The perfect resource for Medicare and soon-to-be Medicare beneficiaries.
Medicare is confusing to most people due to its complex structure and various coverage options. One such coverage option is a Medicare Advantage plan, also known as Medicare Part C.
A Medicare Advantage plan is a type of health insurance offered by private insurance companies contracted with Medicare. These plans provide an alternative to government-administered “Original Medicare” and include Medicare Part A, Part B, and usually, Part D. Medicare Advantage plans may offer additional benefits not provided by Original Medicare.
This guide to Medicare Advantage plans provides valuable insights for Medicare beneficiaries to understand Medicare Advantage plans fully—what they are, how they work, what they cost, and more.
Medicare Advantage plans have become increasingly popular over the last several years, but it’s essential to fully understand the structure of these plans before enrolling in one. Read on to ensure you make the best decision for your health.
Table of Contents
- The Basics of Medicare Advantage Plans
- How Medicare Advantage Plans Work
- What Medicare Advantage Plans Cover
- Costs of Medicare Advantage Plans
- How Medicare Advantage Plans Differ from Original Medicare
- Types of Medicare Advantage Plans
- Medicare Advantage Plan Considerations
- Medicare Advantage Plan Eligibility and Enrollment
- The Pros and Cons of Medicare Advantage Plans
- Choosing the Right Plan
- Annual Changes to Medicare Advantage Plans
- What’s Next?
The Basics of Medicare Advantage Plans
Medicare Advantage plans are often called “Part C” or “MA Plans .”These plans provide an alternative to Original Medicare, the government-administered insurance program for Americans 65 and older and some younger Americans with disabilities. Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance).
Medicare-approved private insurance companies offer Medicare Advantage plans and must follow the rules set by Medicare. Plans are required to provide the same benefits as Original Medicare (Part A and Part B).
Many Medicare Advantage plans also include prescription drug coverage (Medicare Part D). Plans may offer extra benefits such as dental coverage, vision and hearing benefits, fitness programs, and over-the-counter allowances.
There are several types of Medicare Advantage plans, and each type has special rules about how plan members obtain Medicare-covered services and additional benefits.
If you join a Medicare Advantage plan, you will still have Medicare, but you will get most of your Part A and Part B services from your Medicare Advantage plan – not Original Medicare.
How Medicare Advantage Plans Work
With Medicare Advantage plans, you will choose a plan provided by a specific insurance company, such as UnitedHealthcare or Blue Cross Blue Shield. The insurance company will provide the majority of your healthcare services. But you still have the same protections that you would have under Original Medicare.
All insurance companies offering Medicare Advantage plans must be pre-approved by Medicare and follow the rules set by Medicare. All Medicare Advantage plans must provide healthcare benefits that are “at least as good, or better, than Original Medicare.”
While all plans must follow general rules, each Medicare Advantage plan can charge different out-of-pocket amounts and have different rules for how you get services. For example, whether you need a referral to see a specialist.
Every year the Medicare Advantage plan must be certified by Medicare. The plan’s rules and benefits can change every year. However, the plan must notify you about any changes before the start of the next enrollment year.
What Medicare Advantage Plans Cover
Medicare Advantage plans provide all your Part A and Part B benefits, excluding clinical trials and hospice services. In addition, these plans may temporarily not cover new benefits from new legislation or national coverage determinations.
Most Medicare Advantage plans include prescription drug coverage (Medicare Part D). You can join a separate Part D drug plan for specific plans that do not have drug coverage (such as MSA or PFFS).
With Medicare Advantage plans, you may also get additional benefits that Original Medicare doesn’t provide. Many plans offer gym membership, dental coverage, vision and hearing services, over-the-counter allowance, and more.
Costs of Medicare Advantage Plans
The cost of Medicare Advantage plans varies widely depending on your chosen plan. The plans must follow general rules set by Medicare but have the flexibility to select the amounts they charge for premiums and services (as long as approved by Medicare.) The plans may also change what you pay every year.
If you enroll in a Medicare Advantage plan, you still must pay the monthly Part B premium. In 2023, the standard Part B premium is $164.90 per month. Your Part B premiums may be higher depending on your income.
- Premiums: Some Medicare Advantage plans have monthly premiums that must be paid in addition to Part B premiums. Although “zero-premium” Medicare Advantage plans are available in many areas of the country.
- Deductibles: Some plans have an annual deductible that must be paid before the plan begins to cover the cost of care. However, deductibles are becoming less and less common for medical services. Many plans still charge a separate deductible for prescription drug coverage.
- Copayments and Coinsurance: Most Medicare Advantage plans require members to pay a portion of the cost of the care in the form of copayments or coinsurance. These amounts will vary by plan.
The good news is that, unlike Original Medicare, Medicare Advantage plans have an out-of-pocket maximum, limiting the amount members must pay for covered services each year. Once you reach this limit, you won’t have to pay anything for covered services for the remainder of the year. The out-of-pocket limits also vary by plan.
How Medicare Advantage Plans Differ from Original Medicare
There are two main ways to get Medicare coverage: Original Medicare or a Medicare Advantage Plan. Your health plan decisions can affect what you may pay, what benefits you get, and what providers you can use.
Original Medicare is free-for-service health insurance provided by the U.S. Generally, there is a cost for each service you use. You will likely pay a set amount (deductible) before Medicare pays its share. After you meet your deductible, Medicare will pay its share of the costs for covered services (commonly 80%).
You can go to any doctor or hospital that takes Medicare (anywhere in the U.S.)
Original Medicare does not include prescription drug coverage, but you can add a separate drug plan (Part D). You can also purchase supplemental coverage from a private insurance company to help pay for out-of-pocket costs (deductibles and coinsurance). This additional coverage is known as a Medicare Supplement or “Medigap” plan.
Medicare Advantage Plans
Medicare Advantage Plans are very different than Original Medicare. A private insurance company will manage your medical care. You can usually only use doctors and hospitals in your plan’s network. In many cases, you may need to get approval from your plan before it covers certain services or drugs.
As a trade-off, Medicare Advantage plans may have lower out-of-pocket costs than Original Medicare. These plans also limit what you pay for covered services annually. Lastly, many plans offer extra benefits that Original Medicare doesn’t cover, such as gym memberships, dental services, etc.
Types of Medicare Advantage Plans
There are different types of Medicare Advantage plans:
- Preferred Provider Organization plans (PPO)
- Private Free-for-Service plans (PFFS)
- Medical Savings Account plans (MSA)
- Special Needs plans (SNP)
Depending on your area, not all of these plans may be available. There are also additional eligibility requirements for Special Needs plans.
Health Maintenance Organization Plans (HMO)
Health Maintenance Organization (HMO) plans generally provide coverage exclusively from a network of doctors, providers, hospitals, and facilities contracted with the plan. Most HMO plans also require you to get a referral from a primary care doctor for specialist care. In most cases, if you see a provider outside of the plan’s network, you must pay 100% of the costs. Many HMO plans include prescription drug coverage.
Preferred Provider Organization Plans (PPO)
Preferred Provider Organization (PPO) plans also have contracted networks of doctors, providers, hospitals, and facilities. However, with PPO plans, you can also use out-of-network providers for covered services (albeit at a higher cost). With most PPO plans, you will not be required to get a referral for specialist care. Many PPO plans include prescription drug coverage.
Private Fee-For-Service Plans (PFFS)
With a Private Fee-For-Service (PFFS) plan, you can go to any Medicare-approved doctor, provider, or hospital that accepts the plan’s payment terms, agrees to treat you, and hasn’t opted out of Medicare. Some PFFS plans have a network, and some do not. If your PFFS plan has a network, you may have to pay more to go outside the network.
With a PFFS plan, you must ensure that the provider or hospital agrees to your plan’s terms before you receive any services. These plans sometimes include prescription drug coverage. If your PFFS plan doesn’t offer drug coverage, you can join a separate Medicare Part D drug plan.
Medical Savings Account Plans (MSA)
MSA plans combine a high-deductible insurance plan with a medical savings account that you can use to pay for your healthcare costs. In many cases, these plans will deposit money in a medical bank account that you can use for covered medical services. These plans generally don’t have networks of providers. MSA Plans do not include prescription drug coverage, so you must join a separate Medicare Part D drug plan.
Special Needs Plans (SNP)
Special Needs plans (SNP) provide benefits and services to people with specific diseases, particular healthcare needs, or who also have Medicaid coverage. These plans tailor their benefits, provider choices, and list of covered drugs to meet best the specific needs of the group they serve. Special Needs plans are typically either PPO or HMO plans. Each Special Needs plan limits its membership to people in a specific group. And you can only stay in the plan if you continue to meet the particular conditions.
- Chronic Condition SNP Plans (C-SNP) – Members must have one or more specific severe or disabling chronic conditions for C-SNP plans. For example, C-SNP plans are available in some areas for members with diabetes mellitus or certain chronic heart disorders.
- Institutional SNP Plans (I-SNP) – Members of an I-SNP must need the level of care a facility offers or live for at least 90 days straight in a facility such as a nursing home to be eligible.
- Dual Eligible SNP Plans (D-SNP) – D-SNPs plans are for members eligible for Medicare and Medicaid. These plans work with the state’s Medicaid program to coordinate benefits. Only individuals who meet income and resource limits can qualify for Medicaid.
Medicare Advantage Plan Considerations
Medicare Advantage plans often have networks of healthcare providers, which can impact the cost and availability of care for plan members. As such, Medicare recipients considering Medicare Advantage plans should consider the following when it comes to networks:
- Provider network: Before choosing a plan, checking the plan’s network is essential to ensure that preferred providers are included. You should ensure your primary care physician (PCP) is in the plan’s network. NOTE: Network providers can change frequently. Just because your PCP is in the network currently doesn’t mean they will always be there.
- Out-of-network costs: If a Medicare Advantage plan member seeks care from a provider outside of the plan’s network, they may be responsible for paying more out-of-pocket than they would if they had received care from an in-network provider. Members may sometimes be liable for 100% of the cost. As such, it’s essential to understand the costs associated with receiving care from out-of-network providers.
- Coverage for out-of-network care: Medicare Advantage plans cover out-of-network care in certain circumstances, such as emergency and urgent care. However, it’s essential to understand the plan’s coverage for out-of-network care to ensure no surprises when it comes to costs.
- Travel: If a Medicare Advantage plan member travels frequently or spends time in different parts of the country, they may want to consider a plan with a broad network to ensure that they can access care while away from home.
- Referral requirements: Some Medicare Advantage plans may require plan members to get a referral from their primary care physician before seeing a specialist. It’s essential to understand any referral requirements associated with a plan to ensure that plan members can receive the care they need promptly.
Medicare Advantage Plan Eligibility and Enrollment
To join a Medicare Advantage plan, you must have Medicare Parts A and B and live in the plan’s service area. You can join a Medicare Advantage plan even if you have a pre-existing condition.
You can only join, switch, or drop a Medicare Advantage Plan during specific periods of the year. These enrollment periods are described as follows:
- Initial Enrolment Period (IEP) – When you first become eligible for Medicare, you will have a seven-month window to enroll in a Medicare Advantage Plan. If you are turning 65, this period begins three months before you turn 65, includes the month you turn 65, and lasts three months after you turn 65. If you miss this initial enrollment period, you must wait until the Open Enrollment Period.
- Open Enrollment Period (OEP) – Anyone with Medicare can join, switch, or drop a Medicare Advantage plan every year between October 15th and December 7th. Any changes will be effective January 1st of the new year.
- MA Open Enrollment Period (MA OEP) – If you are currently on a Medicare Advantage plan, you can change once every year between January 1st and March 31st. Changes will be effective the following month.
- Special Enrollment Period (SEP) – In special situations, you may be able to join, switch, or drop a Medicare Advantage plan. Examples of special cases include moving out of a service area or losing employer coverage.
You can compare Medicare Advantage plans in your area by visiting Medicare.gov or calling 1-800-Medicare. You can also contact an independent Medicare insurance agent.
To enroll in a plan, you can call the insurance company directly or see if you can enroll through their company website. You can also enroll through a licensed insurance agent.
When you join a plan, you need your official Medicare number (“Member Beneficiary Identifier or MBI). You must know your Medicare Part A and Part B effective dates. After enrollment, it may take a couple of weeks for Medicare to process your registration and for the insurance company to mail you your Member identification card.
After your Medicare Advantage plan becomes effective, you must use the card from your Medicare Advantage plan to get services.
The Pros and Cons of Medicare Advantage Plans
- Extra Benefits: Medicare Advantage plans provide the same Medicare Part A and Part B benefits as Original Medicare but often include additional benefits Original Medicare doesn’t offer. Many Medicare Advantage plans include Part D prescription drug coverage, so you don’t have to purchase a separate Part D Plan. Plus, plans may include dental coverage, vision care, hearing benefits, gym memberships, and more.
- All-In-One Coverage: Medicare Advantage plans bundle Parts A, B, and sometimes Part D (prescription drug coverage) into a single package. Bundling can simplify things for you, as you’ll only need to manage one plan and monthly premium. Plus, you’ll only have to keep track of one Member ID card.
- Cost Savings: Depending on your chosen plan, you might find that your out-of-pocket expenses are lower than with Original Medicare. Many Medicare Advantage plans have lower copayments and deductibles. But most importantly, all Medicare Advantage plans have a yearly out-of-pocket maximum to protect you from high costs.
- Coordinated Care: With most Medicare Advantage plans, you have a primary care physician who coordinates the care among your care providers. Coordinated care helps prevent medical errors and getting the same service more than once (when it isn’t needed).
- Limited Provider Choices: Since most Medicare Advantage plans have provider networks, choosing doctors and hospitals may be more limited than with Original Medicare. If you have a preferred doctor or specialist, they might not be in-network, which could mean higher out-of-pocket costs or the need to find a new provider.
- Geographic Restrictions: Medicare Advantage plans are usually tied to specific service areas. If you travel a lot or split your time between multiple locations, it could be challenging to find in-network care while you’re away from home.
- Prior Authorization Requirements: Some Medicare Advantage plans have more stringent prior authorization requirements than Original Medicare. You may be required to get approval from the insurance company before certain services or treatments are covered, which could delay care.
- Plan changes: Medicare Advantage plans can change their coverage, provider networks, and costs from year to year. You should reevaluate your plan annually to ensure it meets your needs.
Choosing the Right Plan
There are many things to consider when choosing the best Medicare Advantage plan for your situation. Here are five tips to make sure you’re on the right plan.
Tip #1: Think about what’s most important to you.
What matters most to you in a plan? Lowest cost? Network size? What do you like and dislike about your current plan? What extra benefits are important to you? Dental care? A gym membership? Make a list of what you care about most so you know what to look for.
Tip #2: Review the provider network.
Medicare Advantage plans have networks of doctors, hospitals, and other healthcare providers. You might have to pick from a list of doctors in the plan. Make sure your preferred doctor or hospital is part of your plan. If not, are you okay with finding a new one?
Tip #3: Compare the costs.
Each plan has different costs, like monthly premiums, deductibles, and copays. Think about how much you can afford to spend on healthcare. Then, compare the prices of different plans to find one that fits your budget. Look closely at the more expensive charges, such as hospital stays and Part B drug costs. Also, look for a plan with a low annual maximum out-of-pocket limit.
Tip #4: Check out the plan’s travel flexibility.
Do you travel frequently or spend time in more than one place? Some plans only work well in a particular area. If you move around a lot, you’ll want a plan that makes it easy to get care wherever you go.
Tip #5: Ask for help.
Be bold and ask for help. Get feedback from friends and family on Medicare Advantage plans. Also, talk to an expert who knows much about Medicare Advantage plans. If speaking to a Medicare insurance agent, find one that is independent and unbiased.
Annual Changes to Medicare Advantage Plans
Medicare Advantage plans changes can happen for many reasons, like new rules, different costs, or changes to the network of doctors and hospitals.
Every year, your plan might change things like the monthly premium, the deductible, and copays. The list of doctors and hospitals in the plan and the extra benefits (like dental or vision care) can change too.
It’s essential to keep an eye on your mailbox around September or October. That’s when your plan will send you a document called the Annual Notice of Change (ANOC). This notice tells you about any updates to your plan for the following year. Make sure to read it carefully, so you know what’s changing.
If you’re not happy with the changes to your plan, don’t worry. Every year, during the Annual Enrollment Period, you can switch to a different Medicare Advantage plan or even go back to Original Medicare. Just do your research and find a plan that fits your needs!
Congratulations! You’ve completed the Ultimate Guide to Medicare Advantage plans, meaning you’re more knowledgeable about Medicare Advantage plans than 99% of the population.
By applying what you’ve learned in the Guide, you can decide if a Medicare Advantage plan is right for you. And if a plan is right for you, you can save money and avoid the common pitfalls.
So what’s next? The information provided in this guide will help you find an excellent Medicare Advantage plan (if that’s what you want.) But, if you would like further assistance from an experienced professional, we are more than happy to help.
With the help of a Truevine Medicare advisor, you’ll get the following:
- A 100% independent (i.e. Unbiased) expert
- Free personalized advice and consultations
- Annual Medicare plan reviews (including Prescription drug reviews)
- Free lifetime support
You’ll rest easy knowing your Medicare coverage is being done right!