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Learn everything you need to know about Medicare Advantage plans, including what services are covered and which providers offer plans that fit your specific healthcare needs.

By Sherrie Johnson
Updated September 8, 2020

If you are getting ready to apply for Medicare, you are probably wondering about the popular Medicare Advantage plan option, also known as Medicare Part C. For many people, choosing Medicare Advantage is a smart decision.

The reason for this is because Medicare Advantage not only combines Original Medicare Part A and Part B, but also usually includes Part D prescription drug coverage in addition to extras, such as hearing, dental, and vision coverage.

Medicare Advantage plans are offered by private insurance companies that contract with Medicare to provide Part A and Part B benefits in addition to other offerings, depending on the company.

There are several types of Medicare Advantage plans:

  • HMO (Health Maintenance Organizations)
  • PPO (Preferred Provider Organizations)
  • PFFS (Private Fee For Service)
  • SNPs (Special Needs Plans)

Each type has its own specific pros and cons, which we will go into further detail about later in this article.

Key Takeaways

  • Medicare Advantage provides additional benefits in addition to what is covered by Original Medicare
  • The primary benefits of Medicare Advantage include a maximum limit for out-of-pocket costs; low plan premiums; most offer prescription drug coverage; and many offer vision, hearing, and dental coverage
  • Medicare Advantage premiums and deductibles vary according to the specific plan and the amount of coverage chosen
  • Medicare Advantage plan premiums can start as low as $0 per month
  • The four most popular Medicare Advantage plan options are HMOs, PPOs, PFFS and SNPs

How Does Medicare Advantage Work?

Medicare Advantage plans essentially bundle Original Medicare Part A hospital insurance, Part B medical insurance, and usually Part D prescription drug coverage into one all-inclusive plan.

When you have Medicare Advantage, you are technically no longer a part of Medicare. With Medicare Advantage, you pay a private provider who contracts with the federal government to provide you with Medicare services.

With limited exceptions, you can't add a prescription drug plan to a Medicare Advantage plan. If you want prescription drug coverage, you should either enroll in a Medicare Advantage plan with drug coverage or opt for Original Medicare plus a standalone Part D drug plan.

The graphic below offers you a quick look into the various coverage options and costs for Original Medicare vs. Medicare Advantage:

Original Medicare

Medicare Advantage

Area of Coverage

Part A

Part B

Part A

Part B

Part D*.

Vision benefits*.

Dental benefits*.

Hearing benefits*.

Maximum Out-of-Pocket Costs

No maximum

Yearly limit

After the limit is reached, members pay nothing

Doctor and Hospital Visits

Treatments must be received by doctors and hospitals that accept Medicare

You may choose your doctor and hospital, as long as they are in your plan's approved network. Out of network doctors and hospitals might come with higher costs.

Plan Premiums

Part A has no premium

Part B has a premium that starts at $144.60/month

Part B has a premium starting at $144.60+/month

+

Medicare Advantage plan premiums can start as low as $0/month.

Plan Deductibles

Part A has a yearly deductible of approximately $1,408

Part B has a yearly deductible of approximately $198

Deductibles and copays vary

Prescription Drug Coverage

Must purchase Part D or stand-alone drug coverage

Varies by plan

*Not all Medicare Advantage plans offer these extra benefits.

As you can see from the chart above, if you opt for Medicare Advantage, you will have a premium for your plan in addition to your Medicare Part B premium.

What are the primary benefits of Medicare Advantage?

  • Maximum limit for out-of-pocket costs
  • Low plan premiums
  • Most offer prescription drug coverage
  • Many offer vision, hearing, and dental coverage

Find a Medicare plan that fits your lifestyle

What Types of Medicare Advantage Plans are Available?

There are several types of Medicare Advantage plans to choose from, which can be tailored to your specific needs. For this reason, it is essential to research all available plans in order to find the best option for your specific situation. The four most popular options are HMOs, PPOs, PFFS and SNPs.

HMO Medicare Advantage Plans

A Medicare Advantage Health Maintenance Organization (HMO) plan provides medical coverage and health care from a specific set of doctors, specialists, and hospitals that are within a plan's approved network. Special circumstances include if the situation needing coverage is an emergency, in which case the medical care is accessible to the enrollee regardless.

Under an HMO, you are required to choose doctors within the network, which might mean switching from your current primary care doctor.

If you need specialist care, most HMO Medicare Advantage plans require a referral from your HMO-network primary care doctor. As such, deciding to see an out-of-network doctor, specialist, or hospital (unless for an emergency) might mean that you will have to pay the full cost for any associated medical bills.

Most HMOs provide prescription drug coverage. If your plan does not, you have the option to purchase a separate prescription drug plan under Medicare Part D.

PPO Medicare Advantage Plans

Medicare Advantage Preferred Provider Organization (PPO) plans offer a network of primary care doctors, specialists, and hospitals. Under a PPO, you have the option of choosing a doctor, specialist, and hospital outside of the network if desired.

Costs for out-of-network medical service providers might be higher than costs in-network, but they are available to you at a subsidized rate. Using the "preferred" providers will save you the most money.

One of the major benefits of PPOs is that you can receive care without a referral from a primary care physician.

Most PPOs also include prescription drug coverage. If you want prescription drug coverage and you choose a PPO, you must choose a PPO that offers coverage. You are not allowed to purchase a separate Medicare Part D prescription drug plan if you have a PPO Medicare Advantage Plan.

PFFS Medicare Advantage Plans

A Private-Fee-for-Service (PFFS) Medicare Advantage plan is a plan that is offered by a private health insurance company, and it works differently than both HMOs and PPOs.

Under PFFS plans, you are allowed to access any Medicare-approved doctor, specialist, or hospital as long as it accepts your plan and agrees to treat you. Some PFFS plans have an approved, specific network of doctors and healthcare providers that you can rely upon for treatment and services.

If you choose an out-of-network provider that accepts your plan, you should expect to pay more for any services received. Emergency services are covered by this plan, regardless of whether the hospital or urgent care accepts your PFFS plan.

With PFFS plans, health care providers will not bill you for anything beyond your required copayment or coinsurance at the time of service. However, you may pay an additional fee (up to 15%) if there is a difference in the provider's charge and the allowed amount that is covered by your plan.

Some PFFS plans cover prescription drugs. If your plan offers it, you must get your prescription drug coverage through your PFFS plan. If you are not offered prescription drug coverage, you may purchase a separate Medicare Part D prescription drug plan.

SNPS Medicare Advantage Plans

A Special Needs Plan (SNP) provides medical benefits to people with certain diseases, special health care needs, or limited incomes. SNPs offer the same Medicare services that all Medicare Advantage Plans provide. SNPs also offer additional benefits for those with chronic conditions, such as cancer and heart failure.

In order to qualify for a SNP, you need to meet one of the following requirements:

Medical care is provided in-network, unless there are special circumstances, such as receiving out-of-area dialysis. In such a case, you will be provided a primary care doctor or a care coordinator. As for prescription drugs, these are covered in full.

Who Offers Medicare Advantage Plans?

Numerous private insurance companies offer Medicare Advantage plans. Humana and Aetna are two of the most recognized among these due to the number of options and vast network of resources they provide.

Humana Medicare Advantage Plans

Humana is one of the largest private insurance companies in the United States. It offers all four types of Medicare Advantage Plans at reasonable costs and with numerous added benefits. Below is a snapshot of the various plans that Humana offers:

  • HMO: Monthly premiums start at $0 and include all benefits of Original Medicare. Most also include prescription drug coverage, no deductible, and minimal copays. Also included are emergency coverage worldwide, annual preventive screenings, hospitalization coverage, and a fitness program.
  • PPO: These plans offer enrollees the freedom to visit any Medicare-approved doctor in or out of Humana's network. Monthly premiums are affordable, and copays and coinsurance payments are set, which helps you know how to budget. Coverage includes preventive screenings and emergency coverage worldwide. Optional extras include fitness programs, prescription drug coverage, vision and dental coverage for additional premiums.
  • PFFS: These plans offer the option to visit any Medicare-approved doctor, annual preventive screenings, prescription drug coverage, hospitalization coverage, and emergency coverage worldwide.
  • SNPs: Covers all benefits of Original Medicare Part A, Part B, and Part D for those who meet SNP requirements. Most premiums start at $0.

Aetna Medicare Advantage Plans

Aetna is another well-known private insurance company that offers Medicare Advantage plans. Their HMOs and PPOs provide impressive coverage, which are explained in further detail below:

  • HMO: Plan premiums and deductibles start at $0. These plans require in-network service providers for coverage, except in emergency cases. Specialist visits require a primary care doctor's referral. There is an out-of-pocket maximum, and these plans include prescription drug, dental, vision, fitness, and hearing benefits. Emergency and urgent care are covered worldwide. Some plans also offer no-charge OTC items, transportation benefits to doctor appointments, and meals after hospital stays.
  • PPO: Plan premiums and deductibles start at $0. These plans do not require in-network service providers or a referral in order for enrollees to see a specialist. There is an out-of-pocket maximum, prescription drug coverage, dental, vision, fitness, and hearing coverage. Emergency and urgent care are covered worldwide. Most plans offer no-cost OTC, and some plans offer transportation benefits and at-home meals after hospital stays.

Who Can Join Medicare Advantage?

Anyone eligible to enroll in Original Medicare can join a Medicare Advantage program of their choosing.

You can sign up for a Medicare Advantage plan during your Initial Enrollment Period (IEP), Special Enrollment Period (SEP), or Medicare Open Enrollment Period each year.

Your IEP includes:

  • The three months before you turn 65
  • The exact month that you turn 65
  • The three months after you turn 65

Your SEP includes:

  • The month you begin retirement
  • The following seven months after your retirement has begun
  • Extenuating circumstances, such as a move, Medicaid eligibility, and switching to a five-star rated plan

Medicare Open Enrollment takes place from:

  • October 15 – December 7 (for switching from Original Medicare to Medicare Advantage or changing Medicare Advantage plans)
  • January 1 – March 31 (for changing Medicare Advantage plans)

How Much Do Medicare Advantage Plans Cost in 2020?

Medicare Advantage premiums and deductibles vary according to the specific plan and the amount of coverage chosen. Many plans begin at $0 for both premiums and deductibles.

It is advised that you shop around first, seek advice from a licensed Medicare expert, then choose the plan that offers the best fit for your individual needs and budget.

Every person is different, and Medicare Advantage plans are different as well. There is no one-size-fits-all solution.

Sherrie Johnson has a decade of experience as a professional writer with nationally-published healthcare and finance content.