What About Those Medicare Advantage Plans?

There are pros and cons to consider

Older man sitting under a Medicare banner scratching his head
Seniors Attend Medicare Enrollment Fair. Justin Sullivan / Getty Images

As you approach age 65, you will start getting dozens of ads in the mail for “Medicare Advantage” plans from private commercial health care providers like HMOs. What do these plans offer and do they really give you an “advantage?”

What are Medicare Advantage Plans?

Medicare Advantage plans—sometimes referred to as “Medicare Part C”—are a type of health insurance offered by private companies that contract with the federal government Medicare program to provide all Medicare participants with the services and benefits provided under Medicare Part A (Inpatient/Hospital coverage) and Part B (Outpatient/Medical coverage) of “Original Medicare.” In addition to all of the services covered under Original Medicare, most Medicare Advantage Plans also include prescription drug coverage.

Medicare Advantage Plans are typically offered by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans, Special Needs Plans and Medicare Medical Savings Account Plans.

In addition to all of the services covered under Original Medicare, most Medicare Advantage Plans provide prescription drug coverage.

On average, about 30% of all 55.5 million Medicare participants choose Medicare Advantage plans.

What are the Advantages?

On the plus side, Medicare Advantage plans offer participants simplicity, financial protection, and extra services.

  • All-in-one coverage: Most Medicare Advantage plans provide prescription drug coverage at no extra cost, compared to traditional Medicare, under which participants must buy a separate drug plan (Medicare Part D) for an extra premium ranging from $10 to $100 per month.
  • Lower out-of-pocket costs: Total out-of-pocket costs for covered services are capped in Medicare Advantage plans—and once the annual cap is reached, the plan pays the full allowed amount for your medical services. Moreover, by joining a Medicare Advantage plan, you can save money by dropping “medigap” if you have it—supplemental insurance plan that covers some costs such as co-payments or care outside of the United States. Some Medicare Advantage plans also help enrollees pay their monthly Medicare premium.
  • Extra benefits: Medicare Advantage plans typically offer benefits not covered by traditional Medicare, such as dental, hearing, and vision care. Some plans even offer gym memberships.

What are the Drawbacks?

Depending on the specific plan, Medicare Advantage plans can have some components that might not appeal to participants.

  • Limited choice of providers: People in Medicare Advantage plans generally must choose their doctors and hospitals from a specific network of providers—and out-of-network services can be costly. Yet, studies have shown that information about provider networks can change frequently, making it hard to know who is in the network. Many Medicare Advantage plan providers mail updated lists of health care professional and facilities included in their network. While the federal Centers for Medicare Services (CMS) now requires Medicare Advantage plans to notify participants whenever they significantly reduce the size of their provider network, the law allows the plan providers themselves to define “significant.”
  • Limited flexibility: Medicare Advantage plans allow a 6-month period during which new participants can drop the plan and go back to traditional Medicare. After the 6-month period, participants can only switch back one time a year during Medicare’s open enrollment period from October 15 to December 7.
  • Additional premium: Some Medicare Advantage plans require participants to pay a separate monthly premium in addition to their Medicare premium.

How Do You Decide?

If you are eligible for Medicare or already on traditional Medicare and considering the Medicare Advantage option, you should carefully review the pros and cons of the traditional Medicare and the various Medicare Advantage plans available to you.

Chances are there are several Medicare Advantage plans offered in your area, each with somewhat different costs, benefits, and quality. Most Medicare Advantage plan providers have websites with full information and contact phone number. Many even allow you to enroll online.

To find Medicare Advantage plans available in your area, you can use the CMS’s online Medicare Plan Finder.

Medicare also other offers resources to help you decide, such as CMS’ handbook Medicare & You, as well as a list of state health insurance counselors you can contact to learn more. You can also call Medicare directly at 1-800-MEDICARE (1-800-633-4227).

If you do decide to enroll in a Medicare Advantage plan:

  • Visit the plan’s website to see if you can enroll online; or
  • Fill out the plan’s paper enrollment form. Contact the plan to get an enrollment form, fill it out, and return it to the plan. All plans must offer this option.

    When you join a Medicare Advantage Plan, you'll have to give your Medicare number and the date your Part A and/or Part B coverage began. This information is on your Medicare card. If you have lost your Medicare card, you can request a replacement.

    Beware of Identity Theft

    Remember that your Medicare number contains your Social Security Number, making it a rich prize for identity thieves. So, never give it or any other personal information to Medicare plan callers.

    Unless you specifically request to be contacted by phone, Medicare Advantage plans are not allowed to call you. Also, Medicare Advantage plans should never ask for your financial information, including credit card or bank account numbers, over the phone.

    If a Medicare Advantage plan ever calls you without your permission or comes to your home without being invited, call 1-800-MEDICARE (1-800-633-4227) to report the plan to CMS.