Each year, more and more people make the decision to enroll in a Medicare Advantage plan. As of 2023, that included almost half of all Medicare beneficiaries – about 30 million people.
Medicare Advantage is a type of private insurance plan approved by Medicare. Most Medicare Advantage plans (also known as Part C) are all-in-one plans that include the benefits of Original Medicare, extra coverage and Part D prescription drug benefits.
Here’s what you need to know about Medicare Advantage insurance, including how it works, what’s covered and why it might be the right plan for you.
The advantages of a Medicare Advantage plan
Medicare Advantage plans offer coverage as good as or better than Original Medicare, plus much more. But what kind of advantages do they really provide? To start, when shopping for a plan, you can choose one with a $0 or low monthly premium (you must continue to pay your Medicare Part B premium). Your plan can also limit how much you pay out of pocket each year, providing you financial protection.
Most Medicare Advantage plans offer the convenience of having all of your doctor, hospital and prescription drug coverage in one place. This means one ID card for all of your Medicare coverage and a single member services team to help you with any questions or concerns.
Medicare Advantage plans typically offer more benefits than Original Medicare. Part C may cover extras like routine hearing exams and hearing aids, vision exams and glasses not covered by Original Medicare, dental services, gym memberships, and preventive care plus other services like acupuncture and chiropractic care. Medicare Advantage plans may also provide coverage for when you travel. This can include coverage when you are traveling within the U.S. and worldwide emergency and urgent care.
How Medicare Advantage works
Let’s talk about how these plans work, including what Medicare Advantage plans actually cover and how much you’ll be expected to pay out of pocket. Here are some of the most commonly asked questions.
What do Medicare Advantage plans cover?
Like Original Medicare, Medicare Advantage plans cover Part A (hospital insurance) and Part B (medical insurance) with some cost sharing. This means that your plan will cover a portion of the costs for health care services, like:
- Hospital visits
- Time at a skilled nursing facility
- Home health or hospice support
- Outpatient care
- Medical supplies
- Doctor visits
- Lab tests
Part C may also cover some costs that Original Medicare doesn’t cover, like copays, coinsurance or deductibles. And plans usually have a limit on how much you pay each year. Unlike Original Medicare, most Advantage plans include Part D coverage for outpatient prescription medicine as well.
Are you eligible, and when can you enroll?
To enroll in a Medicare Advantage plan, you must first be enrolled in both Medicare Parts A and B, as well as live in the service area where the plan is being offered. You will have seven months to apply for Medicare and enroll into a Medicare Advantage plan – the three months before you turn 65, the month you turn 65, and the three months after you turn 65.
The Annual Election Period for enrolling in a plan is Oct. 15 – Dec. 7 each year. You can also switch to a new Medicare Advantage plan during the Medicare Advantage Open Enrollment Period between Jan. 1 and March 31. If you have a qualifying circumstance, you may be eligible to enroll during a Special Enrollment Period.
Can you keep your doctors with Part C?
Medicare Advantage plans usually have a network of specific doctors, clinics and hospitals. You’ll need to confirm that your doctor is in your plan’s Medicare network before receiving care. In most cases, you’re likely to pay less for covered services from in-network providers. Some Medicare Advantage plans also have benefits for out-of-network services, but you may have to pay more for care.
Are emergencies covered?
Yes, Medicare Advantage plans cover emergency or urgently needed care. How much you may have to pay out of pocket varies depending on the limitations of your plan.
How much does Medicare Advantage cost?
Medicare Advantage costs, including premiums, copays and more, vary. In 2023, the Centers for Medicare and Medicaid Services projected the average Part C premium to be $18 a month. However, you have options – here are some important details to consider.
Can you get a $0 or low premium?
Yes, some plans offer lower or $0 premiums. However, even with a lower premium, you’ll still have to pay your Part B monthly premium (and in some cases, a Part A premium) as well as deductibles and copays for the health care services your plan covers.
Does the plan limit how much you pay?
Yes. Typically a Medicare Advantage plan offers more financial protection because it has an annual out-of-pocket maximum. This means there is a limit on how much you pay each year for covered services. According to the Kaiser Family Foundation, in 2022 the average annual out-of-pocket maximum for those with Medicare Advantage insurance was $4,972. However, this amount varies from plan to plan.
Make sure to ask about your limit when shopping for Medicare Advantage coverage. If you already have a Part C plan, you can check your plan documents for the annual out-of-pocket maximum.
Are there extra benefits and perks?
As mentioned before, many Medicare Advantage plans include additional coverage for services like gym memberships, routine eye and ear exams, dental coverage, hearing aids, glasses and contacts, and worldwide emergency care. Although it depends on your plan’s rules, most of these services don’t need to be offered by Medicare-certified providers, though you may be limited to specific facilities where you can receive service.
Can you use your plan while traveling?
Yes, many Medicare Advantage plans include a U.S. travel benefit. If you travel out of your Part C plan’s service area within the United States, you can still get in-network benefits for covered health care services. However, this is often limited to a specific period of time each year.
The different types of Medicare Advantage plans
Not all Medicare Advantage plans work the same way – just like with other kinds of health insurance. Part C plans have specific types, like HMOs (Health Maintenance Organization) and PPOs (Preferred Provider Organization), with different coverage specifications and plan rules. These plans are similar in many ways but have key differences. It’s important to compare Medicare Advantage plans before choosing your plan so you can find the one that best suits your needs.
The difference between Medicare Advantage HMO and PPO plans
What makes HMOs and PPOs different from one another is how they handle networks and providers. Both plans are network-focused. However, HMO plans offer smaller networks, and PPO networks tend to cover a wider range of providers – they may also allow you to see out-of-network doctors. Like with typical insurance coverage, HMO plans usually require you to select a primary care doctor, whereas PPOs don’t. Also, these plan types handle referrals differently. PPO plans will let you see specialized providers without a referral, but HMO plans may require a referral for you to receive specialized care and coverage.
Coverage costs for both HMOs and PPOs can vary by plan, but there are key differences between the two insurance types. Think of it this way – while an HMO may offer a smaller network, it’s often a more affordable option with lower monthly premiums and out-of-pocket costs. With PPO plans, you may be paying a little more each month and out of pocket for increased flexibility. One plan type isn’t better than the other, it’s just about which will work best for you.