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Medicare Advantage (MA) is a Medicare plan offered by private insurers who contract with the program. Medicare Advantage plans, also known as Medicare Part C, provide hospital, outpatient, and, usually, prescription drug coverage, supplanting benefits under Medicare parts A, B, and D.1
Anyone who joins an MA plan still has Medicare, and must continue paying Medicare Part B premiums in addition to any charged by the plan.  Medicare Advantage plans typically have lower out-of-pocket choice than traditional Medicare and may offer additional benefits, while requiring members to receive care from providers in their network, and to obtain referrals to see specialists.

How Medicare Advantage Works

Medicare is generally available for people age 65 or older, younger people with disabilities, and people with end-stage renal disease—permanent kidney failure requiring dialysis or transplant—or amyotrophic lateral sclerosi (ALS).

Medicare Advantage plans are Medicare-approved policies offered by private companies as an alternative to traditional Medicare coverage. MA plans provide hospital and outpatient coverage that replaces that under parts A and B of Medicare, with the exception of hospice care. Most MA plans also include Part D prescription drug coverage.

More than 28 million people, about 48% of those receiving Medicare benefits, were enrolled in a Medicare Advantage plan in 2022.7 Medicare Advantage plan providers receive a fixed fee from the program for each enrolled health plan participant. The plan providers also collect out-of-pocket costs from policyholders, and may limit coverage to providers in a network while requiring referrals to see specialists.

Some Medicare Advantage plans cover additional costs not covered by traditional Medicare, including vision, dental, and hearing-related expenses. Medicare Advantage plans don’t work with Medigap, which is also called Medicare Supplement Insurance.

The average Medicare Advantage monthly premium is $18.50 in 2024. Medicare Advantage participants pay any MA plan premium in addition to the monthly Medicare Part B premium, which is set at $174.70 in 2024.

Regional preferred provider organizations (PPOs) were established to provide rural beneficiaries greater access to Medicare Advantage plans and cover entire statewide or multi-state regions. Regional PPOs accounted for 5% of all Medicare Advantage enrollees in 2020.

Types of Medicare Advantage Plans

The most common Medicare Advantage plan is a health maintenance organization (HMO). HMOs enroll the majority of Medicare Advantage participants. Other Medicare Advantage plans are structured as PPOs, private fee-for-service (PFFS) plans, and special needs plans (SNPs). HMO point-of-service (HMOPOS) plans and medical savings account (MSA) plans are less common.1
To join any Medicare Advantage plan, you must live within its service area and have Medicare parts A and B.

People with end-stage renal disease became eligible to enroll in any local Medicare Advantage plan in 2021.

People with end-stage renal disease (ESRD) became eligible to sign up for any Medicare Advantage plan in their area in 2021. ESRD patients should compare the costs and benefits of Medical Advantage plans with those of traditional Medicare coverage, and make sure their doctors and hospital are in the plan’s provider network.12

Special Considerations

Medicare’s online plan-finder tool includes information about Medicare Advantage plans. To enroll in a Medicare Advantage plan, a consumer must provide the information on their Medicare card, including their Medicare number along with the dates when their Part A and Part B coverage began.13 People can change their Medicare Advantage plans during a specified open enrollment period in the fall, typically running from mid-October to early December.

Like other types of health insurance, each Medicare Advantage plan has different rules about coverage for treatment, patient responsibility, costs, and more. Joining a Medicare Advantage plan may make someone ineligible to continue receiving health care coverage through their employer or union, so if employer-based coverage fits a person’s needs, they may want to hold off on enrolling in Medicare.

All Medicare Advantage plans have an annual limit on out-of-pocket costs, which may make them more cost-effective for certain beneficiaries. The out-of-pocket maximum for single coverage is $9,450 for 2024. For family coverage, the 2024 out-of-pocket maximum is $18,900.

Why is Medicare Advantage important?

Medicare Advantage is important for several reasons:

1. Enhanced Coverage Options: Medicare Advantage plans often provide coverage beyond what is offered by traditional Medicare, including benefits such as prescription drugs, dental, vision, and hearing services. This expanded coverage can be crucial for seniors who have specific healthcare needs not fully addressed by Original Medicare.
2. Cost Savings: Medicare Advantage plans may offer cost-saving opportunities for beneficiaries. Many plans have lower out-of-pocket costs, such as copayments and deductibles, compared to Original Medicare. Some plans even offer coverage for services not covered by Original Medicare, potentially reducing overall healthcare expenses for beneficiaries.
3. Integrated Care: Medicare Advantage plans often provide coordinated care through networks of healthcare providers. This integration can improve the quality and efficiency of healthcare services, leading to better health outcomes for beneficiaries. Coordinated care may include services such as disease management programs, care coordination between specialists, and preventive care initiatives.
4. Additional Benefits: Medicare Advantage plans frequently offer additional benefits beyond what Original Medicare provides, such as fitness programs, transportation services, over-the-counter allowances, and telehealth services. These extra benefits can contribute to better overall health and well-being for beneficiaries.
5. Choice and Flexibility: Medicare Advantage plans offer beneficiaries a choice of different plan options and insurance carriers, allowing them to select a plan that best fits their healthcare needs and budget. This flexibility empowers beneficiaries to tailor their coverage to suit their individual circumstances and preferences.
6. Increasing Popularity: Medicare Advantage enrollment has been steadily increasing over the years, indicating that many beneficiaries find value in these plans. The growing popularity of Medicare Advantage underscores its importance as a viable alternative to traditional Medicare.

Summary

Overall, Medicare Advantage plays a crucial role in providing comprehensive healthcare coverage, cost savings, and improved care coordination for Medicare beneficiaries, contributing to their overall health and well-being.

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