Medicare Advantage plans have affordable rates, simplified coverage and a yearly limit on health care expenses.
The biggest disadvantage of Medicare Advantage is you'll have a more limited choice of doctors and medical offices than you would with Original Medicare. Medicare Advantage plans can also cost more overall if you have complex medical needs. These plans are best if you don't need expensive treatments or tests.
Advantages and disadvantages of Medicare Advantage
Is Medicare Advantage good?
Medicare Advantage plans can be a good choice if you want simplified coverage and extra perks.
Plans usually have low monthly fees. Plus, you'll have a yearly cap on how much you could pay for medical care. This can help you save money if you end up having an expensive health event.
Low or no monthly costs
Medicare Advantage plans often charge little or nothing in monthly premiums. You still have to pay for Medicare Part B, which is $174.70 per month in 2024. Some Medicare Advantage plans have the perk of paying for part or all of your Part B premium.
The cost for a Medicare Advantage plan varies based on the company, the plan's benefits and your location. But most people have access to a plan with no monthly cost. Just make sure to review the specifics of a plan, even if it doesn't have a monthly fee. It might make sense to pay more for a plan if it gives you better coverage.
Medicare Advantage plans are not always cheaper or a better deal than Original Medicare. Original Medicare is made up of Medicare Parts A and B. If you have complex health care needs, for example, it's usually better to pair Original Medicare with a Medicare Supplement plan (also called a Medigap plan). It might cost more each month, but it usually means you'll pay less for your health care overall. Medicare Advantage plans, on the other hand, are usually a good choice if you have more routine health care needs and don't need complex or expensive treatments.
Medicare Advantage plans are simple, serving as "all-in-one" alternatives to Original Medicare. Medicare Advantage plans bundle Medicare Part A and Medicare Part B, which cover inpatient and outpatient medical care. They also usually include Part D prescription drug coverage.
In contrast, having Original Medicare means buying coverage separately, which can mean more moving parts to keep track of. You can choose the coverage you want, but you'll also have separate monthly fees. For example, you can choose Part A, Part B, Part D drug coverage and a Medigap plan, which helps fill in coverage gaps left by Parts A and B. You'll have separate monthly premiums for each part, although most people don't pay for Medicare Part A.
Medicare Advantage plans provide extra coverage that's not available with traditional Medicare. These perks can include vision, hearing and dental services, gym memberships, preventive chiropractic care and allowances for over-the-counter supplements. Each plan offers its own unique set of perks, so be sure to review the extra coverage carefully if you want a specific benefit.
Cap on how much you'll pay for health care
Unlike Original Medicare, Medicare Advantage plans have out-of-pocket limits that cap the total amount you pay for health care. If you use in-network doctors, you won't pay more than $8,850 per year toward medical bills. This is a benefit over Original Medicare. With just Parts A and B, you won't have a cap on your medical spending. That means you could end up paying for a lot of your health care costs, unless you buy a Medigap plan to supplement your coverage.
Some Medicare Advantage plans let you use doctors that aren't in the network, but you'll pay more for medical care.
Why Medicare Advantage plans are bad
Medicare Advantage plans could be a bad choice if you want complete flexibility to choose your doctor.
The plans use provider networks, which put some limits on where you can get medical care. It can also be tough to calculate your medical costs since the copays and coinsurance levels can change based on the plan and the type of care you need.
Preauthorization and coverage approval
You might have to get prior approval from your Medicare Advantage plan for some types of medical care. There are regulations surrounding preauthorizations for Medicare Advantage plans, but the process can still make getting care slower and more difficult. Original Medicare does not have any preauthorization requirements for medical care.
Higher costs if you have extensive medical needs
Medicare Advantage plans can be more expensive if you need a lot of medical care or complex medical care. If you need expensive medical care, you could end up paying a large amount out of pocket, even with the annual cap on your share of the bills. In this case, it's usually better to stick with Original Medicare and add a Medicare Supplement plan to pay more of your health care bills.
Example: Medicare Advantage vs. Original Medicare for a hospital stay
Say you have Original Medicare. If you have to stay in the hospital, you pay $1,632 for the Medicare Part A deductible. But after that, there are no more daily costs until you've been in the hospital for 60 days.
But if you have a Medicare Advantage plan, you'll likely pay for some of the costs even after your deductible. You'll probably have a daily copay as soon as you are admitted. For example, even if your plan has no deductible, it would only take six days for your hospital stay to cost more than it would with Original Medicare — if you have a $300 daily copay. Your coverage and how much you pay depend on your plan's deductible and copay levels, and how long you're in the hospital.
Some Medicare Advantage plans limit the doctors and hospitals that you can use if you want your medical bills covered. With some plans, you don't have any coverage if you use a doctor that isn't in the network. With others, you still have coverage, but you pay more than if you had used an in-network doctor. Some plans also require you to get a referral to see a specialist, which can slow down your treatment.
In contrast, Original Medicare lets you go to any doctor that accepts Medicare. And most medical offices do. More than 90% of primary care physicians take Medicare. That means you can choose almost any doctor you want and still be covered.
Covered doctors may change
Medicare Advantage plans can change what medical offices you're allowed to use. You might find a doctor you like, only to have to find a new doctor the next year. In contrast, many more providers accept Original Medicare, and options with it tend to be more stable.
Is a Medicare Advantage plan the best choice for you?
If you want to simplify your Medicare coverage and you don't mind using in-network doctors, a Medicare Advantage plan could be a good choice. Medicare Advantage plans are usually a good choice if your health is generally good and you don't need many health care services. It's helpful to get several quotes to find the best Medicare Advantage plan for your situation. Compare the monthly rate, coverage, extra perks and customer satisfaction reviews for each company.
But if you have complex health care needs, it's usually better to have Original Medicare and a Medicare Supplement plan. That combination typically covers more of your medical bills than a Medicare Advantage plan. Plan G is usually the best Medicare Supplement plan if you are just getting Medicare coverage. If you take prescription drugs or think you might in the future, consider a Medicare Part D plan, too.
Medicare Advantage vs. Original MedicareMedicare Advantage plans are becoming more popular. About 60 million people are eligible for Medicare, and 51% have a Medicare Advantage plan. That's up from 19% in 2007.
Original Medicare pays for about 80% of your medical costs, but there's no yearly limit on the amount you pay. Medicare Advantage plans have a yearly cap, which limits how much you could pay if something big happens.
Medicare Advantage (Part C)
Original Medicare (Parts A and B)
|Includes Part A, Part B and usually Part D.
|Government-administered coverage with separate plans for Part A and Part B.
|Not included but can be purchased separately.
|Often includes vision, hearing and dental services, gym memberships and other perks.
|Usually low, but Part B is paid separately.
|Part B: $174.70 per month. Most people do not pay for Part A. Part D drug plans vary in price.
|Restricts you to a network of doctors and medical offices.
|Can use any medical office that accepts Medicare.
|Plans have deductibles, copays and coinsurance. The levels vary depending on the plan.
|Covers about 80% of your medical costs. Deductibles, copays and coinsurance levels are set by the federal government.
How plan administration could affect your health care
With Medicare Advantage, plans and medical offices are usually paid a sum of money up front to manage patient care. This gives them an incentive to keep patients healthy and out of the hospital.
If patients stay healthy, the plans and medical providers come in under budget and make money. If patients get sick and require hospitalization, the plans exceed their budget and lose money.
Critics of Medicare Advantage plans say these financial incentives encourage providers and health plans to skimp on health care. For example, a plan could refuse to pay for certain health screenings or prolonged nursing home stays to save money.
There are five main types of Medicare Advantage plans. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are the most common.
- Health maintenance organizations (HMOs): These plans require you to use in-network doctors except in emergencies. You also must have a primary care doctor and get a referral to see a specialist.
- Preferred provider organizations (PPOs): You can use any doctor you want with a PPO, but you will pay more for out-of-network care. You don't need a referral to see a specialist and don't have to have a primary care doctor.
- Private Fee-for-Service (PFFS) plans: Like PPOs, these plans typically have in-network doctors, but you can go outside of the network for a higher cost. The rates for each type of medical service are set by the plan, and out-of-network doctors can choose to either accept or deny care based on how much each service costs. PFFS plans are usually expensive.
- Special Needs Plans (SNPs): These plans tailor coverage to certain groups, like those with chronic conditions or those who dual-qualify for Medicare and Medicaid. SNPs usually use HMO or PPO networks.
- Medical Savings Account (MSA) plans: These plans have high deductibles and come with a medical savings account to help you pay health care costs. They aren't a good choice if you need a lot of medical care. The high deductible will mean you have to pay a lot of your bills yourself.
The plan types available to you depend on where you live and what companies sell plans in your area.
Medicare Advantage vs. Medicare Supplement
Medicare Advantage and Medicare Supplement plans are both sold by private insurance companies.
Medicare Advantage is a stand-alone plan that includes all your Medicare coverage. Medicare Supplement plans, also called Medigap plans, are add-on plans that you stack on top of Original Medicare. A Medigap plan helps cover some of the costs that Original Medicare doesn't.
|Bundled coverage includes Parts A and B. Usually includes drug coverage.
|Supplemental coverage fills in coverage gaps left by Original Medicare. Drug coverage is not included.
|Usually low monthly premiums. Often, higher deductibles, copays and coinsurance.
|Higher monthly premiums but lower costs for medical care because plans reduce or eliminate copays, coinsurance and deductibles.
|Yes, with most plans.
|No. You can use any medical office that accepts Medicare.
|Depends on the plan.
|Some plans cover foreign travel health expenses.
Medicare Advantage and employer health insurance
You can have both Medicare and health insurance through your job at the same time. The size of your employer determines which plan pays first.
Medicare is the primary coverage if your employer has fewer than 20 employees. This means that Medicare gets your medical bills first and pays its share. Then, your employee health insurance plan will pay for anything that it covers but wasn't already paid for by Medicare. If your employer has 20 or more workers, your employee plan is primary, and Medicare Advantage pays next.
If you have small group insurance and qualify for Medicare, you should enroll in Medicare Parts A and B. If you don’t, your employee plan could deny coverage. There is a law that prevents large employers from requiring eligible workers to sign up for Medicare. The law doesn't apply to small businesses, which means a smaller employer could require you to sign up for Medicare if you qualify.
A Medicare Advantage plan will probably have a lower monthly rate than a plan from your job. The coverage for Medicare Advantage plans and plans from employers varies. Make sure you look at the options and understand what is covered before you choose a plan.
Frequently asked questions
What’s the biggest disadvantage of Medicare Advantage?
The biggest disadvantage of Medicare Advantage plans is that they limit your choice of doctors and medical offices. If you have complex or expensive medical needs, you might also pay more for your health care with a Medicare Advantage plan versus Original Medicare and a Medigap plan.
Who is Medicare Advantage bad for?
Medicare Advantage plans are not the best option for people who have very specific health needs because there's a chance that a specialist might not be in the plan's network. And although Medicare Advantage plans put a cap on the total amount you might spend on health care in a year, they usually aren't the best deal if you need a lot of health care. In that case, a Medigap plan paired with Original Medicare covers more of your health care costs.
Who would benefit most from a Medicare Advantage plan?
Medicare Advantage plans are good for generally healthy people who don't use many health care services. They can also be good if you want extra perks with your coverage. Most plans offer perks like hearing, dental and vision coverage, gym memberships, 24/7 nurse lines and allowance for over-the-counter health items like vitamins and nonprescription medications.
Sources for this article include KFF and Medicare.gov.