What Are the Types of Medicare Advantage Plans?

Medicare Advantage plans, also called Medicare Part C, are most commonly available in the following types:

• Health Maintenance Organization (HMO)
• Preferred Provider Organization (PPO)
• Private Fee-for-Service (PFFS)
• Special Needs Plans (SNP)

These plans are offered by private insurance companies and act as an alternative to Original Medicare. Each type offers different coverages and networks, particularly when it comes to network size, coverage for out-of-network care, and primary care physician requirements. Learn more about the nuances of each type of Medicare Advantage plan to best decide which would work for your healthcare needs.

What Is Medicare Advantage?

Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare. It is offered by Medicare-approved private insurance companies, and must provide the same coverage as Original Medicare’s Part A and Part B benefits at minimum. Many Medicare Advantage plans also include additional benefits, such as prescription drug coverage, dental, vision, and hearing care. For example, these plans generally bundle in Medicare Part D, or coverage for prescription drugs.

Eligibility Criteria for Medicare Advantage

The criteria to be eligible for Medicare Advantage are:

• Be age 65 or older, or
• Under 65 years old with certain disabilities, such as End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gherig’s disease
• Be a U.S. citizen or legal resident living in the service area of a Medicare Advantage insurer accepting new customers
• Be enrolled in Original Medicare, both Parts A and B
• Not be enrolled in Medigap by the time you join a Medicare Advantage plan

Generally, those who are eligible for Original Medicare are typically also eligible for Medicare Advantage.

Common Types of Medicare Advantage Plans

	HMO	PPO	SNP
Average premium	Low	High	Low
Average network size	Moderate	Large	Varies by plan
Designated primary care physician	Required	Not required	Varies by plan
Referrals to seek specialist care	Required	Not required	Varies by plan
Out-of-network care coverage	Not covered	Yes, partially covered	Varies by plan
Savings component	No	No	No

Medicare Advantage is not just one singular plan. You have multiple plan options, each of which provides slightly differing coverages and benefits depending on its type.

Health Maintenance Organization (HMO) Plans

	HMO
Average premium	Low
Average network size	Moderate
Designated primary care physician	Required
Referrals to seek specialist care	Required
Out-of-network care coverage	Not covered
Savings component	No

Health Maintenance Organization (HMO) plans are one of the most popular types of Medicare Advantage plans; 62% of all Medicare Advantage plans in 2021 were HMOs. HMOs are typically one of the lower cost types of Medicare advantage plans because policyholders can only seek the services of healthcare providers and hospitals within the plan’s network. A network is a group of doctors and medical facilities that work with an insurer to provide services for plan recipients at a discounted rate.

Benefits of HMOs

• Moderate network size: HMOs have moderately sized networks, meaning you are likely to find general practitioners, specialists, pharmacies, and facilities within network. However, HMO networks are generally not as large as PPO networks. As HMOs are strict about providing in-network care, if your healthcare provider leaves your plan’s network, you may be notified to choose another doctor.
• Care coordination: Most HMO plans require a designated primary care physician, who will help coordinate all subsequent care. This can make keeping your care history and needs much more streamlined.
• Low costs: HMOs are one of the most affordable plan types. Though HMOs are more restrictive than PPOs in care coverage, that also means they tend to have lower premiums, copays, and out-of-pocket maximums.

Drawbacks of HMOs

• No coverage for out-of-network care: Out-of-network care is not covered, though there may be exceptions for emergencies, urgent care, and dialysis. For example, if you require immediate medical assistance and the nearest hospital is out of your HMO plan’s network, your HMO may cover part or all of your stay there, though you may need to complete your recovery in a facility within network.
• Referrals required: Medical procedures that require specialists typically require a referral, though some services, like annual mammograms, are exempt from this rule. This can make seeking specialist care take longer, as you must first see your primary care physician.

Preferred Provider Organization (PPO) Plans

	PPO
Average premium	High
Average network size	Large
Designated primary care physician	Not required
Referrals to seek specialist care	Not required
Out-of-network care coverage	Yes, partially covered
Savings component	No

Like an HMO, Medicare Advantage PPO plans have a network of doctors, specialists, hospitals, and other providers. Unlike an HMO, though, PPO plans allow for more flexibility in seeking care from your preferred providers even if they are out of your plan’s network. This can make scheduling appointments easier, as you do not have to necessarily adhere to one specific healthcare provider’s availability. However, the increased range of options means that PPO plans are typically more expensive than HMOs.

Benefits of PPOs

• Large networks: PPOs have large networks, meaning you are likely to find general practitioners, specialists, pharmacies, and facilities within network. In fact, PPOs tend to have the largest networks out of all the Medicare Advantage types. This can make seeking in-network care easier.
• Coverage for out-of-network care: Out-of-network care is covered, so if your preferred specialist is not within your plan’s network, you can still seek their care and be covered, though at a higher cost than in-network care. This typically means a higher copay at the time of the appointment and a smaller coinsurance share from the insurer.
• No primary care physician needed: PPO plans do not require policyholders to have a primary care physician, so you do not have to go through a single doctor for all your health needs.
• No referrals needed: You generally do not need a referral or pre-approval to seek specialist treatment, such as if you would like to see a dermatologist. However, some plans may require a referral for specific types of specialists, such as cardiologists.

Drawbacks of PPOs

• Higher costs: PPOs have higher out-of-pocket costs, such as higher premiums, copays, deductibles, and out-of-pocket maximums. This can make these plan types less affordable, especially for those who must seek care often.
• No care coordination: There is less care coordination with PPOs, as it is up to the patient to keep track of their own health care history and needs if they seek care from multiple doctors.

Special Needs Plans (SNPs)

	SNP
Average premium	Low
Average network size	Varies by plan
Designated primary care physician	Varies by plan
Referrals to seek specialist care	Varies by plan
Out-of-network care coverage	Varies by plan
Savings component	No

Special Needs Plans (SNPs) are a type of Medicare Advantage plan that are offered as an HMO or PPO. SNPs provide coverage for people with specific health needs, conditions, or diseases. They can also cover people with limited incomes. Eligibility for SNPs depend on the specific SNP type:

• Chronic Condition Special Needs Plans (C-SNPs): These plans are designed for beneficiaries with severe or disabling chronic conditions. C-SNPs offer tailored benefits, provider choices, and drug formularies to address the specific needs of chronic conditions such as diabetes, chronic heart failure, and end-stage renal disease (ESRD).
• Institutional Special Needs Plans (I-SNPs): These plans are designed for beneficiaries who require long-term care in institutional settings, such as nursing homes, or those who need a comparable level of care at home. I-SNPs focus on care coordination and often include a team of healthcare professionals working together to manage beneficiaries’ complex medical needs and improve their quality of life.
• Dual-eligible Special Needs Plans (D-SNPs): These plans serve beneficiaries who are eligible for both Medicare and Medicaid, known as being dual-eligible. These plans coordinate Medicare and Medicaid benefits to provide comprehensive coverage, and often include additional services not typically covered by Medicare, such as dental, vision, and hearing care. D-SNPs may also offer care coordination and case management services to help beneficiaries navigate the healthcare system and access necessary services.

Benefits of SNPs

• Care coordination: SNPs typically require a primary care doctor, though some require a care coordinator instead, which is usually a specialist in the diseases that impacts the policyholder. This helps make care coordination easier. For example, an SNP for people with diabetes could use a care coordinator to help patients monitor their diet and blood sugar and keep track of prescriptions and appointments.
• Focused benefits: SNPs focus on specific conditions and needs, which provide customized benefits and services designed to meet the needs of the target population, ensuring that beneficiaries receive appropriate care for their specific circumstances.
• Part D coverage: Most SNPs include Medicare Part D prescription drug coverage, helping beneficiaries manage medication costs.
• Lower costs: SNPs tend to be more affordable than PPOs, as some plans may offer lower out-of-pocket costs or additional services not covered by Original Medicare or other Medicare Advantage plans.

Drawbacks of SNPs

• Eligibility required: You must meet eligibility criteria for SNPs, and must maintain it. You may lose eligibility if you no longer meet the criteria for your SNP, in which case you may have to switch to another option. For example, if you are no longer eligible for Medicaid because you did not reapply or because your income changed, you would also lose eligibility for a D-SNP.
• Limited coverage for out-of-network care: SNPs have limited out-of-network coverage, though beneficiaries may see any doctor for emergency care, out-of-area dialysis, or out-of-area urgent care.

Less Common Types of Medicare Advantage Plans

	HMO-POS	MSA	PFFS
Average premium	Low	None	High
Average network size	Large	Nationwide	Large
Designated primary care physician	Required	Not required	Not Required
Referrals to seek specialist care	Varies by plan	Not required	Not Required
Out-of-network care coverage	Yes, for certain services	Yes, if the plan has a network	Yes
Savings component	No	Yes	No

HMOs, PPOs, and SNPs are not the only types of Medicare Advantage plans available. The following are much less common, but still available from select insurers.

HMO Point of Service (HMO-POS) Plans

	HMO-POS
Average premium	Low
Average network size	Large
Designated primary care physician	Required
Referrals to seek specialist care	Varies by plan
Out-of-network care coverage	Yes, for certain services
Savings component	No

HMO-POS plans are like a hybrid of HMO and PPO plans and exist in the space between those two plan types. This type of plan allows more flexibility in seeking out-of-network providers, similar to a PPO plan, though this may come with higher out-of-pocket costs. They also require a primary care physician, like an HMO.

Benefits of HMO-POS Plans

• Moderate network size: Many HMO-POS plans have larger provider networks than HMOs, and can be convenient for those who travel often and might need to see an out-of-network provider in an unfamiliar place.
• Care coordination: Like HMO plans, HMO-POS plans utilize a primary care physician to coordinate care and manage referrals to specialists, helping beneficiaries receive integrated and efficient care.
• Coverage for out-of-network care: While not as flexible as PPO plans, HMO-POS plans do offer beneficiaries the option to seek care from out-of-network providers for certain services, providing more choices than a traditional HMO plan.

Drawbacks of HMO-POS Plans

• Referrals required: Similar to HMO plans, HMO-POS plans usually require referrals from their primary care physician to see specialists. This can slow down the process in seeking specialist care.
• Smaller network than PPO: Although HMO-POS plans offer some out-of-network flexibility, the primary focus remains on in-network providers. Beneficiaries may still face limitations in provider choice compared to PPO plans.

Medicare Medical Savings Account (MSA) Plans

	MSA
Average premium	None
Average network size	Nationwide
Designated primary care physician	Not required
Referrals to seek specialist care	Not required
Out-of-network care coverage	Yes, if the plan has a network
Savings component	Yes

Medicare Medical Savings Account (MSA) plans combine a high-deductible insurance plan and a medical savings account, and they function similarly to health savings account (HSA) plans outside of Medicare. MSAs feature a high-deductible Medicare Advantage plan that only starts to cover your medical expenses after you meet the deductible. In addition, it deposits part of your monthly premium into a savings account. You can use this money to pay for any treatments or tests covered by Medicare before you meet your deductible. You can also use the money for health expenses that are not covered by Medicare.

Benefits of MSA Plans

• Lower costs (if you do not need regular care): MSA plans are paired with a high-deductible health plan (HDHP), which can result in lower monthly premiums compared to other Medicare Advantage plans.
• Tax-free savings: MSA plans come with a tax-free medical savings account, allowing beneficiaries to save and invest money for healthcare expenses. These funds can be used to cover qualified medical expenses without incurring taxes.
• Unused funds roll over: Unlike some other types of health savings accounts, unused funds in an MSA plan roll over from year to year, allowing beneficiaries to accumulate savings for future healthcare costs.
• Flexibility in expenses: MSA plans provide beneficiaries with the flexibility to use their account funds for a wide range of qualified medical expenses, including services not covered by Medicare.

Drawbacks of MSA Plans

• High deductible: MSA plans have a high deductible, which must be met before the plan begins to cover your healthcare costs. This can result in significant out-of-pocket expenses for those who require substantial medical care.
• Limited availability: MSA plans are not available in all areas, and not all insurance companies offer this type of plan.
• No Part D coverage: Medicare Advantage MSA plans do not include prescription drug coverage (Part D). This means if you need prescription coverage, you must enroll in a separate Part D plan.
• Complex fund management: MSA plans require beneficiaries to actively manage their medical savings accounts and track qualified medical expenses.
• No additional deposits: You cannot deposit any additional money into the account. This means if the account runs out of money before the deductible is met, you would have to pay out of pocket for services. However, healthcare providers still cannot charge more than the amount approved by Medicare.

Private Fee-for-Service (PFFS) Plans

	PFFS
Average premium	High
Average network size	Large
Designated primary care physician	Not Required
Referrals to seek specialist care	Not Required
Out-of-network care coverage	Yes
Savings component	No

A Private Fee-for-Service (PFFS) plan allows policyholders to go to any Medicare-approved doctor, hospital, or health care provider that agrees to treat them — though some PFFS plans also have provider networks, restricting out-of-network care. These plans differ from other Medicare Advantage plan types because the insurance company sets the price that it will pay for each type of service, which informs the specific fee beneficiaries pay per service.

In non-emergencies, however, doctors can determine whether or not to accept your PFFS plan’s terms and provide healthcare services. However, emergency care is always covered in PFFS plans, meaning all providers must agree to treat you even if you are out of network if you are suffering from a life threatening injury or condition.

Benefits of PFFS Plans

• Flexibility in choosing providers: PFFS plans allow beneficiaries to see any healthcare provider that accepts the plan’s terms and conditions. This means beneficiaries have more options when choosing healthcare providers compared to plans with restricted networks. This can be especially beneficial for those living in areas where HMO and PPO networks are limited.
• No referrals: PFFS plans do not require referrals from a primary care physician to see specialists.
• Potential for lower costs: Private insurance companies set the payment rates per service, so some PFFS plans may offer lower out-of-pocket costs for certain services compared to Original Medicare or other Medicare Advantage plans.

Drawbacks of PFFS Plans

• Higher premiums: PFFS plans may have higher monthly premiums compared to other Medicare Advantage plans, such as HMO and PPO plans. Be sure to carefully consider the trade-offs between premium costs and provider flexibility when you evaluate your plan options.
• No guarantee of acceptance: Not all healthcare providers accept PFFS plans, and providers can decide on a case-by-case basis whether to accept the plan’s terms and conditions. This means you may face higher out-of-pocket costs if your preferred doctors do not accept the PFFS plan.

Benefits of Medicare Advantage Plans

For those with greater health care needs and preferred physicians within a plan’s network, a Medicare Advantage plan could serve them better. Benefits include:

• More benefits: All Medicare Advantage plans must include all the benefits of Medicare Parts A and B at minimum, and many offer more benefits that are not covered by Original Medicare. For example, many plans include some coverage for vision, hearing, dental care, whereas Original Medicare does not. Some plans may also offer wellness program coverage, such as gym memberships.
• Bundled Part D drug coverage: Many Medicare Advantage plans bundle Part D prescription drug coverage, making it easier to streamline your health needs. This coverage can make your prescription medicines more affordable.
• Limits on annual health spending: Unlike Original Medicare, all Medicare Advantage plans feature a maximum out-of-pocket limit. Once that limit is reached, all further covered healthcare expenses are paid for by the Medicare Advantage plan. This limit is $8,850 for 2024, though insurance companies may set a lower limit.
• Potential for lower out-of-pocket costs: Medicare Advantage plans may offer different cost-sharing structures than Original Medicare, including lower deductibles, copays, and/or a more favorable coinsurance rate.

Choosing the Right Medicare Advantage Plan For You

When deciding on the type of Medicare Advantage plan to enroll in, consider the following:

• What healthcare services do you need the most? If you have recurring needs or medications, it is important to ensure your Medicare Advantage plan covers them. This is especially important if you have chronic conditions or special needs that could become costly if not covered by your plan.
• What networks are your preferred healthcare providers in? If there are doctors you feel comfortable with and want to stay with, make sure they are within your chosen Medicare Advantage plan’s network for full coverage. Even if your plan provides out-of-network coverage, it is always more cost effective to stay within network for care.
• What is your general health? This is important to note, as it impacts what features to prioritize. For example, if you rarely need to see a doctor but do have several prescriptions, you may seek a plan that offers drug coverage but would not need to factor in whether it had the widest network of healthcare practitioners, such as an HMO plan with Part D coverage.
• What can you comfortably afford to pay for premiums, copays, and deductibles? Your budget is important to consider, so be sure to evaluate each plan’s out-of-pocket costs when making your selection.

Once you are ready to compare your final options, look at the insurance company’s overall quality scores and plan ratings. This will give you an idea of what to expect. You may also seek help from unbiased sources, such as a trusted Medicare agent, to help you select a plan that would best suit your needs.

All In All

Understanding the different types of Medicare Advantage plans available allows beneficiaries to make informed decisions about their healthcare coverage. Medicare Advantage generally offers benefits beyond what Original Medicare covers, such as prescription drug coverage, vision, hearing, and dental benefits, and even fitness programs.

However, each Medicare Advantage type has its own network of providers, rules, and costs. Knowing the differences between these plans can help you choose the best plan for your individual healthcare needs and budget.