- Medicare Advantage plans are Medicare health insurance plans sold by private insurance companies.
- In addition to covering all original Medicare services, most Medicare Advantage plans offer prescription drug, dental, vision, hearing, and other optional coverage.
- Medicare Advantage plan costs vary depending on the plan you’re enrolled in, your location, your medical needs, and more.
Medicare Advantage is a popular health insurance option because it works like private health insurance for Medicare beneficiaries.
In fact, according to the Centers for Medicare & Medicaid Services, more than 58 million Americans enrolled in Medicare in 2018. Of these Medicare enrollees, more than 35 percent were enrolled in a Medicare Advantage plan or another alternate Medicare plan option.
In this article, we discuss how Medicare Advantage works, who Medicare Advantage is good for, and things you need to know to enroll in a Medicare Advantage plan.
Medicare is a government-run health insurance option that covers Americans ages 65 and older, as well as those with chronic disabilities.
So, how exactly does Medicare Advantage work — and does it operate in the same way that original Medicare does?
Medicare Advantage plans are Medicare plans sold by private insurance companies across the United States.
These companies have signed a contract with Medicare to cover the same services that original Medicare covers. This includes any hospital services covered under Medicare Part A and any medical services covered under Medicare Part B.
Some Medicare Advantage plans also cover additional healthcare needs, including:
However, this coverage varies by plan, and each Advantage plan can choose what additional coverage to offer.
Medicare Advantage plans can also choose what fees to charge for enrollment. You pay this fixed amount directly to the company each month for your coverage.
Insurance companies can also choose what type of Medicare Advantage plan structures to offer.
Some companies also offer additional options to meet particular needs, such as:
When a Medicare Advantage plan might work for you
If you’re trying to choose between original Medicare and a Medicare Advantage plan, here are a few situations when a Medicare Advantage plan might be a good option for you:
- if you want your health coverage and prescription drug coverage under one plan
- if you need dental, vision, or hearing coverage for yearly preventive visits
- if you’re interested in different types of health insurance plan options
- if you’re comfortable possibly having less provider freedom under your plan for a lower fee
- if you’d benefit from a yearly out-of-pocket maximum
- if you don’t travel often or seek medical services out of state
Medicare Advantage, also known as Medicare Part C, is an alternative to original Medicare (parts A and B).
Medicare Advantage plans are required to cover all Medicare Part A and Part B services, which include:
- Hospital insurance. Medicare Part A covers inpatient hospital care, short-term nursing facility care, home healthcare, and hospice care.
- Medical insurance. Medicare Part B covers services related to the prevention, diagnosis, and treatment of medical conditions.
Most Medicare Advantage plans also offer additional healthcare coverage, such as:
- Prescription drugs. Medicare Part D helps cover the cost of prescription drugs.
- Additional coverage. This typically includes dental, vision, hearing, and fitness benefits.
You’re eligible to enroll in a Medicare Advantage plan only after you’ve enrolled in original Medicare.
Medicare Advantage plans cover all original Medicare (Part A and Part B) services, as well as other optional coverage that may fit your personal healthcare needs.
Medicare Part A is hospital insurance. All Medicare Advantage plans cover the same services as Medicare Part A, such as:
- short-term inpatient hospital care
- short-term skilled nursing facility care
- nursing home care
- home healthcare
- hospice care
Medicare Part B is medical insurance. All Medicare Advantage plans also cover the same services as Medicare Part B, such as:
- preventive services
- diagnostic services and testing
- treatment-related services and equipment
- durable medical equipment
- inpatient and outpatient mental healthcare
- certain prescription drugs
Medicare Part D is prescription drug coverage. Most Medicare Advantage plans include this coverage, which helps pay for the cost of your medications.
Only certain types of prescription drugs are required to be covered under Part D, however — so you’ll want to make sure to check for coverage of your medications before enrolling in an Advantage plan.
Medicare supplement (Medigap)
Medigap is supplemental Medicare insurance that can help cover Medicare plan costs, such as:
It’s important to note that Medigap policies can’t be used with Medicare Advantage plans, only with original Medicare.
Here are some costs you may need to pay if you choose a Medicare Advantage plan:
- Part B premium. Even if you’re enrolled in Medicare Advantage, you’re still responsible for paying the Part B premium. This amount can cost up to $144.60 per month. However, some Advantage plans cover a portion — or even all — of this premium cost.
- Coinsurance and copayments. Most Medicare Advantage plans charge a copayment or coinsurance amount for services rendered. These services could include a doctor’s office visit, specialist’s office visit, or even a prescription drug refill. Specific coinsurance and copayment amounts are set by the plan you’re enrolled in.
- Advantage plan costs. Medicare Advantage plans can charge a monthly premium that’s separate from the Part B premium. Other Advantage plans may be premium-free. In addition, Advantage plans can charge separate drug and health plan deductibles.
Individual healthcare needs play a huge role in how much you may end up paying out of pocket for your Medicare Advantage plan. For example, your plan costs can be affected by:
- how often you seek services
- whether you visit out-of-network providers
- if you enroll in extra benefits
Original Medicare eligibility includes individuals who:
- are 65 years old or over
- have been receiving Social Security or Railroad Retirement Board disability benefits for 24 months
- have been diagnosed with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis
Medicare beneficiaries who are already enrolled in Medicare Part A and Part B are eligible to enroll in a Medicare Advantage plan.
The only exception is that individuals who have been diagnosed with ESRD are generally not eligible to enroll in most Medicare Advantage plans.
Once you’ve enrolled in original Medicare, you can begin searching for Medicare Advantage plan options in your area.
Unlike with original Medicare, you must live in the service area of the Medicare Advantage plans you’re shopping for — companies don’t offer nationwide coverage. This means that even if you find better Medicare Advantage plan options elsewhere, you can only enroll in a plan in your state.
If you’re ready to shop for Medicare Advantage plans in your area, you can use Medicare’s plan finder tool to look for an Advantage plan that meets both your healthcare and financial needs.
Medicare Advantage enrollment deadlines
If you’re considering enrolling in Medicare Advantage, you’ll need to know these important enrollment deadlines and dates:
- Initial enrollment period. This is a 7-month window around your 65th birthday when you can sign up for Medicare. It begins 3 months before your birth month, includes the month of your birthday, and then extends 3 months after your birthday. During this time, you can enroll for all parts of Medicare without a penalty.
- Open enrollment period (October 15–December 7). During this time, you can switch from original Medicare (parts A and B) to Part C (Medicare Advantage), or from Part C back to original Medicare. You can also switch Part C plans or add, remove, or change a Part D plan.
- General enrollment period (January 1–March 31). You can enroll in Medicare during this time frame if you didn’t enroll during your initial enrollment period.
- Special enrollment period. If you delayed Medicare enrollment for an approved reason, you can later enroll during a special enrollment period. You have 8 months from the end of your coverage or the end of your employment to sign up without penalty.
- Medicare Advantage open enrollment (January 1–March 31). During this period, you can switch from one Medicare Advantage plan to another or go back to original Medicare. You can’t enroll in a Medicare Advantage plan if you currently have original Medicare.
- Medicare Advantage plans are a great option for Medicare beneficiaries who want to have all their healthcare coverage under one roof.
- In addition to covering both hospital and medical insurance, most Medicare Advantage plans cover prescription drugs plus dental, vision, and hearing services, as well as other healthcare needs.
- If you’re already enrolled in original Medicare and have been considering Medicare Advantage, you can use Medicare’s plan finder tool to search for an Advantage plan that works for you.