Seniors and others who are Medicare-eligible can find and compare Medicare Advantage plan costs and benefits through the Medicare Plan Comparison Tool. Picking a plan is a matter of finding the kind of coverage and costs that works best for the individual.
Over the years premiums for Medicare Advantage plans have gone down and consumer protections built into them have improved, making them a more attractive option than ever before. Recent data from the Kaiser Family Foundation indicates that Medicare Advantage plans account for 33% of all Medicare spending and one-third of all Medicare enrollees. These plans are clearly popular, but they aren’t as commonly used as Original Medicare is. Many seniors may feel confused about how to join a plan and how available plans differ from Original Medicare.
Seniors who need more information on Medicare Advantage or who are interested in enrolling can read on to learn more about Medicare Advantage basics, the main types of Medicare Advantage plans, and how to pick a Medicare Advantage plan that meets their needs. Those who already have a plan may also find included information on enrollment periods and other policies helpful.
*Did you know? Medicare Advantage prototype programs began in the 1970s and became a more formal part of Medicare in 1997.
It can be difficult to understand the difference between Medicare Advantage (also referred to as Medicare Part C) and other parts of Medicare. When seniors sign up for a Medicare Advantage plan, they continue to pay Part A ($0 for most people) and B (about $150 for most) premiums to Medicare, but their Part A and B services are covered by the Medicare Advantage company they choose. Essentially, they remain enrolled in Medicare, Medicare provides the insurance company some compensation, and the company assumes financial risk by agreeing to cover the patient. Thus, Medicare Advantage is like a replacement for Original Medicare, yet the seniors using it don’t exactly drop Original Medicare since they are still paying one or two premiums directly to Medicare.
Medicare Advantage plans can charge an additional premium to be paid directly to the insurance company, but many do not since they are already being compensated. If the plan offers extras- like vision, dental, and drug coverage- that Original Medicare doesn’t cover, then they often charge between $20-$50 a month, though sometimes the charge will be much higher.
Like Original Medicare and most insurance, Medicare Advantage plans include deductibles, copays, and coinsurance, and they won’t cover all medical expenses. The level of coverage provided by a Medicare Advantage plan should be equivalent to or better than Original Medicare coverage.
The table below demonstrates how Medicare Advantage (Part C) fits into the “big picture” of all types of Medicare policies.
|Medicare Advantage Compared to Other Medicare Products|
|Medicare Part A||-Hospital Insurance|
– “Original Medicare” when combined with Part B
|Covers costs incurred in hospitals, skilled nursing facilities, hospice, and home health care settings.|
|Medicare Part B||-Medical Insurance|
-“Original Medicare” when combined with Part A
|Covers “medically necessary” and “preventative” costs, including doctor visits, ambulance services, durable medical equipment, clinical research, mental health care, and limited prescription drugs.|
|Medicare Part C||-Medicare Advantage (MA)|
-Medicare Advantage with Prescription Drugs (MAPD)
|Covers the same services as Original Medicare, has an out-of-pocket spending limit that Original Medicare does not have, and often includes additional coverage for vision, dental, hearing, prescription drugs, and more.|
|Medicare Part D||-Prescription Drug Coverage|
–Prescription Drug Plan (PDP)
|Supplements Original Medicare or Medicare Advantage by providing coverage for prescription drugs according to a predetermined formulary, a list of covered drugs.|
|Medigap||Medicare Supplement Insurance||Assists enrollees with Original Medicare copays and coinsurance, as well as travel emergencies and some other items that Original Medicare doesn’t cover.|
Note: Parts C and D and Medigap are always offered through private insurance providers.
Seniors switch from Original Medicare to Medicare Advantage for a variety of reasons, but some of the most common include:
There are some noteworthy rules regarding the relationship between Medigap and Medicare Advantage that seniors need to know about. Before switching to Medicare Advantage take a look at the areas of concern below.
The term Medicare Advantage describes several different plan types that act as an alternative for Original Medicare. All of these plans are offered by for-profit companies, and they can operate in quite different ways even though they’re all Medicare Advantage.
In the table below we have ranked the level of restrictions that each plan has from I-III. Plans can vary by company, but in general, the higher the ranking, the less likely the plan is to cover out-of-network care and the more steps the patient will need to take to see a specialist. For those unfamiliar with the concept, a network is a group of healthcare providers that the insurance plan actively and continuously contracts with to provide lower costs and/or consistently available services to patients.
The table below includes a quick overview of the main types of Medicare Advantage plans.
|Overview of Medicare Advantage Plan Types|
|Plan Type||Level of Restrictions||Defining Features|
|Health Maintenance Organization (HMO)||III||A network-based health plan that requires a primary doctor and referrals for specialists.|
|Preferred Provider Organization (PPO)||II||A network-based plan that doesn’t require a primary doctor and usually doesn’t require referrals to specialists.|
|Private Fee-For-Service (PFFS)||I||A primarily non-network plan that gives coverage at any provider that agrees to see the patient according to the payment system the plan uses.|
|Special Needs Plan (SNP)||III||A network-based plan tailored to the needs of a very specific patient group and that only accepts patients in that group.|
Note: In the case of plans with networks, out-of-network care should still be covered without regard to network in certain emergency situations, including for some dialysis needs.
HMOs are a health plan structure that many seniors may already be familiar with even outside of the context of Medicare. Sometimes HMOs are also called “managed care,” and they are designed to keep costs low. These plans have some of the most controlled networks of the Medicare Advantage plans, but they frequently have $0 deductibles and low out-of-pocket spending limits for in-network care. Drug plans are very commonly included in HMOs, as are other extra benefits. All healthcare in an HMO must be based around a primary doctor, meaning that you must ask that doctor for a referral if you need to see a specialist.
Below you can find a table that summarizes the kind of coverage likely with an HMO.
|Best for…||…those who don’t mind being limited to a predetermined healthcare network and those who don’t see specialists frequently.|
|Drug Coverage Included||Often|
|Network Details||Only covers out-of-network care in emergencies and for some dialysis.|
|Primary Doctor Required||Yes, in most cases|
|Specialist Referrals Required||Always|
A Preferred Provider Organization (PPO) is a health plan that has a network but that also allows patients to use services outside of the network. Copays and other patient costs are lower within the network, but decent coverage is still offered for services obtained outside the “preferred” network. Most PPOs include drug coverage and other extra benefits, but some do not. For the most part, PPOs don’t require patients to have a primary doctor or to get referrals to see specialists. This relaxed policy regarding referrals means that PPOs more closely resemble Original Medicare than they do the HMO model discussed above.
|Best for…||…those who want the option of going out-of-network when necessary.|
|Drug Coverage Included||Often|
|Network Details||Preferred network with the option of coverage outside of the network.|
|Primary Doctor Required||No|
|Referrals Required||Not usually|
Private-Fee-For-Service (PFFS) plans are insurance plans that let patients see any provider that will accept the payment terms of the insurance and agree to treat them. Some PFFS plans have contracts with networks that provide guaranteed service and discounts, but seeking out-of-network services should still result in a decent amount of coverage for the patient. The downside to using a PFFS plan is that doctors and other providers can refuse to work with a PFFS plan, and they may choose to do so abruptly after having cooperated with the plan in the past. Verifying that the doctor still cooperates with the PFFS is the responsibility of the patient at every visit. Accepting services when the relationship between the provider and the plan has changed can leave the patient responsible for the full bill.
|Best for…||…those who want flexibility and who are comfortable frequently interacting with providers to verify coverage.|
|Drug Coverage Included||Sometimes|
|Network Details||Some have networks and some do not. You can see any provider that agrees to the terms of the plan but not all providers will agree.|
|Primary Doctor Required||No|
The main goal of a Special Needs Plans (SNP) is to connect patients who have unusual challenges to networks, doctors, and care coordinators that are highly experienced in helping with those challenges. There are three main types of SNPs, each geared towards a different population. An I-SNP serves those who live in institutional settings such as nursing homes, inpatient psychiatric facilities, or homes for the developmentally impaired. A D-SNP serves patients who have dual eligibility for both Medicare and Medicaid. A C-SNP serves those with chronic conditions such as certain severe diseases affecting the lungs, heart, immune system, or brain function. The insurance company that offers the C-SNP decides which of the conditions on the C-SNP list it caters to. Each of the links for the different types of SNPs includes more information on eligibility.
|Best for…||…those with Medicare and Medicaid (dual enrollment), those with qualifying chronic conditions, and those who live in institutional settings.|
|Drug Coverage Included||Always (mandatory)|
|Network Details||A well-defined network of care with doctors that specialize in care for the SNP’s group|
|Primary Doctor Required||Yes, or a designated care coordinator|
The four categories above make up the vast majority of available Medicare Advantage plans. There are some less common varieties, however, which we will briefly describe below. Medicare itself provides relatively little information on these Medicare Advantage types, but you’ll want to look into them more if they are offered in your area.
Alternative and Uncommon Medicare Advantage Types:
Medicare Advantage plans differ according to location and the company offering them, and picking a plan can be a challenge due to the sheer amount of options. The following steps will help seniors pick the best Medicare Advantage plans for their needs.
*Did you know? You must enroll in Medicare Parts A and B prior to joining a Medicare Advantage plan. Enrolling when first eligible can help you avoid high lifetime rates due to late-sign up penalties.
Medicare restricts Medicare Advantage enrollment and plan changes to certain times of the year and certain conditions in the enrollee’s life. Before they really start shopping for a Medicare Advantage plan, most seniors should learn more about their eligibility to enroll. After reviewing the enrollment periods listed below, most seniors will also benefit from reading the expanded enrollment rules as stated by Medicare itself.
Initial Enrollment Periods:
Annual Enrollment Periods:
Those who have determined that they are in or are nearing a Medicare Advantage enrollment period should take a closer look at the different plan types to determine the best fit. As reviewed earlier in this article, Medicare Advantage plans can be divided into four main types: HMO, PPO, PFFS, and SNP. The information on networks and referrals below will help clarify which of the above types are most likely to be beneficial for you.
Some Medicare Advantage plans have no networks, but the majority do. Getting care outside of a network may result in no coverage, a lower tier of coverage, or the same coverage, depending on the specific insurance company and plan. HMOs and SNPs have the strictest networks, HMO-POS and PPOs have slightly less strict networks, and PFFS plans have the most relaxed networks. You may not be able to completely decide which network style is best until you look at actual plans, but write down the types you think will be best and be prepared to revise your opinion later if necessary.
If you’re still unsure if a network will work for you when you begin actively shopping plans, you’ll want to ask “how or when will I be financially penalized for seeking care outside of this network?” and “how practical is this network for my situation?” A network may be impractical if its doctors are far away, don’t treat your conditions, or have excessive wait times for appointments.
Some plans, especially HMOs and SNPs, require a referral from a primary doctor for the patient to see a specialist. Patients who tend to need many different specialist appointments may want to opt for a plan with fewer or no referrals, such as a PPO or PFFS. However, in many cases, a plan that requires referrals can be a good option if it has other benefits such as superior access to cutting edge treatment. This can be the case with some SNP plans even though they generally require referrals for specialist visits. For some patients, the occasional need for a referral will not be a significant factor in the decision process, and the merits of plans can be judged by other criteria.
Once you’ve determined what kind of networks and referrals processes is most likely to be practical, you’ll probably have your search narrowed down to one or two types of plans. You may know that you want either an HMO or SNP, for example, or you may think you want either a PPO or a PFFS. Whatever the case, now is the time to start comparing secondary benefits. Secondary benefits are parts of the plan that are not mandated by Medicare but that the plan offers as an attractive selling point for its customers.
Medicare Advantage plans often offer one or more of the following extras:
Many seniors already have some of these benefits through other forms of insurance. Consider the implications of dropping that coverage and switching to a Medicare Advantage plan that has a similar benefit. Would your costs be lower or higher for those services in the end? Ask yourself which extras a plan absolutely must have and which ones would be nice but optional. For most seniors, quality prescription drug coverage will be the most crucial. You can check the coverage of individual drugs through the Medicare Plan Finder, which we explain in the next step.
After getting an idea of the type of plan and the kinds of benefits that they would like, seniors should start looking at real-life plans and their costs by visiting the Medicare Plan Finder. To begin, create a user account, log in to an existing one, or click “continue without logging in.” The search tool will walk you through several questions about location and coverage preferences. After this short survey, the search tool will present a list of options. Many seniors will immediately eliminate certain plans from consideration due to their understanding of plan types and extras. For the types of plans you are interested in, it’s time to look at cost specifics which are listed clearly for each plan.
Below you can learn what some cost-related terms mean and what typical costs look like:
One of the hardest parts about comparing plans is that with so many cost categories, it’s common to find a plan that has low costs in one area but high costs in another. Under “Plan Details” you can view “estimated total yearly costs for care.” Hypothetical numbers can’t account for everyone’s actual patterns of healthcare use, though, so the value of these estimates for comparing plans is somewhat limited.
Ultimately, you need to make your final decision holistically, taking into account all of the information provided in the above steps. The trick is to find a plan that provides the right blend of convenience, coverage, and low costs for your health and situation. The following tips can help you clarify what matters most to you for this multifaceted decision.
Considerations for making the final call:
Below we have included links to articles, videos, and other resources for learning about how Medicare and Medicare Advantage work.
|Medicare Advantage Resources|
|Understanding Medicare Advantage Plans||Medicare.gov PDF booklet (32 pages)||Provides exhaustive details on buying and using Medicare Advantage.|
|“Things to know about Medicare Advantage Plans”||Medicare.gov article||Lists 12 quick facts about Medicare Advantage, clearing up confusion on numerous topics.|
|“Medicare Advantage Plans”||Medicare.gov article||Summarizes MA types and links to further information on HMO, PPO, PFFS, SNP, and MSA plans.|
|“Medicare & You”||Youtube Playlist created by Medicare & Medicaid Services (CMS)||Explains a wide range of Medicare topics, including Medicare Advantage issues.|
|“Joining a health or drug plan”||Medicare.gov article||Addresses several different situations in which a person is eligible to enroll in or change a Medicare Advantage plan.|
|Medigap & Medicare Advantage Plans||Medicare.gov article||Clarifies rules regarding the way Medicare Advantage and Medigap policies interact with each other.|
|“Medicare Advantage Plans Cover all Medicare Services”||Medicare.gov article||Explains the coverage model of Medicare Advantage compared to Original Medicare.|