Medicare Advantage is a bundled plan that, in most instances, combines Medicare parts A, B, and D. This can help people secure additional benefits while getting Medicare coverage from a private insurance company.

However, some types of Medicare Advantage plan can be quite restrictive in terms of the network of healthcare providers a person may be allowed to use.

If a person qualifies for Medicare, they can choose between Medicare Advantage and traditional Medicare. This article covers some advantages and disadvantages to consider regarding Medicare Advantage.

We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:

  • Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
  • Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
  • Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
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Medicare Advantage plans offer additional benefits, such as dental cover.

Medicare Advantage plans must cover all services that traditional Medicare includes. A person will not have any less coverage if they enroll in a Medicare Advantage plan.

Most Medicare Advantage plans offer additional benefits besides traditional Medicare’s basic level of coverage. These vary by plan and may include:

  • dental
  • fitness
  • hearing
  • prescription drug coverage
  • vision

When a person chooses a Medicare Advantage plan, they are still responsible for paying their premium. They will also continue to pay their premium for Medicare Advantage benefits.

In return, Medicare contributes a set amount of money to the participant’s plan that covers healthcare services.

Insurance companies are able to profit from this setup by creating networks of healthcare providers. These providers agree to a set fee or discount for the plan’s members, and to receive treatment outside of this network, people with a Medicare plan will need to pay more.

As a result, the insurance company saves money, and the healthcare provider gets more custom from the plan.

An estimated 34% of people enrolled in Medicare have Medicare Advantage plans, according to the Kaiser Family Foundation (KFF).

However, many Medicare Advantage plans are not available across the whole country. In fact, there are 77 counties in the United States where no insurance companies offer a Medicare Advantage plan.

A full breakdown of Medicare Advantage, or Medicare Part C, is available here.

Medicare Advantage has a number of benefits. The following sections will discuss these in more detail.

Additional benefits

Medicare Advantage plans usually offer coverage that extends beyond traditional Medicare’s benefits.

Some examples of extra benefits include:

  • bathroom safety equipment
  • caregiver support
  • dental care
  • fitness
  • hearing care
  • in-home support
  • meal benefits
  • telemonitoring services
  • transportation assistance
  • vision care

Although not all Medicare Advantage plans offer all of these benefits, each will usually offer some additional forms of coverage.

According to a brief based on data from the Centers for Medicare and Medicaid Services, 97% of Medicare Advantage plans cover vision, hearing, and dental care, as well as fitness.

However, a plan may state that a person is responsible for copayments or coinsurances.

Prescription drug coverage

In addition to many supplemental benefits, an estimated 90% of Medicare Advantage plans offer some form of prescription drug coverage, according to the KFF.

Medicare requires that all enrollees have some form of prescription drug coverage. Through a Medicare Advantage plan, a person can secure a prescription drug plan.

The KFF suggests that the average deductible for a Medicare Advantage prescription drug plan is $121. This is significantly lower than the Medicare Part D deductible, which is $445 in 2021.

There are other factors to consider in terms of coverage for individual medications, which may vary by plan. People should ask to see the formulary for their Medicare Advantage prescription drug plan, which lists all covered medications.

Some people view having a Medicare Advantage prescription drug plan as a lower cost alternative to traditional Medicare with a Part D prescription drug plan.

Out-of-pocket spending limits

Medicare Advantage plans have an out-of-pocket spending limit. This is an annual cap on how much a person will pay in out-of-pocket expenses.

The average out-of-pocket limit for in-network services $5,059, and it comes to $8,818 for out-of-network services, according to the KFF. Typically, health maintenance organizations (HMOs) have a lower out-of-pocket limit than other plan types.

Although the out-of-pocket limits represent thousands of dollars, they do offer some assurance to a person that they will not have to spend more than a certain amount.

Once a person reaches their limit, their insurer will cover all of their Part A and Part B costs.

For example, if a person pays a 20% coinsurance on doctor’s visits but has an out-of-pocket limit of $5,500, they will not be responsible for any further out-of-pocket costs once they have paid $5,500 in coinsurances.

Medicare resources

For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.

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Medicare Advantage plans may also have some drawbacks. The sections below will cover these in more detail.

Limited provider networks

Several different Medicare Advantage plan types are available. The most common are preferred provider organizations (PPOs) and HMOs.

Each of these works by defining in-network and out-of-network providers as a way to bring down costs.

An HMO usually involves a person visiting an in-network primary care physician about most health concerns.

If they have a health condition that requires specialist care, they will usually see their primary care provider. This doctor must then refer them to an in-network specialist before an HMO covers the cost at their reduced rate.

A PPO varies slightly, in that a person does not usually need a specialist referral. However, these types do often have a fixed network of providers.

Under traditional Medicare, a person can see any provider who accepts assignments from Medicare. Some people prefer this option, as they have more freedom to choose their providers and specialists.

Learn more about HMOs and PPOs here.

Supplemental coverage not available

When a person has traditional Medicare, they can purchase a supplemental insurance policy called Medigap. This helps them reduce out-of-pocket costs by covering deductibles, coinsurances, and copayments.

People with significant out-of-pocket costs cannot get a Medigap policy if they also have Medicare Advantage.

However, it is possible to switch plans during one of several enrollment windows. Learn more about switching from Medicare Advantage to Medigap here.

Authorization is necessary before procedures

In most instances, as long as traditional Medicare covers a particular service or procedure, a person does not have to get authorization for coverage before receiving treatment.

However, Medicare Advantage may require a person to request prior authorization for a procedure to make sure that the provider and the facility are in-network.

Although doing so may not delay care, a person could end up waiting before they can get clearance for their procedure.

Private insurers offer thousands of Medicare Advantage plans, which vary by price and coverage level.

Some areas have multiple plans available, while others may have a few. It is best to carefully review the plans available and consider whether or not they meet budgetary constraints and healthcare needs.

Both traditional Medicare and Medicare Advantage offer benefits to their providers and plan holders.

If a person finds that a Medicare Advantage plan does not fit their healthcare needs, they can revert to traditional Medicare or choose a different Medicare Advantage plan during one of the enrollment periods.

Learn more about Medicare enrollment periods here.

We will update the 2021 costs as soon as possible after the Centers for Medicare and Medicaid Services (CMS) have released them.

We last updated the costs on this page on October 8, 2020

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