Summary: A Medicare Advantage plan may be a good fit for you if you are looking to receive your medical, hospital, and prescription drug coverage through a single insurer. Some Medicare Advantage plans do not charge a separate premium other than your Part B premium. Most require that you use the plan’s provider network to receive full benefits and the lowest out-of-pocket costs.

You have options in how you receive your Medicare benefits. This is a good thing. But it can also be confusing. Perhaps you are wondering if a Medicare Advantage plan would be the right option for you. Let’s look at the basics and then some of the specific features of Medicare Advantage to help you decide.

What is Medicare Advantage?

Medicare Advantage is a different way to receive your Medicare Part A (hospital insurance) and Part B (medical insurance) benefits.

Instead of getting your Medicare benefits from the federal Medicare program, you get them from a private insurer. The government sets rules for a Medicare Advantage plan, but private insurance companies sell and administer the plans.

In many ways a Medicare Advantage plan looks like the group insurance you may have had while working. Medicare Advantage plans usually have networks of hospital and doctors who participate in the plan. There are usually cost-sharing features, such as deductibles, copayments, and coinsurance.

Each Medicare Advantage plan has its own provider network and service area. Usually the service area is regional or local and not nationwide. Each plan sets its own premiums and cost-sharing arrangements. And each Medicare Advantage plan decides what extra benefits (if any) it will offer that Original Medicare doesn’t have.

Medicare Advantage and Extra Benefits

Although it isn’t required of them, usually a Medicare Advantage plan offers additional benefits that Medicare doesn’t have. These can include:

  • Medicare Part D prescription drug coverage (most plans include)
  • Coverage for routine dental, vision, and hearing services (many plans offer one or more)
  • 24-hour nurse consultations by telephone
  • Over-the-counter medicines and health supplies

For members who qualify, some plans may cover:

  • Telemedicine
  • Travel to and from doctor visits or medical facilities

Many include “perks” such as gym membership discounts.

What are the common types of Medicare Advantage plans? 

Three of the most common types of Medicare Advantage plans are listed below.

  1. Health Maintenance Organizations (HMOs). HMOs have provider networks. You generally must get all but emergency care within your plan’s network. You choose a primary care doctor who oversees all your medical care. Your plan may require you to get a referral for specialist care and prior authorization for certain tests and procedures.
  2. Preferred Provider Organizations (PPOs). PPOs also have provider networks, but you can still use any provider who accepts Medicare. You’ll pay a lot less out-of-pocket if you stay in your plans network. You don’t have to choose a primary care doctor or need a specialist referral.
  3. Special Needs Plans (SNPs). SNPs are customized Medicare Advantage plans. They may be an HMO or PPO. SNPs restrict their membership to people with specific diseases or characteristics. This allows them to design their benefits, provider choices, and prescription drug formularies to best meet the specific needs of the groups they serve. SNPs can be tailored to groups such as people who:
    • live in a nursing home
    • people with certain chronic diseases (e.g., dementia, HIV, or heart failure)
    • or people who are eligible for Medicare and Medicaid.

It’s worth considering that most Medicare Advantage plans, regardless of the type, usually have provider networks. HMOs and SNPs may have more restrictive networks that PPOs.

What are the costs of a Medicare Advantage plan?

If you enroll in a Medicare Advantage plan, you continue to pay your Medicare Part B premium. Some Medicare Advantage plans have a deductible and others don’t.

If you enroll in a Medicare Advantage plan, you will probably pay a copayment when you get healthcare. This is usually between $10 and $20 for doctor visits and up to $75 – $100 for emergency room and urgent care visits. It’s common for prescription drug benefits to have a tiered copayment system. Generic medications have lower copayments, often in the $3 to $5 range. Brand-name medications and specialty drugs have higher copays or may have coinsurance.

Keep in mind, you will usually pay a hefty portion of the cost if you get care outside the Medicare Advantage plan’s provider network. In an HMO, you may have to pay the full bill.

On the positive side, Medicare Advantage plans set a limit or cap on the amount you spend each year in deductibles, copayments, and coinsurance. In 2020, the maximum out-of-pocket limit is $6,700 for medical services. Some plans set lower caps. If you meet the cap, the plan pays 100% for covered medical services the rest of the year.

Is a Medicare Advantage plan right for you?

You’re in the best position to know if a Medicare Advantage plan would work for you.

Many people who decide to enroll in Medicare Advantage cite some of the following reasons for doing so.

  • Medicare Advantage typically combines medical and prescription drug coverage (and often dental, vision, and hearing coverage) under one plan, making it a convenient choice in Medicare insurance coverage.
  • Medicare Advantage plans can be affordable insurance coverage. They typically have low premiums or no premium.
  • Medicare Advantage plans help people with chronic or multiple health conditions manage their care and their prescription drugs.

Medicare Advantage plans may not be a good fit if you split your time between a winter and a summer residence because their service areas are limited. They may not be a good fit if you are unwilling to review the plan’s benefits each year and compare plans. Benefits and costs can change from year to year. And yes, you can return to Original Medicare, if you wish, or switch to a different Medicare Advantage plan. Usually you can make these changes during certain times of the year. The Annual Enrollment Period is in the fall and the Medicare Advantage Open Enrollment Period is in the winter.