Medicare Advantage, or Medicare Part C, is a type of Medicare plan that private insurance companies offer.
Private insurance companies have agreements with Medicare to provide the same services that traditional Medicare offers, plus some additional benefits, to its members.
In 2020, private insurance companies offered an estimated 3,148 Medicare Advantage plans, according to the Kaiser Family Foundation (KFF).
This article will discuss Medicare Advantage plans, including where a person can find out more about the companies offering them and some tips for comparison.
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.
Medicare Advantage is an approach to Medicare in which private insurance companies are responsible for providing a person’s Medicare Part A (hospital) and Part B (medical) coverage.
Many Medicare Advantage plans also offer Part D (prescription drug) coverage, as well as additional services, such as dental, hearing, or vision benefits.
When a person has Medicare Advantage, they will still need to pay the Medicare Part B premium, as well as a monthly premium to their Medicare Advantage plan. However, some Medicare Advantage plans offer premium-free coverage.
Four main Medicare Advantage plan types exist, which the sections below will cover in more detail. Unlike traditional Medicare, each has an out-of-pocket limit. Once a person reaches their out-of-pocket limit, the insurance company covers the remainder of the costs.
Health maintenance organizations
Health maintenance organization plans allow a person to see an in-network primary care provider. Before an individual can see an in-network specialist, their primary care provider will usually need to refer them.
Preferred provider organizations
With preferred provider organization plans, a person can choose from in-network providers but does not usually require a physician’s referral to see a specialist. The costs to see an out-of-network provider tend to be considerably higher.
Private fee-for-service plans
In private fee-for-service plans, the insurance company pays a doctor who accepts Medicare assignments a set fee. Sometimes, these plans have in-network providers.
Special needs plans
Special needs plans (SNPs) are specifically for individuals who have a particular medical condition, are in a nursing home or another institution, or are eligible for Medicare and Medicaid.
The benefits included in these plans should be available when a person searches for information on SNPs. The search results may also include costs to see doctors in network and out of network.
If the plan includes prescription drug coverage, a list of covered medications should also be available.
Private insurance companies across the country sell Medicare Advantage plans. A company may sell different plan options that offer varying levels of coverage.
As stated in a 2020 report by the KFF, when a person searches for Medicare Advantage plans in their area, they will usually be able to choose from at least seven different insurance companies.
The following are the companies that welcomed the most Medicare Advantage enrollees in 2020:
- UnitedHealthcare: 26%
- Humana: 18%
- BCBS plans: 15%
- CVS (Aetna): 11%
- Kaiser Permanente: 7%
- Centene: 4%
- Cigna: 2%
The remaining 18% represent other insurers in the marketplace.
Medicare Advantage plans are often regional. Location matters because an insurance company will create agreements with providers and hospitals in a particular region, so they become “in network” with that specific insurance company.
When a person researches available plans in their area, they may find that these plans and insurance companies differ from those available in different areas.
According to the KFF report, the average person will have 28 plans available to them in their region through Medicare Advantage. An estimated 77 counties in the United States do not have any available Medicare Advantage plans.
If a person is considering a Medicare Advantage Plan, Medicare’s plan finder may be useful. This allows people to search for available health plans in their area. They will be able to find out about the monthly premiums, the out-of-pocket costs, and whether or not the plan offers prescription drug coverage.
Once a person chooses a Medicare Advantage plan, they are not locked into the plan forever. If they select a plan that does not meet their needs, there are times throughout the year when they may be able to switch to another plan or return to traditional Medicare.
A person can also call Medicare on 800-633-4227 to find out more about available plans or request a list of plans available in their area.
When looking for a Medicare Advantage plan, a person may wish to consider the plan’s rating. Medicare uses a plan rating system to evaluate how well the plan performs for its customers. Considerations include:
- customer service
- member complaints
- quality of care
A five-star rating is the highest a plan can receive.
If cost and coverage are similar, choosing a plan with a higher star rating may ensure better customer satisfaction.
The amount a person can afford to pay for monthly premiums and out-of-pocket expenses may vary.
Looking at healthcare spending from the previous year, or estimating how health may change in the coming year, can help when choosing a plan.
A person can also compare coverage levels. For example, some plans offer a variety of benefits, including:
- dental coverage
- fitness memberships
- hearing coverage
- transportation to medical appointments
- vision coverage
If a person would like additional services, choosing a plan that offers comprehensive benefits can represent a cost saving, as traditional Medicare may not provide coverage for those services.
Medicare requires a person’s prescription drug plan to be at least as comprehensive as the basic Medicare drug plan.
An individual may wish to consider the level of prescription drug coverage, if any, that a Medicare Advantage plan offers.
When prescription drug plans do not cover the specific medications a person requires, it may be more cost-effective to research alternative, stand-alone plans.
If a person chooses a Medicare Advantage plan without drug coverage, they will usually purchase a separate prescription drug plan.
Medicare Advantage plans offer services and out-of-pocket limits that may not be available with traditional Medicare.
A person will usually choose from a selection of plans offered by private medical insurance companies. The available plans and the companies providing them could vary depending on location.
Individuals may consider factors such as cost, coverage, and plan ratings when determining the Medicare Advantage plan that may best suit their needs.
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 13, 2020.