Pros and Cons of Medicare Advantage

A Medicare Advantage plan, also known as Medicare Part C, is an alternative way to get the same coverage offered by Medicare Parts A and B. Medicare recipients can choose to enroll in Original Medicare (Part A and Part B) or a Medicare Advantage plan.

The key features of Medicare Advantage plans:

• Administered by private insurance companies
• May include Medicare Part D prescription drug coverage
• May include vision, dental, hearing, and other benefits
• May have specific provider networks

The key features of Original Medicare:

• Administered by the federal government
• Generally limited to hospital and medical services
• Does not include Part D, vision, dental, or hearing
• Accepted nationwide without network restrictions

The following guide explores the pros and cons of Medicare Advantage plans vs. Original Medicare. This in-depth summary provides the information you need to make an informed decision.

Medicare Advantage vs. Other Medicare Options At a Glance

Feature	Medicare Advantage	Original Medicare	Medicare Supplement (Medigap)
General coverage	Covers all medically necessary services of Original Medicare, and may include more, such as dental, vision, and hearing	Covers most medically necessary services	Can fill some coverage gaps in Original Medicare plans
Part A: hospital coverage	Yes	Yes	Supplements Part A benefits
Part B: medical coverage	Yes	Yes	Supplements Part B benefits
Part D: drug coverage	Dependent on insurer and plan	No	No
Out-of-network coverage	Dependent on plan	No	No
Premiums	One premium	Part A is commonly premium-free; separate premium for Part B	Separate premium in addition to Original Medicare
Deductibles	Dependent on insurer and plan	Separate deductible for Parts A and B	Helps pay Original Medicare deductibles; excludes Part B deductibles for those who became eligible for Medicare after January 1, 2020
Copays	Dependent on insurer and plan	None	None
Coinsurance	Dependent on insurer and plan	20%	Helps pay Original Medicare coinsurance
Out-of-pocket costs	Annual limit, after which you don’t pay	No annual limit on costs	Helps pay Original Medicare out-of-pocket costs

Overview of Medicare Advantage and How It Works

Medicare Advantage plans, offered by Medicare-approved private insurers, wrap Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) into one plan. Medicare Advantage plans may also include Medicare Part D (prescription drug coverage) and other health benefits. In addition, a Part C plan may include coverage for vision, dental, and hearing, as well as wellness benefits like gym memberships, coverage for over-the-counter drugs, transportation to doctor’s visits, and more.

Generally, if you are eligible for Original Medicare, you’re also eligible for a Medicare Advantage plan. To sign up for Medicare Advantage, you must enroll in Medicare Part A and B and live in the plan’s service area. You can enroll in a Medicare Advantage plan when you first qualify for Medicare or during specific annual enrollment periods.

Common Types of Medicare Advantage Plans

There are several different types of Medicare Advantage plans, each with different cost structures and network requirements:

• Health Maintenance Organization (HMO): This requires covered individuals to use a network of doctors, hospitals, and other healthcare providers. You may need a referral from a primary care provider to see a specialist.
• Preferred Provider Organization (PPO): This offers a network of providers. Covered individuals can see any doctor or specialist they prefer, but going out of network may cost more. Referrals are typically not required to see a specialist.
• Private Fee-for-Service (PFFS): This allows patients to visit any doctor or hospital as long as the provider accepts the plan’s payment terms.
• Special Needs Plans (SNP): This offers benefits tailored to beneficiaries with specific diseases or characteristics. Eligibility is limited to those who meet the plan’s requirements. SNPs typically require using in-network providers, except in an emergency.

Costs of Medicare Advantage  

There are several key costs associated with participating in a Medicare Advantage plan:

• Premiums: Plan participants are required to pay the monthly Medicare Part B premium ($174.70 in 2024). Some Medicare Advantage plans charge an additional premium, while others are zero-premium plans, making them available at no extra cost. 
• Copays: These are fixed amounts you pay for covered healthcare services. For example, a plan may require you to pay $20 per doctor’s visit.
• Coinsurance: This is the percentage of the Medicare-approved amount you must pay out of pocket after meeting your deductible.  
• Deductibles: This is the amount you must pay before the plan starts to cover costs. The Medicare Part B deductible is $240 per year in 2024, while the Part A deductible is $1,632 per benefit period.
• Out-of-pocket maximums: The maximum you’ll pay for covered services in a year. In 2024, the out-of-pocket (OOP) maximums for Medicare Advantage plans cannot exceed $8,850 for in-network services. Some plans have lower out-of-pocket maximums. 
• Out-of-network fees: Extra costs may arise if you use doctors or services outside the plan’s network. This can vary based on the plan.

Advantages and Drawbacks of Medicare Advantage

Pros of Medicare Advantage Plans  

When weighing the pros and cons of Medicare Advantage plans, there are significant benefits to consider, such as potential access to a more robust suite of services and additional perks. Here’s a look at some of the reasons you might choose a Medicare Part C plan. 

• Greater benefits coverage: Medicare Advantage typically goes beyond Original Medicare by offering coverage for vision, hearing, and dental services, as well as wellness programs. The expanded coverage can lead to cost savings since covered individuals do not have to purchase additional plans or pay out of pocket.
• Bundling Plan D prescription coverage: Many Medicare Advantage Plans integrate prescription drug coverage, offered separately by Original Medicare as Medicare Part D. This bundled approach simplifies management and may provide more streamlined care coordination between doctors and pharmacists without the need to pay a separate premium.
• Potential cost savings: While Medicare Advantage Plans may have a monthly premium, including Medicare Part D and additional services could lead to overall savings. Medicare Advantage Plans also have an out-of-pocket maximum that caps annual expenses. Since Original Medicare does not currently have an OOP maximum, this annual spending limit is typically considered one of the critical benefits of Medicare Advantage Plans over Original Medicare.
• Special Needs Plans: SNPs, or Special Needs Plans, are a special type of Medicare Advantage plan designed for people with specific conditions or medical needs. SNPs tailor benefits to meet the needs of the groups they cover, offering specialized care that may not be available under Original Medicare.
• Streamlined billing and paperwork: Having one integrated plan may lead to simpler, consolidated billing. Instead of sorting through multiple statements from Original Medicare, Medigap, and Part D, you typically receive a single statement detailing your health expenses. This can make it easier to track expenses and manage payments.
• Additional perks: Many Medicare Advantage Plans offer unique perks like fitness programs, gym memberships, allowances for over-the-counter drugs, and transportation to medical appointments. These extras can enhance overall well-being and simplify access to health services.

Cons of Medicare Advantage Plans

Before choosing a Medicare Advantage Plan, it’s essential to consider the potential drawbacks and how they may impact your medical expenses, healthcare options, and quality of life. Following are a few potential cons of Medicare Advantage Plans. 

• Smaller network of doctors: Original Medicare is generally accepted nationwide by any provider that accepts Medicare. In contrast, many Medicare Advantage Plans require participants to use a specific network of doctors and hospitals. This may mean you have limited options when it comes to choosing your healthcare providers. Choosing a provider outside your plan’s network can result in higher costs or no coverage.
• Potential plan rule complexity: Since private companies offer Medicare Advantage Plans, each has its own set of rules. One plan might require a referral to see a specialist, while another might not. Some plans may also have specific protocols for getting certain procedures approved. These variables can sometimes make it challenging to comply with your plan’s rules.
• Variable costs: While Original Medicare has a consistent cost structure, Medicare Advantage Plans can vary greatly in their cost-sharing requirements. This includes differences in premiums, deductibles, and copays. Some plans might offer a zero-dollar monthly premium, while others could have higher monthly charges. This can make it more challenging to anticipate your healthcare costs.
• Variable coverages: Just as costs can vary, the coverages offered by Medicare Advantage Plans can differ, too. While Medicare Advantage Plans must offer the same coverage as Original Medicare at a minimum, additional benefits — like vision, dental, or gym memberships — can vary from one plan to the next. These variations complicate plan selection.
• Annual changes: Each year, Medicare Advantage Plans can make changes to their coverage, cost, and network of providers. This means the benefits or doctors you have access to one year might not be available the next, requiring you to re-evaluate your plan and possibly switch plans to continue accessing the care or providers you prefer.
• Incompatible with Medigap: Medicare Supplement Insurance, also known as Medigap, can help cover out-of-pocket costs under Original Medicare. However, you cannot use Medigap in conjunction with Medicare Advantage. If you currently have Medigap and want to join a Medicare Advantage Plan, you must drop your Medigap coverage.  

Who Should Consider Medicare Advantage?

Medicare Part C plans can be beneficial for certain types of individuals, depending on their financial situation and healthcare needs. There are a few scenarios where a Medicare Advantage plan may be particularly fitting, including:

• Individuals seeking comprehensive coverage: With many plans bundling hospital care, routine care, prescription drug coverage, and coverage for dental, vision, and hearing, Medicare Advantage provides an all-inclusive option.
• Budget-conscious enrollees: People on a tight budget might benefit from Medicare Advantage plans, especially those with low or zero-dollar monthly premiums. The added benefit of an out-of-pocket maximum can also protect against unforeseen medical expenses.
• Those needing specialized care: Special Needs Plans (SNPs) under Medicare Advantage cater to individuals with specific diseases or characteristics. If you have a chronic condition like diabetes or heart failure, you may benefit from an SNP tailored to your needs.
• Preference for modern perks: Many plans offer contemporary benefits like gym memberships, telehealth services, or over-the-counter allowances. If these extras appeal to you, Medicare Advantage might be worth considering.

How to Enroll in Medicare Advantage

Once you’ve decided you’re interested in a Medicare Advantage plan, you can compare your options and enroll in a few simple steps:

1. Research and compare plans: Begin by comparing available Medicare Advantage plans in your area. You can do this by visiting Medicare.gov/plan-compare or consulting with local insurance brokers. 
2. Check eligibility: Make sure you’re enrolled in Medicare Part A and Part B, as this is a requirement for enrolling in a Medicare Advantage plan.
3. Gather necessary information: Be prepared to provide your Medicare number and the date your Part A and Part B coverage started.
4. Enroll in your preferred plan: Once you’ve compared and selected a plan, visit the plan’s website to see if an online application is available. Alternatively, you can fill out a paper application or call the plan provider directly.
5. Confirm for approval: After you’ve submitted your application, wait for confirmation of your enrollment.

Enrollment Periods

There are specific time periods when eligible individuals can enroll in a Medicare Advantage plan. These include:

• Annual Enrollment Period (AEP): October 15 to December 7 every year. During this period, you can switch from Original Medicare to a Medicare Advantage plan, change from one Medicare Advantage plan to another, or drop a Medicare Advantage plan altogether.
• Open Enrollment Period for Medicare Advantage (OEP): January 1 to March 31. During OEP, individuals enrolled in a Medicare Advantage plan can switch to a different Medicare Advantage plan or revert to Original Medicare.
• Special Enrollment Periods: You can make changes to your Medicare Advantage and Part D coverage when specific life events happen, such as moving or losing current coverage. The exact timing and eligibility requirements vary based on the specific event.

What This Means for You

Understanding the Medicare Advantage pros and cons can help you make an informed decision about your healthcare coverage. Medicare Advantage offers comprehensive coverage, a streamlined experience, and potential cost savings. However, some individuals may prefer Original Medicare’s standardized coverage, predictable costs, and lack of network requirements.

As you weigh your options, you may consider consulting with a trusted advisor who can help provide clarity and guide you through the details of each plan. Remember that Medicare Advantage plans can change each year, and you can only change your plan selection during specific times. This makes it critical to review your annual plan updates carefully.