Insurance Health Insurance What Are Medicare Advantage Plans? By Tim Parker Tim Parker Facebook Twitter Tim Parker specializes in investing topics and is the president of IT services company "The Web Group." He has degrees from Wright State University and the University of Cincinnati. learn about our editorial policies Updated on October 24, 2022 Reviewed by Erika Rasure Reviewed by Erika Rasure Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. learn about our financial review board Fact checked by David Rubin In This Article View All In This Article How Do Medicare Advantage Plans Work? Example of Medicare Advantage Plans Types of Medicare Advantage Plans How Much Do MA Plans Cost? How To Get a Medicare Advantage Plan Frequently Asked Questions (FAQs) Photo: Thomas Barwick / Getty Images Definition 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. Key Takeaways 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 factors 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. How Do Medicare Advantage Plans Work? 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. 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. Example of Medicare Advantage Plans If you choose a Medicare Advantage plan, the federal government pays the private company a fixed amount monthly to administer its portion of the Medicare expenses, and you pay 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 you to use health care providers in their plan's network, whereas Original Medicare plans allow you 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. Note 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. Here are the four most common varieties of these plans. 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 such as 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 is $18 in 2023, down from $19.52 in 2022. Moreover, the standard Part B premium amount is $164.90 in 2023, down from $170.10 in 2022, though seniors with higher incomes may pay more. The deductible for Part B is $233 in 2022, dropping to $226 in 2023. 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 areaHave Medicare Part A and Part BBe a U.S. citizen or lawfully present in the U.S 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. Note 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. Frequently Asked Questions (FAQs) What is a Medicare Advantage plan? A Medicare Advantage plan is also known as Medicare Part C. It combines Medicare Part A and Medicare Part B in one plan. Medicare Advantage plans bundle your Medicare services and provide an alternative to Original Medicare. How is a Medicare Advantage plan different from Original Medicare? Medicare Advantage plans are offered through private companies. These plans cover most services and may even include vision and dental, too. However, unlike with Original Medicare, you may be restricted to using certain doctors or hospitals as outlined in your plan as being in-network. You might also need a referral if you want to see a specialist but have a Medicare Advantage plan. Is it worth it to choose a Medicare Advantage plan? It depends. Having a Medicare Advantage plan can put a limit on your out-of-pocket costs for the year, which will help you keep expenses down, especially during years in which you need a lot of medical services. Some MA plans also offer more coverage, such as vision and dental, than Original Medicare. However, you are restricted in the care providers you can see when you have a Medicare Advantage plan. With Original Medicare, you can see whomever you want for your medical care. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Centers for Medicare & Medicaid Services. "Costs." Centers for Medicare & Medicaid Services. "Understanding Medicare Advantage Plans," Pages 6-7. Centers for Medicare & Medicaid Services. 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Medicare.gov. "Consider These 7 Things When Choosing Coverage."