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.

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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.

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 $1,600. 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 $164.90 monthly for most Americans.*. However, premiums can be more than double that cost for higher-income people.

Part B’s annual deductible is $226 for 2023. 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.

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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.

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. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE (TTY 1-877-486-2048), 24 hours a day/7 days a week, 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. 

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