Medicare Advantage plans are health insurance plans offered by private insurance companies that act as an alternative to Original Medicare. Also called Medicare Part C, these plans are most commonly available as Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Private Fee-for-Service (PFFS), or Special Needs Plans (SNP). Each offers slightly different coverages and networks. 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?
Private, Medicare-approved companies provide Medicare Advantage plans, which must follow set guidelines, such as offering at minimum the same amount of coverage as Original Medicare. As such, all Medicare Advantage plans include Medicare Parts A and B. They usually include Medicare Part D or coverage for prescription drugs as well, and may offer other additional coverages that go beyond Original Medicare, such as dental and vision benefits.
Those who are eligible for Original Medicare are typically also eligible for Medicare Advantage. In addition, you must be a U.S. citizen or legal resident living in the service area of a private insurance company that’s accepting new customers.
The Medicare Open Enrollment Period is from October 15 to December 7 every year, during which time you can enroll in a new Medicare Advantage plan or switch plans. After you become eligible for Medicare or Medicare Advantage, your individual Marketplace plan may not renew your existing coverage. Enrolling in Medicare — whether Original Medicare or Medicare Advantage — as soon as possible can help you avoid a gap in your coverage.
Common Types of Medicare Advantage Plans
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.
|Out of network coverage||No, except with POS option||Some coverage||Sometimes|
|Mandatory primary care physician||Yes||No||Yes, in most cases|
|Referrals for specialist care||Yes||No||Yes, in most cases|
Health Maintenance Organization (HMO) Plans
HMOs 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.
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 in a life threatening situation 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.
Medical procedures that require specialists typically require a referral from your primary care physician, though some services, like annual mammograms, are exempt from this rule. 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.
Preferred Provider Organization (PPO) Plans
Like an HMO, PPO plans have a network of doctors, specialists, hospitals, and other providers. Unlike an HMO, though, PPO plans usually allow you to see out-of-network providers for a higher out-of-pocket cost. This is typically seen as a higher copay at the time of the appointment and potentially a coinsurance setup for the service itself where your PPO plan will cover a percentage of the service and the rest is paid out of pocket. As this can become costly, it is still preferable to stay within network.
With PPO plans, you do not need a referral or pre-approval from your primary care physician to seek specialist treatment, such as if you would like to see a dermatologist. As PPO plans do not require policyholders to have a primary care physician, you may schedule an appointment with a specialist on your own without a doctor’s referral.
This increased range of options, however, means that PPO plans are typically more expensive than HMOs.
Special Needs Plans (SNPs)
SNPs, while a type of Medicare Advantage plan, can be offered as an HMO or PPO. However, these types of plans provide coverage for people with specific health care needs, conditions, or diseases. They can also cover people with limited incomes.
Different SNPs serve specific groups of people, offering benefits and covered drugs tailored to meet the special needs of policyholders. For example, an SNP for people with severe conditions like cancer or heart failure could cover more days in the hospital than Original Medicare. Illnesses that could make someone eligible for an SNP are called chronic condition SNPs or C-SNPs. They include:
- Chronic alcohol or other dependence
- Autoimmune disorders
- Cardiovascular disorders
- Chronic heart failure
- Chronic mental health conditions
- End-stage liver disease
- End-stage renal disease requiring dialysis
- Severe hematological disorders
- Chronic lung disorders
- Neurological disorders
SNPs usually require people to get care from providers in the plan’s network, but patients can see any doctor for emergency care, out-of-area dialysis, or out-of-area urgent care.
Much of the time, SNPs require a primary care doctor, though some require a care coordinator instead, which is usually a specialist in the diseases that impacts the policyholder. 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.
Institutional SNPs, or I-SNPs, are available to those living in nursing homes or receiving home nursing care. These plans are also called dual-eligible SNPs or D-SNPs because beneficiaries are typically eligible for both Medicare and Medicaid.
Less Common Types of Medicare Advantage Plans
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.
|Out of network coverage||Yes||Yes||Limited|
|Mandatory primary care physician||Yes||No||No|
|Referrals for specialist care||Yes||No||No|
HMO Point of Service (HMOPOS) Plans
HMOPOS plans are like a hybrid of HMO and PPO plans. 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.
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. In addition, those who are away from home for long periods can get a primary care provider in their temporary location until they return home.
Medicare Medical Savings Account (MSA) Plans
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 aren’t covered by Medicare.
However, 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. After you reach your deductible, your plan will kick in and cover everything that is covered by Original Medicare.
Any money left in your account at the end of the year stays and accrues, and you can use it for future health care expenses. However, if you use the money in the account for anything other than medical expenses, you may need to pay taxes on it.
Private Fee-for-Service (PFFS) Plans
A general PFFS plan allows policyholders to go to any Medicare-approved doctor, hospital, or health care provider that agrees to treat them. However, some PFFS plans have provider networks, restricting out-of-network care. Seeking out-of-network care in these types of PFFS plans could result in higher costs out of pocket.
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. In non-emergencies, however, doctors can determine whether or not to accept your PFFS plan’s terms and provide healthcare services.
Another Option: Medicare Supplement Plans
Medicare Supplement, also know as Medigap, plans provide additional coverage for people with Original Medicare. These plans could serve as an alternative to Medicare Advantage. However, Medigap can only work with Original Medicare. Those with Medicare Advantage plans cannot purchase a Medigap plan.
If you join a Medicare Advantage plan and decide to go back to Original Medicare within the first year, you can still get a Medigap policy and a Medicare drug plan.
Every insurance company in the same area sells the same Medigap policies. The only potential difference is cost. In many states, these standardized policies are identified by the letters A, B, C, D, F, G, K, L, M, and N. They mostly cover copayments and deductibles, and individuals need separate plans for their spouses. Medigap plans do not have networks. Services can be provided by any healthcare practitioner who accepts Medicare.
Medicare Advantage vs. Original Medicare
Medicare Advantage offers more coverages and benefits than Original Medicare, oftentimes including prescription drug coverage, though individual plans may vary. For those with greater health care needs and preferred physicians within a plan’s network, a Medicare Advantage plan could serve them better. However, Original Medicare is more widely accepted and when paired with a Medigap plan, can offer additional coverage. Those who do not necessarily need to see specialists or get prescriptions filled may be better served by an Original Medicare plan.
What Medicare Advantage Doesn’t Cover
Most Medicare Advantage plans do not cover:
- Vision health
- Dental procedures
- Gym memberships or general fitness costs
- Out-of-network doctor visits that aren’t emergencies
Even within your network, you may need to make copays and meet deductibles for hospital stays, X-rays, emergency room visits, lab tests, and other procedures. Standalone insurance plans are a good option for those who need routine vision health procedures or dental procedures. These are plans that only provide dental or vision coverage, including basic annual examinations.
What to Consider For Your Medicare Advantage Plan
When deciding on the type of Medicare Advantage plan to enroll in, consider the following:
- What healthcare services do you need the most?
- What networks are your preferred healthcare providers in?
- What is your general health?
- What can you comfortably afford to pay for premiums, copays, and deductibles?
Your general health and most needed healthcare services are important factors in picking a plan that would best suit you. 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.
However, if you regularly go to the doctor and see specialists for medical procedures, a plan with a wider network as well as some out-of-network coverage like a PPO would likely be more suitable to ensure you have the best chance of finding care. Those who do a great deal of traveling may also want to consider a PPO, as it offers more out-of-network benefits, which could come in handy should you need to see a doctor while away from home.