Learning Center > What Is Medicare Advantage And How Does It Work?

What Is Medicare Advantage And How Does It Work?

Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare. When you enroll in a Medicare Part C plan, your benefits are offered and administered by a private insurance company and these private insurance companies must comply with many rules and regulations set by the Medicare program. So whether you’re already in a Medicare Advantage plan, curious about them, or you’ve never heard of them, this in depth guide is for you.

Who Qualifies For Medicare Advantage?

To qualify for Medicare Advantage, you must be enrolled in Original Medicare Parts A and Medicare Part B. You also must continue to pay your Part B premium in order to keep your Medicare Advantage coverage.

There are no age restrictions for Medicare Advantage plans. If you’re enrolled in Part A and B before age 65 due to a disability or chronic condition, you’re still eligible for Medicare Advantage coverage.

Enrolling In Medicare Advantage For The First Time

If you’re turning 65, you can enroll in Medicare Advantage during your Initial Enrollment Period (IEP). Your IEP lasts for 7 months, which begins 3 months before your 65th birthday, includes that birthday month, and ends 3 months after you turn 65.

If you’re under 65, your first chance to enroll in Medicare Advantage starts:

  • After your 24th month of receiving Social Security disability benefits, or
  • At any age if you have Amyotrophic Lateral Sclerosis (ALS), also called Lou Gherig’s Disease, or if you have End-Stage Renal Disease (ESRD).

Changing Your Medicare Coverage During AEP

The Medicare Open Enrollment Period, also called the Medicare Annual Enrollment Period or Annual Election Period, is a good time to decide whether Medicare Advantage or Original Medicare is right for you.

Keep in mind that Medicare Advantage plan benefits can change annually. So if you have a MA plan, you should check to make sure the plan still meets your needs.

Here are the actions you can take during AEP:

  • Change from Original Medicare to a Medicare Advantage plan.
  • Change from one Medicare Advantage plan to another.
  • Disenroll from your Medicare Advantage plan and go back to Original Medicare.
  • Change from one prescription drug plan (Medicare Part D) to another.
  • Enroll in a prescription drug plan.
  • Cancel your prescription drug coverage.
  • If you enroll in, or switch your Medicare Advantage insurance during AEP, your new coverage will be effective on January 1st of the following year.

You may also be able to enroll in a Medicare Supplement plan if you drop your Medicare Advantage coverage during AEP.

Medicare Advantage Open Enrollment Period

If you’re enrolled in a Medicare Advantage plan, you have access to another enrollment period beyond AEP: The Medicare Advantage Open Enrollment Period (MA-OEP).

MA-OEP runs from January 1 to March 31 of each year. During the MA-OEP, you can:

  • Change from one Medicare Advantage plan to another.
  • Drop Medicare Advantage, and return to Original Medicare.
  • Add a Prescription Drug Plan if you return to Original Medicare.

It’s important to keep in mind that the MA-OEP is only for people who already have a Medicare Advantage plan. If you change plans during the MA-OEP, your new coverage will be effective on the first day of the month after you enroll.

How Do Medicare Advantage Plans Work?

Medicare Advantage health care plans work like the employer-sponsored health insurance plans you may be used to from your previous or current job.

Medicare Advantage plans provide comprehensive coverage, and you usually need to stay in-network to receive care. You’ll typically have some out-of-pocket expenses when you receive services and procedures under your Medicare Advantage policy. These costs typically come in the form of copayments or coinsurance that you’ll pay to your provider when you receive care.

An important point to remember is that all Medicare Advantage plans have an annual out-of-pocket (OOP) maximum that limits the total amount you can spend in any year. But you do not have an OOP with Original Medicare.

What is the Difference Between Original Medicare and Medicare Advantage Plans?

The primary difference between these programs is that Medicare Advantage is an alternative to Original Medicare. When you join a Medicare Part C plan, you no longer receive your Medicare benefits through Original Medicare.

Medicare Advantage plans are offered and administered by private insurance companies. But these private insurance companies must comply with many rules and regulations set by the Medicare program.

What Does Medicare Advantage Cover?

Medicare Advantage plans provide coverage that matches Original Medicare Parts A and B. Generally speaking, your Medicare Advantage plan will cover the same service or procedure as Original Medicare. But there is one exception to this rule, which we’ll cover below.

Medicare Advantage plans cover the following services.

Medicare Part A Services

Medicare Part A covers services that take place in healthcare facilities or institutions like:

  • Inpatient hospital stays
  • Skilled nursing services (not room and board)
  • Hospice care
  • In-home care

Note: Hospice care is usually not covered by Medicare Advantage plans. Instead, hospice care is covered under Original Medicare, even if you’re enrolled in a Medicare Advantage plan. However, a new test program in 2021 will explore Medicare Advantage plans providing hospice benefits.

Medicare Part B Services

Medicare Part B services and procedures are considered more routine and non-emergency in nature than Part A. Common Medicare Part B services include:

  • Doctor’s visits, including specialists
  • Physical and occupational therapy
  • Lab and diagnostic testing services like blood work and x-rays
  • Durable medical equipment
  • Mental health services
  • Ambulance services
  • Some cancer treatments, including chemotherapy

As mentioned, Medicare Advantage plans cover all of these services with the exception of hospice care.

Medicare Part D Services

Most Medicare Advantage plans offer prescription drug coverage. These plans are also known as Medicare Advantage Prescription Drug Plans (MAPDs), and they include Medicare Part D.

Medicare Advantage Extra Coverage

When considering Medicare Advantage pros and cons, it’s essential to take extra benefits that Medicare Advantage could offer to you. Many of these benefits are not provided through Original Medicare.

  • Fitness programs: SilverSneakers, gym memberships, and fitness trackers.
  • Vision care: Eye exams, contact lenses, and sometimes eyeglass frames.
  • Hearing care: Exams and often discounted hearing aids.
  • Dental coverage: Some plans have basic dental benefits built in, others offer dental coverage for an extra premium.
  • Transportation: Rides to and from medical appointments.
  • Meal Deliveries: For qualified people returning home from the hospital or skilled nursing facility
  • Telemedicine services and virtual healthcare.

Note: Medicare Part C plans have the ability to choose which, if any, extra benefits to offer. These insurance companies may also make changes to their Medicare benefits and offerings each year.

What Types Of Medicare Advantage Plans Are Available?

There are 6 types of Medicare Advantage plans, including:

  • Medicare Advantage HMOs (Health Maintenance Organizations)
  • Medicare Advantage PPOs (Preferred Provider Organizations)
  • Medicare Advantage PFFS (Private Fee-For-Service Plans)
  • Medicare Advantage SNP (Special Needs Plans)
  • Medicare Advantage HMO-POS (HMO Point-Of-Service Plans)
  • Medicare Medical Savings Plans (MSPs)

Who Is Medicare Advantage Good For?

You should consider enrolling in Medicare Advantage if:

  • You want to put a cap on your total out-of-pocket spending under Original Medicare.
  • You want prescription drug coverage without paying for a separate Part D drug plan.
  • You need some of the extra benefits (vision, hearing, private home aides) that come with many Medicare Part C plans.
  • You don’t want to pay for Medicare Supplement (Medigap) plans.
  • You don’t mind using a network of doctors and facilities.
  • You don’t mind needing referrals to see specialists.
  • You don’t mind paying small copays each time you see a doctor.

How Much Does Medicare Advantage Cost?

Medicare Advantage plans have several costs associated with them. Before we dive into each cost, it’s important to remember that you always have to pay your Part B premium in order to have Medicare Advantage.

Now, some Medicare Advantage plans offer a benefit that covers part, or all, of your Part B premium. But check the plan benefits closely to see if this is offered by a specific Medicare Advantage plan.

Beyond this Part B premium, you might face the following Medicare Advantage plan costs:

  • Monthly premium
  • Annual deductible
  • Copayment
  • Coinsurance

You might have a monthly premium for your Medicare Advantage plan, but many plans do not have them. If they do, these premiums tend to be low.

Some Medicare Part C plans have an annual deductible, but again, many do not. If your plan does have an annual deductible, this means you’ll have to pay a certain amount before the plan begins paying benefits. Note that there may be separate deductibles for drug coverage and medical benefits.

Beyond premiums and deductibles, the most common expenses you’ll have with Medicare Advantage plans are copayments and coinsurance. These two terms are referred to as “cost-sharing.” This is what you’ll pay out of pocket when you receive covered services. All the amounts you pay during the year count towards your annual out-of-pocket cap.

Examples Of Medicare Advantage Costs

Let’s look at 3 examples of how these Medicare Advantage costs work in a Medicare Advantage HMO plan.

(Note: These costs are not the actual costs for any specific plan, but rather, in the range of costs for plans that you may have access to.)

Scenario 1: Medicare Part B Services

You injure yourself shoveling snow on your property, and you go to the doctor for an examination.

  • You’ll pay a copay of $20 to see your primary care physician who then refers you to an orthopedic specialist.
  • Your orthopedic specialist charges you a $35 copay for the office visit and wants you to get x-rays.
  • You pay a $50 copay for the x-rays. Fortunately, nothing is broken or torn, so your specialist refers you to physical therapy.
  • You pay a copay of $40 for four physical therapy sessions.
  • Your total out-of-pocket spending for this injury is $265, spread out over a month-long period. All of these costs count towards your Medicare Advantage out-of-pocket maximum.

Scenario 2: Medicare Part A & B Services

You experience the symptoms of an irregular heartbeat, so you’re admitted to the hospital as an inpatient. You spend two nights in the hospital.

  • You pay a copay of $300 per day, which amounts to a total of $600.
  • After you’re released from the hospital, you continue to see a cardiologist, and you pay a $35 copay to see this specialist each time you visit.

Scenario 3: Cancer

You’re diagnosed with a treatable cancer, and you’re given chemotherapy.

  • The copay for this treatment is 20% of the Medicare-approved cost.
  • Although 20% amounts to more than $20,000, you hit your annual out-of-pocket maximum, so your costs are capped at $5,900 for the year.

Medicare Advantage Plans

Medicare Advantage plans can be a great way to manage your out-of-pocket spending while enjoying extra benefits we covered, if you qualify. And they can offer some compelling advantages over Original Medicare, depending on your healthcare needs.

So if you'd like to learn more about Medicare Advantage plans in your area, call 800-620-4519 to reach a licensed insurance agent who may be able to guide you to the right plan for your needs. You can also try our online Medicare plan comparison tool.

Get a Free Quote

Get a Free Quote

What you should read next

 a donut with a bite as a visual metaphor for the Medicare Donut Hole

If you choose to have Original Medicare with Medicare Part D added, you’ll receive prescription drug coverage through Medicare Part D. However, there can sometimes be a gap in the coverage of your prescriptions. This gap is known as the “donut hole,” and it’s a period of time where you pay out-of-pocket for your medications. However, you don’t pay the full amount, and once your out-of-pocket costs hit a specific level Medicare will resume coverage. What is the Medicare donut hole? This page will help you understand the donut hole and how to navigate it. How Does the Donut Hole Work in Medicare? The Medicare donut hole is a period of time where you’ve reached the limit of your Medicare Part D coverage, but haven’t hit the “catastrophic coverage” level where Medicare resumes assisting you with your prescription drug coverage. With Medicare Part D, the first portion of the year you’ll be paying toward your deductible. The deductible varies but can be up to $445 in 2021. Once you reach your deductible, your drug plan will kick in and you’ll pay your copayment or coinsurance for your medication. If the amount you and your plan pay toward prescription drugs reaches a certain level, you’ll enter the donut hole. Keep in mind that not everyone gets to the prescription donut hole — the gap was designed to encourage Medicare recipients to seek out lower-cost drugs and generics. The Medicare donut hole in 2021 starts at $4,130. When Does the Medicare Donut Hole End? The coverage gap ends when you reach the catastrophic coverage limit for the year. In 2021, this amount is $6,550. The good news is that the donut hole essentially closed in 2020, so that even when you hit the coverage gap, you won’t pay more than 25% of the cost of prescription drugs. However, around 95% of the cost will count toward moving you out of the hole. Do Medicare Advantage Plans Cover the Donut Hole? Medicare drug coverage — Part D — works the same in a Medicare Advantage plan as it does with a "Stand-alone” Part D plan. However, some Medicare Advantage plans offer more generous benefits during the donut hole than a stand-alone Part D plan does. Understanding your prescription drug coverage is essential so that you know if you’re likely to approach a coverage gap based on the price of your medication. If so, make sure you know what the costs will be during the donut hole period. Medicare Part D Plans Without the Donut Hole There are no Medicare Part D plans — including Medicare Advantage plans — without a coverage gap. However, some prescription plans have additional coverage options during the donut hole. For instance, your Medicare Advantage plan might include coverage for some generic medications even in the gap. Or, they may offer some drugs at a lower cost than 25%. It all depends on your plan and provider. The best way to avoid the donut hole is to work with your doctor to keep the cost of your medication low. If that’s not possible, the fact that you will pay no more than 25% of the full cost even in the coverage gap will help ease your mind. How Do I Get Out of the Medicare Donut Hole? If you’re in the Medicare Part D donut hole, the only way to get out is to spend enough to reach the catastrophic coverage threshold. The good news is that while you’re paying no more than 25% of the cost of the medication, close to 95% of the cost of the drugs is going toward your spending total. One way to manage the coverage gap “donut hole” is to work with your doctor to find effective low-cost and generic medications that will help you maintain your physical health. Here are some tips that can help: Use a generic or find a similar drug that has a generic Talk to your doctor about drug costs and whether specific prescriptions are really needed Shop around — different pharmacies offer different drug prices Compare Medicare plans each year to make sure you have affordable drug coverage Learn More About Medicare Costs and Plans Medicare costs can be confusing, especially when there is the possibility of a coverage gap in the middle of the year. Fortunately, even during the Medicare donut hole, you don’t have to pay more than 25% of a prescription drug price, and you may even pay less. If you’re interested in comparing Medicare plans to make sure your drug coverage meets your needs, talking to a licensed insurance agent can help. Learn more about your options and compare Medicare plans today!
Read More »
Medicare enrollment periods

Everyone can enroll in Medicare in the seven-month period around their 65th birthday through the Medicare Initial Enrollment Period (IEP). It starts three months before your birth month, includes your birth month, and ends three months afterward. If you don’t enroll in Medicare (either Medicare Part A or Part B) during your IEP, you can enroll enroll in either during the General Enrollment Period that occurs annual from January 1 through March 31 of each year. After you enroll in Medicare when can you change your Medicare coverage options? There are three main enrollment periods that allow you to make changes to your coverage. Everyone with Medicare can make changes during the annual enrollment period (AEP). If you have certain qualifying events happen in your life, you may also have a special enrollment period (SEP) to allow changes. And if you are enrolled in a Medicare Advantage (MA) plan, you will also have an opportunity to make changes during the MA open enrollment period (OEP) that happens at the beginning of the year. . This article will cover these enrollment periods in more detail so you know exactly when you can make changes to your Medicare plan. Special Enrollment Period SEP for those enrolled in Medicare Advantage or Prescription Drug Plans If you have special circumstances in your life, , you may qualify for a Medicare SEP to change your Medicare Advantage or Part D plan coverage. The special enrollment period options and length will be different for each circumstance. For example, you could qualify for an SEP if you: Retire from a job after age 65 Move Become eligible for Medicaid Have your Medicare plan terminated by the insurer Lose other medical or drug coverage To learn more about Medicare SEPs, check out our guide on special enrollment periods. Medicare Advantage Open Enrollment (MA OEP) vs. Annual Enrollment (AEP) Both Medicare annual enrollment period (AEP) and Medicare Advantage Open Enrollment period (MA OEP) happen each year. However, there are some important differences. This will help you understand Medicare AEP vs Medicare Advantage OEP. The Medicare annual enrollment period is between October 15th and December 7th of each year. During this time everyone with Medicare can join, switch, or drop any Medicare Advantage or Prescription Drug plan (“Part D). Your coverage will begin on January 1st, as long as you make your choice by December 7th. The Medicare Advantage open enrollment period applies only to those enrolled in Medicare Advantage plans. From January 1st to March 31st each year, you can switch to a different Medicare Advantage plan, or switch from Medicare Advantage to Original Medicare and join a separate drug plan. To summarize the Medicare annual enrollment period vs Medicare Advantage open enrollment period: Dates: Oct 15 - Dec 7 for AEP, Jan 1 - March 31 for Medicare Advantage OEP Costs: None beyond your plan’s monthly premiums Eligibility to Enroll: AEP — any Medicare beneficiary; OEP — Medicare Advantage enrollees only Form of Medicare Available: AEP — any; MA OEP — Change Medicare Advantage plans or Medicare Advantage to Original Medicare Medicare Enrollment Periods Chart This chart can help you understand Medicare open enrollment vs annual enrollment, along with special enrollment periods. Medicare Annual Enrollment (AEP) Medicare Advantage Open Enrollment (OEP) Medicare Advantage & Part D Special Enrollment (SEP) Start Date October 15th January 1st When a qualifying even occurs End Date December 7th March 31st Varies Notes Any Medicare beneficiary can make any changes Medicare Advantage enrollees only, limited changes Details depend on the qualifying event Learn More About Medicare Enrollment Periods Now that you understand the different enrollment periods, you might decide you want to make a change. Making the right choice for your needs is easier when you talk to a licensed insurance agent. Contact us today for any questions about enrollment periods or comparing Medicare plans!
Read More »

Medicare Part D offers important prescription drug coverage and is part of both Original Medicare and Medicare Advantage. As a result, it’s important to understand the Medicare Part D phases that occur each year. There are four Medicare Part D stages. Depending on your drug costs, you may not reach all four in a given year. However, it’s still vital to know what to expect in case your prescription drug needs increase over time. Here’s what you need to know. What are the 4 Stages of Medicare Part D? What are the Medicare Part D stages of coverage? As we mentioned, there are four of them. They start with the deductible period, then initial coverage, followed by the donut hole, and then catastrophic coverage. We’ll go in-depth into each stage so that you can fully understand how they work for you. Deductible Period During the deductible period, you pay the full price of your prescription drugs until you meet your Medicare Part D deductible. The deductible may vary from one plan to another, but Medicare does set a maximum limit. Medicare Part D Deductible 2021 In 2021 the deductible limit for Medicare Part D is $445. Some plans have a $0 deductible, meaning that you skip the first of the Medicare Part D payment stages and move straight into initial coverage. Other plans have a deductible that only applies to certain tiers of medications, while other medications are covered right away. For instance, generic medications may be covered immediately while name-brand medications have a deductible. Make sure you review the Medicare Part D deductible when you compare plans each year so you can choose the plan that’s best for your needs. Initial Coverage Once your deductible is met, you move into initial coverage. This is where your Medicare Part D plan covers your medication, and you only pay a copayment or coinsurance each time. Each plan will have a different list of covered medications and different out-of-pocket costs, so be sure to carefully review the details of your plan. The initial coverage period lasts until you hit $4,130 in total drug costs, which includes both the amount you have paid during the year and the amount your plan paid. Depending on your medical needs, you may not hit the limit, but if you do, you enter the coverage gap known as the Medicare donut hole. Medicare Part D Donut Hole Once you hit the Medicare Part D initial coverage limit, you enter a gap in coverage known as the donut hole. In the past, you had to pay a significant amount of your drug costs during this gap. The coverage gap for all drugs essentially closed in 2020, meaning your share of costs in the “donut hole” is limited to 25% of the drug cost (both brand-name and generic). This percentage will replace the copayment or coinsurance you were paying during the initial coverage period. S For a generic drug that costs $100, you would pay $25 for that drug during the donut hole. For brand-name drugs, even though you only pay 25% of the cost, around 95% of the cost will count toward your out-of-pocket total to move you out of the coverage gap. Once you have paid $6,550 in out-of-pocket costs for prescription drugs, you’ll exit the donut hole and enter catastrophic coverage. Medicare Part D Catastrophic Coverage The final stage of Medicare Part D is catastrophic coverage. What is catastrophic coverage in Medicare Part D? It’s a phase designed to help those who have especially high prescription drug costs. During catastrophic coverage, you’ll pay significantly lower copayments or coinsurance for your remaining prescriptions for the year. For Medicare Part D catastrophic coverage in 2021, you’ll pay 5% of the cost of drugs, and the plan pays for the remainder. Does Medicare Part D Have an Out-of-Pocket Maximum? There is no out-of-pocket maximum for Medicare Part D, but once you hit catastrophic coverage, your out-of-pocket costs drop significantly. Generally, you’ll pay a a minimum of $9.20 for brand-name medication and $3.70 for generic drugs, or 5% of retail costs, whichever is higher. Learn More About Medicare Part D Coverage Stages Medicare Part D is important coverage for many Medicare beneficiaries. That’s why it’s vital to understand the various Part D phases and whether you will enter them in a specific year. Comparing plans is easier with a licensed insurance agent by your side. Contact us to learn more or use our plan comparison tool to learn about plans in your area.
Read More »

Healthinsurance.com LLC is a commercial site designed for the solicitation of insurance from selected health insurance carriers. It is not an insurer, an insurance agency, or a medical provider. You may obtain a complete list of available Medicare plans by contacting 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

This site is not maintained by or affiliated with the federal government’s Health Insurance Marketplace website or any state government health insurance marketplace.