What Medicare Advantage Plans Are

A Medicare Advantage plan is an alternative way to get your Medicare coverage. Instead of using Original Medicare (Parts A and B), you sign up with a private insurance company that contracts with Medicare. That company becomes responsible for providing your hospital care, doctor visits, and other covered services.

Medicare Advantage plans are also called Part C. When you join one, you still pay your Part B premium to Medicare, but the private insurer handles the rest. Most Medicare Advantage plans also include prescription drug coverage (Part D) built in, so you do not need to buy it separately.

The trade-off is that Medicare Advantage plans typically have networks — you usually must see doctors and use hospitals within that network, or pay more. Original Medicare has no network, so you can see any doctor who accepts Medicare anywhere in the country.

Key Takeaways

  • Medicare Advantage plans are run by private insurance companies and usually cost less in monthly premiums than Original Medicare plus a Medigap policy, though you may pay more when you use care.
  • Most Medicare Advantage plans include prescription drug coverage, dental, vision, and hearing benefits that Original Medicare does not cover.
  • You must use doctors and hospitals in the plan's network in most cases, or you will pay higher costs or the plan may not cover the visit at all.
  • Each plan has an out-of-pocket maximum — once you reach it in a year, the plan pays 100 percent of covered services for the rest of that year.
  • You can switch to a different Medicare Advantage plan or back to Original Medicare during the Annual Enrollment Period (October 15 to December 7 each year).

How Costs Work in Medicare Advantage

Medicare Advantage plans charge a monthly premium, which varies by plan and by where you live. Some plans have a zero premium — you pay only your Part B premium to Medicare — but these plans typically have higher costs when you actually use care. Other plans charge a monthly premium on top of Part B but may have lower costs at the doctor or hospital.

Every Medicare Advantage plan has an out-of-pocket maximum. This is the most you will pay in a calendar year for covered services. Once you reach that limit, the plan pays 100 percent of your covered care for the rest of the year. Out-of-pocket maximums vary by plan but are capped by Medicare — in 2024, the maximum is $8,050 for in-network care.

When you see a doctor or go to the hospital, you typically pay a copay (a fixed amount like $25) or coinsurance (a percentage of the cost). These amounts count toward your out-of-pocket maximum. If you use an out-of-network provider, you usually pay more, and some plans may not cover the visit at all except in emergencies.

Types of Medicare Advantage Plans

The most common type is a Health Maintenance Organization (HMO) plan. HMO plans require you to choose a primary care doctor who coordinates your care and gives referrals to specialists. You must use in-network doctors and hospitals, except in emergencies. HMO plans usually have lower premiums and lower copays than other types.

A Preferred Provider Organization (PPO) plan gives you more flexibility. You can see any doctor or go to any hospital without a referral, but you pay less if you use in-network providers. Out-of-network care costs more but is still covered. PPO plans usually have higher premiums than HMO plans.

Private Fee-for-Service (PFFS) plans let you see any doctor who agrees to treat you under the plan's terms, without a network requirement. These are less common and may have higher costs. Special Needs Plans (SNPs) are designed for people with specific conditions (like diabetes or heart disease) or situations (like living in a nursing home). You must meet the plan's criteria to join.

What Is Included in Most Medicare Advantage Plans

All Medicare Advantage plans must cover everything Original Medicare covers: hospital stays, doctor visits, and emergency care. Most plans also include prescription drug coverage, so you do not need a separate Part D plan. Dental, vision, and hearing coverage are common extras, though what they cover varies widely — some plans cover cleanings and exams, others cover major work like crowns or root canals.

Many plans also cover fitness benefits (like a gym membership), transportation to medical appointments, or meal delivery after a hospital stay. These extra benefits differ from plan to plan and from year to year. When you are comparing plans, check what extras each one offers, because they can add real value if you use them.

Prescription drug coverage in Medicare Advantage works the same way as standalone Part D: you pay a copay or coinsurance for each drug, and there is a coverage gap (called the "donut hole") where you pay more. Once you reach a certain out-of-pocket amount for drugs, catastrophic coverage kicks in and you pay very little.

Network Restrictions and How They Affect You

In an HMO plan, going to an out-of-network doctor usually means the plan will not pay for the visit at all, except in true emergencies. This is the biggest difference from Original Medicare, where you can see any doctor anywhere. If you travel frequently or have a specialist you want to keep seeing, check whether that doctor is in the plan's network before you join.

PPO plans are more forgiving — they cover out-of-network care, but you pay a larger share of the cost. For example, you might pay 20 percent of a specialist visit in-network but 40 percent out-of-network. The plan's website or member handbook will show you the exact costs for in-network versus out-of-network care.

Networks change every year. A doctor who was in-network last year might not be this year, or vice versa. Before you renew your plan each fall, check your doctor's status on the plan's website. If your main doctor is leaving the network, that is a good reason to switch plans during the Annual Enrollment Period.

When You Can Join or Switch Plans

The main time to join a Medicare Advantage plan is during the Annual Enrollment Period, which runs from October 15 to December 7 each year. Changes take effect on January 1. If you are new to Medicare, you have a seven-month window around your 65th birthday to join without penalty.

If you have a may have access to life event — you move out of your plan's service area, you lose employer coverage, or your plan leaves Medicare — you may be able to switch plans outside the enrollment period. These are called Special Enrollment Periods, and they usually last two months from the date of the event.

If you miss the Annual Enrollment Period and do not have a may have access to event, you are locked into your current plan until the next October. The one exception is if you are in Original Medicare and want to switch to a Medicare Advantage plan for the first time — you can do that during the Annual Enrollment Period without penalty.

Questions to Ask Before You Choose a Plan

Before you join a Medicare Advantage plan, find out whether your doctors and preferred hospital are in the network. Call the plan or check its website for a provider directory. Ask whether your specialists require referrals and whether you need approval before certain procedures.

Ask what the plan's out-of-pocket maximum is and what costs you will pay for the services you use most often — doctor visits, specialist visits, hospital stays, and prescription drugs. Compare this to what you would pay under Original Medicare plus a Medigap policy and a Part D plan.

Check whether the plan covers the extra benefits you care about, like dental or vision. Ask whether there are any restrictions on those benefits — for example, some dental plans cover only cleanings and exams, not major work. If you travel, ask whether the plan covers emergency care outside the service area.

Frequently Asked Questions

Can I switch back to Original Medicare if I do not like my Medicare Advantage plan?

Yes, during the Annual Enrollment Period (October 15 to December 7) you can switch to Original Medicare or to a different Medicare Advantage plan. If you switch to Original Medicare, you may want to buy a Medigap policy and a Part D prescription drug plan at the same time, because waiting can result in higher premiums.

What happens to my Medicare Advantage plan if I move to a different state?

Most Medicare Advantage plans are regional and do not cover you outside their service area. If you move, your plan may no longer serve your new location. This is a may have access to event that lets you switch plans outside the Annual Enrollment Period. Contact your current plan to find out whether it operates in your new state.

Do I still pay my Part B premium if I have a Medicare Advantage plan?

Yes, you must continue paying your Part B premium to Medicare. The Medicare Advantage plan premium (if there is one) is separate. Some plans have zero premium, meaning you pay only Part B, but most charge an additional monthly amount.

What if my Medicare Advantage plan stops offering coverage in my area?

If your plan leaves Medicare or stops serving your county, you will receive a notice from the plan. This is a may have access to event that lets you switch to a different plan or to Original Medicare outside the normal enrollment period. You typically have until the end of the month after you receive the notice to make a change.

Are there any penalties for joining a Medicare Advantage plan late?

If you miss your initial enrollment window (the seven months around your 65th birthday) and do not have a may have access to event, you may pay a late enrollment penalty when you eventually join. The penalty is 1 percent of the national average Part B premium for each month you were late, and it is permanent.