What to Know About Medicare Advantage Plans

These health care plans can be a convenient way to combine your Medicare Part A and B benefits and get other covered services.

Written by Kat Tretina / March 15, 2022

Quick Bites

  • Medicare Advantage Plans are also referred to as Medicare Part C plans.
  • Unlike the Original Medicare plan, Medicare Advantage Plans are sold by private insurance companies.
  • They can cover additional services, including prescription medications and hearing aids.
  • Cost varies by state and plan.

As if Medicare isn’t complicated enough, there are also Medicare Advantage plans. These alternatives to original Medicare have been growing in popularity over the past few years. In fact, the Kaiser Family Foundation reported that over 23.4 million people enrolled in a Medicare Advantage Plan in 2020, up from just 21.3 million in 2019.[1]

So what is a Medicare Advantage plan? How does it work? And how much does it cost? Read on to find out, so you can decide if this plan is right for your needs.

Inside this article

  1. What’s Medicare Advantage?
  2. What do Advantage plans cost?
  3. Pros and cons
  4. Enrolling in a plan

What are Medicare Advantage plans?

Unlike Original Medicare, which is managed by the federal government, Medicare Advantage Plans—also known as Medicare Part C—are sold and managed by private insurance companies.

Despite being issued by private insurers, Medicare Advantage plans maintain the same coverages as Medicare. However, they can simplify your coverage, says Lindsay Malzone, a Medicare expert at Medigap.com, a Medicare plans comparison site.

“Medicare Advantage is an alternative to Original Medicare offering beneficiaries coverage as good as Part A and Part B with additional benefits such as dental, vision, hearing and prescription medications,” says Malzone. “It was introduced in 2003 as part of the Medicare Modernization Act. In order to take advantage of this plan, beneficiaries must be enrolled in Part A and Part B and continue to pay the Part B premium.” That means you’ll pay the premium for the Medicare Advantage Plan in addition to your Medicare Part B premium.

Medicare Advantage plans combine your Part A (hospital) and Part B (medical) benefits into one policy. Some plans also include other benefits, such as prescription drug coverage, and may cover services that Medicare doesn’t, such as hearing aids or glasses.[2]

What do Medicare Advantage plans cost?

When it comes to cost, Medicare Advantage plans can vary in price based on your location and selected plan.

Medicare will pay a fixed amount toward your coverage, but you may have to pay additional premiums depending on the options you select when you pick your plan. Plans range in cost from $0 to over $100 per month.

According to the Kaiser Family Foundation, two-thirds of Medicare Advantage plan enrollees pay no supplemental premium beyond their premium for Medicare Part B.

“Medicare Advantage plans are good for those on a limited income,” says Malzone. “When shopping for a plan, you need to consider the doctor network and make sure all your doctors are in the network.”

The overall average monthly premium—when including those who don’t pay additional premiums at all—is $21 per month in 2021.[3] But you can still encounter high expenses due to deductibles, copayments and the higher cost of out-of-network care.

Pros and cons of Medicare Advantage plans

If you’re looking for a Medicare Advantage plan, it’s important to know that not all plans are created equal. Medicare Advantage plans can vary significantly in terms of cost and the services they offer, so it’s important to do your research before enrolling.

When deciding whether a Medicare Advantage plan is right for you, carefully consider the advantages and drawbacks:

Pros

You can get additional benefits

Medicare Advantage plans offer more comprehensive benefits than Original Medicare. This can include prescription drug coverage, dental and vision care, and even hearing aids.

Your out-of-pocket costs may be lower

Medicare Advantage plans have yearly caps on your out-of-pocket expenses, and you may qualify for a plan with a lower deductible or coinsurance requirement than you’d get with Original Medicare.

You can streamline your insurance

Rather than having to buy separate vision, dental and prescription drug coverage, Medicare Advantage plans allow you to get all of your benefits in one policy, making your health care easier to manage.

Coverage for other services

Some Medicare Advantage plans include additional services like healthy meal deliveries, gym memberships and telehealth.

Cons

You may have limited Part C options: Depending on where you live, you may have few plans to choose from. Also, Medicare Advantage plans are sold by private companies that can cancel their plans from year to year, so you may have to look for a new plan if yours is no longer available.

You can’t combine Medigap with Medicare Advantage plans

Medigap is a popular choice as a supplement to Original Medicare; it can cover some remaining health care costs, such as your deductibles or copays. However, you can’t have both Medigap coverage and enroll in a Medicare Advantage plan—you can only choose one.[4] So you’ll need to decide which option is better for you.

You may be limited in the providers you can visit

Depending on the plan you choose, you may only be allowed to visit health care providers who are in the plan’s network. If you see a specialist outside of the network, you may have to pay the entire cost yourself.

You will likely need a referral

If you need to see a specialist, you’ll likely need to get a referral before you can schedule your appointment.

Enrolling in a Medicare Advantage plan

To see what Medicare Advantage plan options are available where you live, use the U.S. Centers for Medicare and Medicaid Services’ Plan Finder tool. You can view available plans and their costs, and you can filter results based on factors like the premium, deductible, covered services and prescription drug coverage.

If you need help evaluating your options, contact your state health insurance assistance program (SHIP). SHIP is a federally funded, objective resource, and it provides local insurance counseling and assistance to Medicare-eligible individuals. You can get help with:

  • Finding financial assistance programs to offset your insurance costs

  • Understanding what Medicare does and doesn’t cover

  • Reviewing health and prescription drug coverage options

You can find a SHIP near you with its locator tool or by calling 877-839-2675.[5]

Article Sources
  1. “Total Medicare Beneficiaries,” Kaiser Family Foundation, https://www.kff.org/medicare/state-indicator/total-medicare-beneficiaries/?currentTimeframe=1&selectedDistributions=medicare-advantage&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
  2. “Types of Medicare Health Plans,” U.S. Centers for Medicaid and Medicare Services, https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans.
  3. “Medicare Advantage Plans Premiums and Costs,” Kaiser Family Foundation, https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2021-premiums-cost-sharing-out-of-pocket-limits-and-supplemental-benefits.
  4. “What Is Medigap?” U.S. Centers for Medicaid and Medicare Services, https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap.
  5. “About Us,” State Health Insurance Assistance Program, https://www.shiphelp.org/about-us.

About the Author

Kat Tretina

Kat Tretina

Kat is dedicated to teaching people how to pay down debt, boost their incomes and reduce financial stress. Her work has been published by Reader's Digest, The Huffington Post, Forbes Advisor and more.

Full bio

Related Content