What is a Medicare Advantage Plan?

Medicare Advantage bundles the parts of Medicare in one policy. MA plans are available for purchase from private companies.

Medicare Advantage is a health plan option that allows you to have Medicare Part A (hospital insurance), Part B (medical insurance), and prescription drug coverage, usually under one Medicare plan.

Medicare Advantage (MA) bundles the parts of Medicare under one policy. MA plans are available for purchase from private companies that contract with Medicare. When you join MA, Original Medicare does not end, but your benefits follow the MA policy, which may provide more coverage than Original Medicare. There are limitations too.

While you are responsible for coinsurance, copays, and deductibles, these payments may be less than Original Medicare. Also, MA plans limit your expenses with an annual out-of-pocket cap on covered medical costs. Many MA plans include prescription drug coverage (Part D) and are available without a monthly premium. Beneficiaries are responsible for the Part B premium.

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How Medicare Advantage Plans Work

Having Original Medicare coverage is a prerequisite to signing up for a Medicare Advantage plan. When you join a Medicare Advantage plan, you receive an insurance card separate from your Medicare card. For most health care services, present the Medicare Advantage card, but safeguard your Medicare card in case you want to switch back to Original Medicare.

Your Medicare Advantage plan will provide several documents, including:

  • Evidence of Coverage (EOC), which describes all your benefit provisions
  • Provider directory, so you can use the plan’s network as required or encouraged by the plan
  • Formulary, if the plan includes Part D

If you have any questions about your benefits, contact your insurance company rather than Medicare.

At the end of every calendar year, your insurer will announce any changes to the plan that will take effect on January 1 of the following calendar year. The insurer must mail you the Annual Notice of Change by September 30. Then, on or before October 15, the plan will provide instructions on accessing the EOC in the form you prefer, either in digital format or printed copy. If the plan changes do not serve your health care needs, you can leave the plan and sign up for another at specific times during the year.

Types of Medicare Advantage Plans

The most common types of Medicare Advantage plans are HMO and PPO:

  • HMO: Health Maintenance Organization
  • HMO POS: Health Maintenance Organization Point-of-Service
  • PPO: Preferred Provider Organization

Both HMO plans and PPO plans usually cover prescription drugs. If you want an HMO or PPO plan and a prescription drug plan, you must join an HMO or PPO that includes Part D. You cannot join an HMO or PPO but also have a stand-alone Medicare drug plan. Where the HMO and PPO plans differ is the level of flexibility in usage of the provider network, whether or not you need a referral and if you have to designate a primary care physician (PCP). HMOs tend to be more limited than PPOs but offer more cost savings if you adhere to the plan’s parameters.

Health Maintenance Organization (HMO)

Here are the general rules you can expect to find in specific types of Medicare Advantage plans:

  • Health care provider network required except in emergency medical care, urgent care, and temporary out-of-network dialysis
  • Prescription drugs covered
  • Must choose a PCP
  • Must get referrals to visit specialists, except for specific services like annual mammogram screenings
  • May allow some out-of-network services for a higher copay or coinsurance if you have an HMO POS plan

Preferred Provider Organization (PPO)

  • Out-of-network providers allowed with higher cost-sharing for covered services if the provider has not opted out of Medicare
  • Prescription drugs covered
  • PCP not required
  • No referrals required
  • Higher benefits when using network doctors and suppliers

Private Fee-for-Service (PFFS)

  • Access to any Medicare-approved health care provider who accepts the payment terms of the private fee for service plan agrees to provide treatment, and has not opted out of Medicare
  • Higher benefit if using network providers if the plan has a network
  • Sometimes covers prescriptions drugs
  • PCP not required
  • No referrals required

Special Needs Plans (SNPs)

  • Designed for beneficiaries with certain diseases, specific health care needs, or limited means (may include beneficiaries receiving Medicaid services)
  • Benefits, provider options, and medication lists (formularies) tailored to eligible populations
  • May or may not cover out-of-network services
  • Part D included
  • PCP required
  • Referrals required

Eligibility is limited to three types of populations:

  • Institutional (I-SNPs): live in institutions or get nursing care in the home
  • Dual Eligible (D-SNPs): have both Medicare and Medicaid
  • Chronic Condition (C-SNPs): chronically ill with a specific type of severe or disabling health condition

Medical Savings Account (MSA plans)

  • No provider network
  • No prescription drug coverage
  • PCP not required
  • Referrals not required
  • No monthly premium but high annual deductible
  • May offer extra benefits for a monthly premium
  • Plan deposits funds into savings account to defray Medicare-covered health care expenses

Medicare Advantage vs. Original Medicare

Unlike Original Medicare, Medicare Advantage plans generally:

  • Limit out-of-pocket Medicare-covered costs for the year
  • May require the use of provider network
  • Usually covers prescription drugs
  • Has one deductible for the plan versus a deductible for Part A and another for Part B
  • Offers additional benefits beyond what Original Medicare covers, such as wellness programs, dental care, and vision and hearing services

Medicare Advantage vs. Medigap

Unlike Medicare Advantage, Medigap generally:

  • Covers coinsurance, copays, and deductibles depending on the Medigap policy
  • Does not cover extra benefits like dental, vision, and hearing services
  • Does not cover prescription drugs
  • May not have an annual out-of-pocket maximum
  • Is not limited to a plan’s network of providers

How To Choose a Medicare Advantage Plan

The Medicare website offers a plan-finder tool to help you filter plans available in your location. In addition, a licensed insurance agent can help you fine-tune the selection specific to your service area and health care needs.

How To Enroll

The best time to enroll in a Medicare Advantage plan is when you first become eligible for Medicare. Signing up during the Initial Enrollment Period avoids the possibility of a late enrollment fee.

If you have a qualifying event that makes you eligible for a Special Enrollment Period, you can enroll later and not be subject to a late enrollment penalty.

Following are the dates of annual enrollment events with fixed periods:

  • January 1 to March 31: General Enrollment if you missed the Initial Enrollment Period and didn’t qualify for the Special Enrollment Period
  • January 1 to March 31: Medicare Advantage Open Enrollment Period available if you are already in a Medicare Advantage plan
  • October 15 to December 7: Open Enrollment Period when you can join, change or leave a Medicare Advantage plan
  • December 8 to November 30: 5-star Special Enrollment Period when you can switch to a plan that has earned a 5-star rating

How to Switch Medicare Advantage Plans

If you are an MA member, you may switch to another Medicare Advantage plan during the Medicare Advantage Open Enrollment Period, January 1 to March 31.

During this time, you can change from one Medicare Advantage plan to another, with or without prescription drug benefits, effective the first of the month following the plan’s receipt of your application.

Rather than switch to another Medicare Advantage plan, you may revert to Original Medicare and join a stand-alone Medicare drug plan. In that case, withdrawal from your current Medicare Advantage plan will happen automatically.