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Medicare Advantage Plans are bundled health care plans that cover most Medicare services. They're offered by private companies as an alternative to Original Medicare.
Learn what these plans offer and the different types to determine whether they're right for your health care needs.
If you qualify for Medicare and are ready to look at plans, eHealth Medicare, an independent insurance broker and partner of The Balance, has licensed insurance agents at <833-970-1252 TTY 711> who can help connect you with Medicare Advantage, Medicare Supplement Insurance, and Prescription Drug Part D plans.
What Are Medicare Advantage Plans?
Medicare Advantage Plans, also known as Medicare Part C coverage, are an all-in-one alternative to Original Medicare, including Medicare Part A (hospital insurance), Part B (medical insurance), and in most cases, Part D coverage (drugs). Although these plans are approved by Medicare, they're offered by private companies.
- Alternate name: Medicare Part C, MA Plan
How Medicare Advantage Plans Work
Seniors can get Medicare coverage in two ways: Original Medicare or a Medicare Advantage Plan. Original Medicare is administered by the federal government and includes Medicare Part A and Part B. If you want drug coverage, you'll need to enroll in Part D. You pay a monthly premium for Part B (and Part D, if applicable), and you'll be on the hook for 20% of the Medicare-approved amount of Part-B services you receive. Similarly, if you need to fill the gaps in Original Medicare coverage—for example, to cover copayments, coinsurance, and deductibles—you'll need Medicare Supplement Insurance (Medigap). Unless you have Medigap, there's no annual limit on your out-of-pocket costs.
Medicare Advantage Plans, a bundled service offered by federally regulated private companies that contract with the Medicare program, include Medicare Part A, Part B, and usually Part D coverage. This means individuals don't have to sign up separately for Part D. In addition, Medicare Advantage may result in lower out-of-pocket costs than Original Medicare, though out-of-pocket costs vary by plan. But even if you rack up high out-of-pocket costs for Part-A and Part-B services, MA plans place an annual limit on these costs. Some plans even come with benefits beyond what Original Medicare offers, such as vision, hearing, and dental care, avoiding the need for additional insurance. In fact, you can't get Medigap insurance if you have an MA plan.
The federal government pays the private companies a fixed amount monthly to administer its portion of the Medicare expenses, and the insured pays for the rest of the coverage. Each plan can charge you a monthly premium for the MA plan, a Part B premium that may be paid for in part by the plan, and out-of-pocket costs. For example, the plan may charge you a $10 copayment every time you see a doctor. Plans can also impose rules that govern plan use, such as which doctors you can see and whether you need referrals for specialists.
But MA Plans typically require the insured to use health care providers in their plan's network, whereas Original Medicare plans allow seniors to visit any doctor or hospital in the country. And even with a Medicare Advantage Plan, you may be on the hook to pay for items or services that aren't deemed by the plan to be medically necessary. Fortunately, you can generally ask ahead of time whether an item or service will be covered.
You might have seen ads or heard radio spots about Medicare Supplement Insurance, but it's illegal for Medicare Advantage Plan users to be sold Medigap insurance. Similarly, Medicare plans shouldn't call you or visit your home to try to sell you a plan without your permission. Call 1-800-MEDICARE to report any plan that does so.
Types of Medicare Advantage Plans
MA Plans work much the same way as traditional health insurance. You can shop around for a plan that has the features you want for a premium that fits your budget. The four most common varieties of these plans include:
- Health Maintenance Organization (HMO) Plans: HMO plans are often the most affordable but require seniors to pick a primary care doctor and only see doctors in the plan’s network. You'll likely also need a referral from your primary care doctor. Exceptions are made for medical emergencies, urgent care, or dialysis, but outside of those scenarios, you might not get to choose the provider you prefer.
- Preferred Provider Organization (PPO) Plans: You’ll pay less if you stay in the network, but it’s not required with a PPO plan. Moreover, you don't have to pick a primary care doctor and typically don't have to get a referral to see a specialist.
- Special Needs Plans (SNP): These plans are only available to people with specific diseases, including chronic medical conditions like dementia or other special needs. Generally, you'll need to use providers within the SNP network unless you're receiving emergency or urgent care or dialysis. In addition, you'll typically need to select a primary care physician and get a referral before seeing a specialist.
- Private Fee-For-Service (PFFS) Plans: With this type of Medicare Advantage Plan, you can typically see any Medicare-approved provider, but you will pay less if you stay within the plan's network. When you receive your care, you will find out how much the plan will pay for a service and how much you will be expected to pay.
How Much Do Medicare Advantage Plans Cost?
Costs for MA Plans depend on the plan type you choose, the premiums, deductibles, and other out-of-pocket costs that your specific plan applies, the providers you visit, the services you receive, and the frequency with which you receive them.
The Center for Medicare and Medicaid Services estimates that the average monthly premium for a Medicare Advantage Plan will be $19 in 2022, down from $21.22 in 2021. Moreover, the standard Part B premium amount is $148.50 in 2021 (increasing to $170.10 in 2022) though seniors with higher incomes may pay more. The 2021 deductible for Part B for 2021 is $203 (increasing to $233 in 2022).
How to Get a Medicare Advantage Plan
You typically have to meet three criteria to participate in an MA Plan:
- Live in your chosen plan's service area
- Have Medicare Part A and Part B
- Not have End-Stage Renal Disease
If you meet these requirements, shop for Medicare Advantage Plans using Medicare's Plan Finder. Enter your zip code and click "Medicare Advantage Plans" to view estimates of your Part B monthly premium and MA plan premium. From there, browse a list of plans in your area and drill down to their costs and features. Medicare also gives each plan a star rating that gauges its quality. The fewer the stars, the better off you are steering clear of that plan.
If you don’t want to change doctors, ensure that any plan you consider lists your current doctors as part of their network.
Assuming your chosen plan allows for online enrollment, you can also enroll in the plan. Otherwise, contact the plan to obtain the information required for paper enrollment. To complete the process, you'll need your Medicare number and the date that your Part A and Part B coverage began.
- Medicare Advantage Plans are private, bundled health care plans that include Medicare Part A, Part B, and usually Part C coverage.
- They're regulated by the federal government but are offered by private companies as an alternative to Original Medicare.
- Plan holders may pay a plan premium along with a Part B premium and out-of-pocket costs, but the cost of the plans also factor in the type of plan, the provider used, and the care received.
- The most common types of MA Plans are HMO, PPO, SNP, and PFFS.