Renal Disease
People with Lou Gehrig’s Disease

When can I join, switch or drop a Medicare Advantage plan?

You can make changes during open enrollment periods.

The Medicare Open Enrollment Period runs between October 15 and December 7. During that time, you can:

Switch from Original Medicare to Medicare Advantage
Change from Medicare Advantage to Original Medicare
Swap Medicare Advantage plans
Get a Part D plan if you have Original Medicare
Change or cancel Part D plans

There’s also a limited Medicare Advantage Open Enrollment Period from January 1 to March 31. During that open enrollment, you can only:

Switch Medicare Advantage plans
Move from Medicare Advantage to Original Medicare
Make a switch to one.

If you don’t make changes during these times, you won’t be able to switch until the next the open enrollment period unless you qualify for a special enrollment period. A qualifying life event can include events such as a spouse’s death, retirement or moving out of the plan’s service area.

What if my plan decides to stop participating in Medicare?

If your Medicare Advantage plan is no longer available, you can switch to another Medicare Advantage plan in your area.

The Centers for Medicare and Medicaid Services estimated that Americans have an average of 57 Medicare Advantage choices in 2021. That’s an increase from 39 alternatives on average in 2020.

Overall, CMS said there were more than 4,800 Medicare Advantage plans in 2021, and the number of plans continues to grow each year. So, you should be able to find a plan right for you even if your plan stops offering coverage.

Do most Medicare Advantage Plans offer prescription drug coverage?

Most Medicare Advantage plans provide prescription drug coverage. You may pay more for a Medicare Advantage plan with prescription drug coverage, but getting help paying for your prescriptions can be a huge help.

Sources:

Medicare.gov. “Costs.” Accessed August 2022.

Medical News Today. “ Medicare Advantage: Monthly costs and more.” Accessed August 2022.

Kaiser Family Foundation (KFF). “ Medicare Part D: A First Look at Medicare Prescription Drug Plans in 2022.” Accessed August 2022.

Disclaimer:

Insure.com is not affiliated with or endorsed by the government or Federal Medicare program. Plans are insured or covered by a Medicare Advantage organization with a Medicare contract and/or a Medicare approved Part D sponsor. Enrollment in the plan depends on the plan’s contract renewal with Medicare. We do not offer every plan available in your area. Currently we represent 10 organizations which offer <100> products in your area. Please contact Medicare.gov, 1800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options. Not all plans offer all of these benefits. Benefits and availability may vary by carrier and location. Limitations and exclusions may apply. Every year, Medicare evaluates plans based on a 5-star rating system. Part B Premium give-back is not available with all plans. Actual Part B premium reduction could be lower. Deductibles, copays and coinsurance may apply. Enrollment in the described plan type may be limited to certain times of the year unless you qualify for a Special Enrollment Period.

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Les Masterson

Contributor

Les, a former managing editor, insurance, at QuinStreet, has more than 20 years of experience in journalism. In his career, he has covered everything from health insurance to presidential politics.