A Medicare Advantage plan is a private insurance option that covers the same services as Original Medicare, but through an insurance company instead of the federal government

Medicare Advantage, also called Part C, is an alternative way to receive your Medicare benefits. Instead of using Original Medicare (Part A and Part B), you enroll with a private insurance company that has a contract with Medicare. That company then becomes responsible for providing your hospital care, doctor visits, and other covered services.

The key difference is who pays the bills. With Original Medicare, the federal government pays your providers directly. With Medicare Advantage, you pay the insurance company a premium, and they pay your providers. You still get the same basic coverage — hospital stays, doctor visits, lab work, imaging — but the insurance company decides which doctors and hospitals you can use and how much you pay out of pocket.

Key Takeaways

  • Medicare Advantage is run by private insurance companies under contract with Medicare, not by the federal government directly.
  • Most Medicare Advantage plans include prescription drug coverage (Part D) and extras like dental or vision, which Original Medicare does not cover.
  • You must use doctors and hospitals in the plan's network, except in emergencies, or pay more out of pocket.
  • Medicare Advantage plans have annual out-of-pocket limits that Original Medicare does not have, which can protect you from very high costs.
  • You must live in the plan's service area and keep paying your Part B premium to stay enrolled.

How Medicare Advantage differs from Original Medicare

Original Medicare is a fee-for-service program: you go to any doctor or hospital that accepts Medicare, and Medicare pays them. You have no network restrictions. Medicare Advantage works more like employer health insurance. You choose a plan, that plan has a network of doctors and hospitals, and you pay less when you use doctors in that network.

Original Medicare has no annual out-of-pocket limit. If you need a lot of care, your costs can grow without bound. Medicare Advantage plans must have an annual out-of-pocket maximum — once you hit it, the plan pays 100 percent of covered services for the rest of that year. This can be a real protection if you have serious illness or multiple conditions.

Original Medicare does not cover prescription drugs, dental, vision, or hearing aids. Most Medicare Advantage plans include all of these. That is why many people choose Medicare Advantage even though they have to use a network.

Types of Medicare Advantage plans and how they work

The most common type is a Health Maintenance Organization (HMO). With an HMO, you choose a primary care doctor who coordinates your care. You need a referral from that doctor to see a specialist. You can only use doctors and hospitals in the plan's network, except in a true emergency. If you go out of network without an emergency, you pay the full bill yourself.

A Preferred Provider Organization (PPO) gives you more flexibility. You do not need a primary care doctor or referrals. You can see any doctor or hospital, but you pay less if you use doctors in the network. Out-of-network care costs more but is still covered. PPO plans usually have higher premiums than HMOs because of this flexibility.

A Private Fee-for-Service (PFFS) plan works differently. You can see any doctor or hospital that accepts the plan's payment terms, not just those in a network. The plan sets its own payment rates. These are less common and may not be available in your area.

A Special Needs Plan (SNP) is designed for people with specific conditions, like diabetes or heart disease, or for people who live in a nursing home or receive Medicaid. These plans tailor their benefits and care coordination to that group.

What you pay with a Medicare Advantage plan

You pay a monthly premium to the insurance company. This is in addition to your Part B premium, which you still owe to Medicare. Some plans have a zero premium — you pay only the Part B premium — but these are becoming less common. Premiums vary by plan and by where you live.

You also pay copayments or coinsurance when you use care. A copay is a flat fee — for example, $15 to see your doctor. Coinsurance is a percentage of the cost — for example, you pay 20 percent and the plan pays 80 percent. Different services have different copays. A doctor visit might be $15, an emergency room visit might be $300, and a hospital stay might be $250 per day.

You pay an annual deductible before the plan starts paying its share. Some plans have no deductible. Others have a deductible of several hundred dollars. Once you meet the deductible, you start paying copays or coinsurance.

All of these costs — premiums, deductibles, copays, and coinsurance — count toward your annual out-of-pocket maximum. Once you reach that limit, the plan pays 100 percent of covered services for the rest of the year. The out-of-pocket maximum is set by Medicare and changes each year.

When you can enroll and how to switch plans

You can enroll in Medicare Advantage during the Annual Enrollment Period (AEP), which runs from October 15 to December 7 each year. Any changes you make take effect on January 1. You can switch from Original Medicare to Medicare Advantage, switch from one Medicare Advantage plan to another, or switch back to Original Medicare.

If you are new to Medicare, you have a seven-month window starting the month you turn 65. If you miss this window and do not have other may have access to coverage, you may pay a penalty when you do enroll.

You can also switch plans if you have a may have access to life event — you move out of your plan's service area, you lose other health coverage, or you become may be able to access for Medicaid. You have 60 days from the event to make a change.

What to ask your doctor before choosing a Medicare Advantage plan

Before you enroll, check whether your current doctors are in the plan's network. Call their offices or use the plan's online directory. Ask whether they are accepting new Medicare Advantage patients. Some doctors have stopped taking Medicare Advantage because of payment rates or administrative burden.

If you take prescription drugs, check the plan's formulary — the list of covered drugs. Not all plans cover all medications. If a drug you need is not covered, ask your doctor whether there is an alternative that is covered, or whether the plan will make an exception.

Ask your doctor about any specialists you see regularly. Make sure they are in the network and whether you need a referral. If you have a condition that requires frequent care, ask whether the plan has disease management programs or care coordination for that condition.

When to seek help understanding your options

If you are confused about whether Medicare Advantage is right for you, contact Medicare directly at 1-800-MEDICARE (1-800-633-4227). They can answer questions about how plans work and what they cover. They cannot recommend a specific plan, but they can explain your options.

You can also contact your State Health Insurance information Program (SHIP), which offers free counseling about Medicare. SHIP counselors can review specific plans with you and help you understand the costs. To find your SHIP, visit shiptalk.org or call 1-877-839-2675.

During the Annual Enrollment Period, insurance companies hold information sessions and send materials to your home. You can also compare plans side by side on Medicare.gov. Take time to review the materials — do not rush the decision.

Frequently Asked Questions

Can I use my Medicare Advantage plan if I travel or move?

Most Medicare Advantage plans only cover care in their service area. If you travel, you can use emergency services anywhere in the United States, but routine care outside the service area is not covered. If you move permanently out of the service area, you can switch to a different plan during the 60-day window after your move.

What happens to my Medicare Advantage plan if the insurance company stops offering it?

If your plan is discontinued, Medicare sends you a notice. You can then switch to any other Medicare Advantage plan or go back to Original Medicare. You have until the end of the month following the notice to make a change, and the change takes effect the first of the next month.

Do I still have Medicare if I enroll in a Medicare Advantage plan?

Yes. Medicare Advantage is a way to receive your Medicare benefits through a private company, but you are still a Medicare beneficiary. You keep your Medicare card. You must continue to pay your Part B premium to Medicare. If you drop the Medicare Advantage plan, you go back to Original Medicare automatically.

Can I have both Medicare Advantage and Medigap coverage?

No. Medigap is supplemental coverage designed to work with Original Medicare. If you have Medicare Advantage, you cannot buy a Medigap policy. Medicare Advantage plans already include some cost protections, like the annual out-of-pocket maximum, that Medigap provides.

What if I need a service that my Medicare Advantage plan does not cover?

You pay the full cost yourself. This is why it is important to review what each plan covers before you enroll. If a service is medically necessary but not covered, you can ask the plan to make an exception, though approval is not may provide. Original Medicare covers some services that Medicare Advantage plans may not.