What Is Medicare Advantage and Is It Right for You?

Amy Beardsley
Written byAmy Beardsley
Photo of an Insurify author
Amy BeardsleyInsurance Writer
  • 3+ years writing about auto, home, and life insurance

  • 7+ years in personal finance and technology

Amy specializes in insurance and technology writing and has a talent for transforming complex topics into easy-to-understand stories.

Featured in

media logomedia logo
Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

media logo

Updated January 23, 2023 at 11:00 AM PST

Insurify partners with top insurance companies to provide a comprehensive comparison experience. However, the insurance experts writing our content operate independently of our partners. Check out reviews from over 3,000 satisfied customers, how we make money, our data methodology, and our editorial standards.

Medicare Advantage plans are an alternative to Original Medicare. These Medicare-approved plans provide all your Medicare Part A (hospital insurance), Medicare Part B (medical insurance), and Medicare Part D (prescription drug) coverage as part of one package.[1] 

Many private insurance companies offer Medicare Advantage plans, and the out-of-pocket cost is typically lower than Original Medicare. In fact, the average premium for people in Medicare Advantage plans is $29 per month, according to a 2022 study by the Kaiser Family Fund.[2] Your coverage can also go beyond what Original Medicare offers, including prescription drug coverage and routine dental and vision care.[3]

Deciding on health insurance can be overwhelming, but it doesn’t have to be. We’ll break down what’s important to know about Medicare Advantage and how to decide if it’s right for you.

What is a Medicare Advantage plan?

Medicare Advantage, sometimes called Medicare Part C, is available to everyone eligible for Medicare. To participate, you can buy coverage through private companies, and Medicare will pay these companies to cover the costs of your Medicare benefits.

Medicare Advantage offers the same coverage as Original Medicare Parts A and B rolled into one plan. You may also qualify for additional benefits, such as coverage for prescription drugs, dental care, eyeglasses, and wellness programs.

Medicare Advantage vs. Original Medicare

Medicare Advantage plans are Medicare-approved and offer similar coverages. With the plan, you can visit any doctor or hospital that accepts Medicare wherever you are in the country when you need medical care. But these plans have some key differences that can affect your healthcare options.

Original Medicare doesn’t cover vision, hearing, or dental services. It also doesn’t include coverage for pharmaceutical drugs. For that, you’ll need to join a separate Medicare drug plan, Medicare Part D, or purchase supplemental coverage.

Medicare Advantage plans typically include Part D, and many offer extra benefits to provide dental and vision care, hearing aids, and wellness options. However, you must see a doctor in your plan’s network.

See More: The 10 Best & Worst Medicare Advantage Plans

Medicare Advantage plan vs. Medigap plan

Medicare Advantage is a stand-alone program that bundles your coverage with Original Medicare and additional benefits. But if you choose to stick with your Original Medicare plan, you may want to purchase supplemental insurance called Medigap.

Key Takeaway:

You can’t have both Medicare Advantage and Medigap, but you can switch plans if you need to.

Medigap is supplemental insurance to help pay for out-of-pocket healthcare costs that Original Medicare doesn’t cover. After Original Medicare covers its share of your costs, a Medigap plan can cover the cost of copays, co-insurance, and deductibles. 

Learn More: Medigap vs. Medicare Advantage: Which Plan Is Best for You?

How do Medicare Advantage plans work?

Every Medicare Advantage plan comes from a private, Medicare-approved company. But each plan must offer the same coverage and follow the same rules as Original Medicare. Many offer additional benefits, such as dental care, vision care, and hearing aids. 

You’ll likely pay certain fees out of your own pocket for:

  • Premiums: Most Medicare Advantage plans require you to pay for premiums, though some plans are available with premiums as low as $0.

  • Copayments and co-insurance: These costs may be a set amount, like $20, or a percentage of the service’s total cost.

  • Deductibles: You’ll typically pay a health insurance deductible each year before your plan’s coverage kicks in. You may have a different deductible for medical care and prescription drugs.

Medicare Advantage plans have out-of-pocket limits and must provide certain preventive services at no additional cost, such as flu shots and cancer screenings. How much you pay out of pocket depends on your plan, although the most you’ll spend in 2023 is $8,300 for in-network services.[4]

Learn More: How To Switch Back to Medicare From Advantage Plans

The parts of Medicare

Medicare consists of different parts that cover different types of services:

  • Part A provides coverage for inpatient hospitalizations, skilled nursing facility stays, hospice care, and home healthcare.

  • Part B provides coverage for outpatient care, wheelchairs and other medical equipment, and preventative services.

  • Part C refers to Medicare Advantage plans that include Part A and Part B. Plans may also offer additional coverage for vision, hearing, and dental treatment.

  • Part D provides coverage for prescription drugs. You can purchase Part D if you have Original Medicare or a Medicare Advantage plan without drug coverage.

  • Medigap, sometimes called Plan G or Plan K, provides supplemental insurance that helps pay for your share of costs under Original Medicare.[5]

What do Medicare Advantage plans cover?

Medicare Advantage plans cover all Medicare Part A and Part B benefits with a few exceptions: clinical trials and hospice services. Medicare Advantage providers also cover most medically necessary services that are covered by Original Medicare and Medicare Drug Coverage (Part D). 

Medicare Advantage plans may offer benefits beyond Original Medicare, such as discounts for fitness programs, dental and vision checkups, and additional wellness services. Plans may also cover transportation to medical appointments, over-the-counter medications, and health promotion services.  

Remember that benefits beyond what Medicare Parts A and B cover can vary by plan, so review available coverage options before enrolling.[6]

Learn More: What Is an FSA?

What do Medicare Advantage plans exclude?

Medicare Advantage plans may not pay for services from doctors not in the plan’s network or outside of the U.S. They also won’t cover services that aren’t medically necessary, alternative medicine, long-term care, and non-medical services like private hospital rooms or copies of medical records.

How much does a Medicare Advantage plan cost?

How much you pay for Medicare Advantage depends on the plan you choose. Some of the 3,998 available programs have premiums as low as $0.[7] Medicare Advantage plans are projected to cost $18 a month on average in 2023, according to the Centers for Medicare & Medicaid Services (CMS).

Original Medicare Part A doesn’t have a premium for most people, and Part B costs $164.90 per month (or more, depending on your income). If you need prescription drug coverage, CMS projects the average cost for Part D coverage to be $31.50 per month. If you purchase Medigap for supplemental insurance, you’ll also have an additional cost, but premiums will vary.[8]

Why consider a Medicare Advantage plan?

Medicare Advantage plans aren’t necessarily the best choice for everyone. Though they typically offer lower premiums than Original Medicare, you can’t customize your coverage quite as much with Medicare Advantage.

You might choose Medicare Advantage if you don’t have a chronic condition or significant health needs. It’s a good choice if paying lower premiums is important and you want access to the dental and vision benefits that some plans provide. But depending on your health needs, you may pay more out of pocket than you would with Original Medicare.

Pros and cons of Medicare Advantage plans

Consider the advantages and drawbacks of a Medicare Advantage plan before enrolling.

Pros
  • Low (or no) monthly premiums

  • Most plans include prescription Part D coverage

  • May provide more benefits than Original Medicare

Cons
  • Must use a provider network

  • May have higher out-of-pocket costs

  • Limited options for enrollees in rural areas

Read More: Medicare & Ambulances: How To Get It Covered & Save Money

Types of Medicare Advantage plans

Choosing a Medicare Advantage plan is a lot like selecting coverage when you were employed — plans are available in various shapes and sizes.

Plan TypeKey FeaturesAdvantagesDisadvantagesCosts
Preferred Provider Organization (PPO)Visit specialists without a referral
  • Flexibility
  • Out-of-network coverage
  • Higher premiums
  • Coordinate your own care
  • Premium
  • Deductible
  • Copays
  • Co-insurance
Health Maintenance Organization (HMO)Usually low-cost and includes additional benefits like vision, hearing, dental care
  • Usually includes drug coverage
  • Must use in-network doctors and providers
  • Can’t buy separate Medicare drug plan
  • Premium
  • Deductible
  • Copays
  • Co-insurance


 

Point-of-Service (POS) plansOffers out-of-network coverage for some benefits
  • Access to out-of-network providers
  • Usually includes Medicare drug coverage
  • Higher copayments or co-insurance for out-of-network services
  • Premium
  • Deductible
  • Copays
  • Co-insurance
Private Fee-for-Service (PFFS)Flexible provider options
  • You can go to any Medicare-approved doctor, provider, or hospital
  • No referral needed for specialist visits
  • Allows providers to charge up to 15% more than Medicare- approved amount, which is your responsibility to pay
  • Premium
  • Deductible
  • Copays
  • Co-insurance
Special Needs Plans (SNPs)Tailored coverage for specific diseases and healthcare needs
  • All plans include prescription drug coverage (Part D)
  • Flexible network of providers
  • Limited membership
  • Can only stay enrolled if you continue to meet the special condition of the plan
  • Premium
  • Deductible
  • Copays
  • Co-insurance
Medical Savings Account (MSA)The medical savings account can help cover healthcare costs
  • Medicare deposits money into the account on your behalf each year
  • Can go to any Medicare-approved doctor, provider, or hospital
  • Doesn’t include prescription drug coverage
None

How to enroll in Medicare Advantage

Medicare beneficiaries can enroll in Medicare Advantage during the seven-month period that starts three months before the month you turn 65. If you want to switch to Medicare Advantage from Original Medicare, you’ll need to wait for the Annual Enrollment Period that runs from Oct. 15 to Dec. 7 each year. Find out more about special enrollment periods.[9]

Here’s how to enroll:

  1. Compare Medicare Advantage plan options available in your area. Visit Medicare.gov or call 1-800-MEDICARE to look at costs and coverage options.

  2. Enter your ZIP code and county to find a plan. You can continue without logging in, but you’ll get more personalized options if you log in for this step.

  3. Choose your plan. You may need to call the plan you want to join if online enrollment isn’t available.

  4. Complete the paper enrollment form. The plan will provide you with the form and you’ll need to return it after filling it out.

Medicare Advantage plans can have different costs, coverage, and provider networks, so it’s important to compare your options. Fortunately, online tools are available to make it easy. Medicare.gov allows you to search and view plan details, including costs and coverage, side by side for easy comparison.

Medicare Advantage FAQs

Here are answers to common questions and concerns to help you better understand Medicare Advantage program options and enrollment.

  • Does a Medicare Advantage plan cost more than Original Medicare?

    Medicare Advantage plans often have lower out-of-pocket costs than Original Medicare. On average, Medicare Advantage costs were 7% less than Original Medicare, according to a study by Wakely Consulting Group.[10] Additionally, Medicare Advantage plans may offer benefits that Original Medicare doesn’t cover, such as vision and dental care.

  • Are Medicare Advantage plans bad?

    Medicare Advantage plans provide the same benefits as Original Medicare (Part A and Part B). Some policies also cover vision, dental, and hearing care in addition to basic coverage. However, plans may have limitations. For example, you might have fewer choices of doctors and facilities when it comes to Medicare Advantage plans due to closed provider networks.

  • How do you choose a Medicare Advantage plan?

    With so many Medicare Advantage plans available, you should carefully consider your health needs to determine which plan is best for you before deciding on a plan. Compare plans online using the tool at Medicare.gov to review coverage options and consider out-of-pocket costs such as deductibles, copays, and co-insurance.

  • What happens if your Medicare Advantage plan is discontinued?

    You have a few options if your plan decides not to continue to participate in Medicare. Your coverage will typically last through the end of the year. In that case, you can choose another plan during the annual Open Enrollment Period. You may also enroll in Original Medicare and purchase a Medigap policy, according to Medicare.gov.

  • What are out-of-pocket maximums for Medicare Advantage plans?

    Medicare Advantage plans have a maximum out-of-pocket limit to protect your finances. In 2023, the limit is $8,300 for in-network services. However, the cap applies only to service that fall under Parts A and B. Part D prescription drug coverage has a separate out-of-pocket limit of $7,050.[2]

  • Who qualifies for a Medicare Advantage plan?

    You can enroll in a Medicare Advantage plan if you qualify for Original Medicare. To join the plan, you must live in the plan's service area, be a U.S. citizen or be lawfully present in the country, and have Medicare Part A and B.

Sources

  1. Centers for Medicare and Medicaid Services. "What's a Medicare Advantage Plan?." Accessed January 18, 2023
  2. Kaiser Family Fund. "Medicare Advantage in 2022: Premiums, Out-of-Pocket Limits, Cost Sharing, Supplemental Benefits, Prior Authorization, and Star Ratings." Accessed January 20, 2023
  3. Centers for Medicare and Medicaid Services. "Understanding Medicare Advantage Plans." Accessed January 19, 2023
  4. National Council on Aging. "Medicare Advantage/Medicare Part C Costs." Accessed January 19, 2023
  5. Medicare.gov. "Parts of Medicare." Accessed January 19, 2023
  6. Medicare.gov. "Medicare Advantage Plans cover all Medicare services." Accessed January 19, 2023
  7. Kaiser Family Foundation. "Medicare Advantage 2023 Spotlight: First Look." Accessed January 19, 2023
  8. CMS.gov. "Biden-Harris Administration Announces Lower Premiums for Medicare Advantage and Prescription Drug Plans in 2023." Accessed January 19, 2023
  9. Centers for Medicare and Medicaid Services. "Understanding Medicare Advantage & Medicare Drug Plan Enrollment Needs." Accessed January 19, 2023
  10. AHIP. "New Study: Medicare Advantage Costs Less than Original Medicare." Accessed January 19, 2023
Amy Beardsley
Amy BeardsleyInsurance Writer

Amy is a personal finance and technology writer. With a background in the legal field and a bachelor's degree from Ferris State University, she has a talent for transforming complex topics into content that’s easy to understand. Connect with Amy on LinkedIn.

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

media logo