On the surface, Medicare Advantage plans seem to offer everything that traditional Medicare lacks. But before you sign on, dig a little deeper so you understand the pros and cons of Medicare Advantage vs. original Medicare.
Many Medicare Advantage plans offer supplemental benefits that original Medicare generally doesn’t cover, and often with a lower price tag. However, they offset those additions with limitations and restrictions that can affect where you receive care and how quickly you receive it.
To learn more, we spoke with UCLA Health’s Vilsa Eliana Curto, PhD, and Samuel Skootsky, MD.
“The financial benefits [of Medicare Advantage] are real,” Dr. Curto says. “However, consumers may not fully appreciate the provider network restrictions that come with them.”
What Are Medicare Advantage Plans?
Medicare Advantage, also called Medicare Part C, is an alternative way to receive your Medicare benefits. Instead of receiving hospital insurance (Part A) and medical insurance (Part B) directly from the federal government, you receive those benefits through a Medicare-approved private insurance company.
Every Medicare Advantage plan must provide at least the same hospital and medical coverage as original Medicare, including inpatient hospital care, physician visits, preventive services, outpatient care, laboratory testing, durable medical equipment, and other medically necessary services. Most plans also include Medicare Advantage prescription drug coverage (Part D in original Medicare), and many include routine dental care, vision services, hearing aids, fitness programs, transportation assistance, and allowances for over-the-counter health products.
How Medicare Advantage Plans Work
One of the biggest differences with Medicare Advantage vs. original Medicare is provider choice. Original Medicare allows beneficiaries to receive care from nearly any physician or hospital nationwide that accepts Medicare. Medicare Advantage plans, by contrast, typically rely on provider networks, similar to employer-sponsored health insurance. To receive the lowest costs, and sometimes any coverage beyond emergencies, you’ll usually need to see doctors, specialists, hospitals, and other providers that participate in your plan.
“Prospective members should carefully consider whether a particular Medicare Advantage plan supports access to the physicians, hospitals, medications, and care model that matter most to that individual,” Dr. Skootsky says.
Many plans also require prior authorization before they’ll pay for certain tests, procedures, medications, or medical equipment. While insurers say these reviews help ensure appropriate care, critics argue that they can delay treatment.
“People may not realize how important broad provider access is until they need specialized care,” Dr. Curto says. “Network limitations and prior authorization requirements may not seem significant when someone is healthy, but they can become much more important after a serious diagnosis.”
Medicare Advantage Pros and Cons
THE PROS
- Lower costs. For many beneficiaries, Medicare Advantage’s biggest appeal is affordability. Many plans charge little or no monthly premium beyond the standard Medicare Part B premium, while bundling hospital, medical, prescription drug, and supplemental benefits into a single plan.
- Spending caps. Another important advantage is that there is usually an annual out-of-pocket maximum for covered Part A and Part B services. Once you reach that limit, the plan pays 100% of covered services for the remainder of the year. Original Medicare does not provide a comparable annual spending cap unless you purchase supplemental Medigap coverage, which often has a higher premium.
THE CONS
- Limited Networks. Those lower costs come at the expense of fewer choices. Most Medicare Advantage plans require beneficiaries to use participating physicians and hospitals except during emergencies. Care received outside the network may cost significantly more—or may not be covered at all. Network limitations tend to be less restrictive in urban areas, where beneficiaries generally have more plans and participating providers to choose from, Dr. Curto says. But they can be a significant challenge for rural residents who often have fewer plan options and smaller provider networks.
- Provider networks can change from year to year. Physicians and hospitals may join or leave a plan as contracts change, so it’s important to review your coverage annually. A growing number of providers have stopped accepting certain Medicare Advantage plans, says David Lipschutz, JD, Co-Director, law & policy/attorney, of the Center for Medicare Advocacy.
- Prior authorization.To see specialists, get non-emergency hospital care, and access some prescription medications, many Medicare Advantage members must get prior authorization from the insurer. Critics of this process, which is widely used in for-profit insurance coverage, say it delays and can even block access to needed care. A 2021 report from KFF found that Medicare Advantage insurers fully or partially denied more than 2 million prior authorization requests. Although 82% of those denials were later fully or partially overturned on appeals, it further delayed access to care.
Choosing Medicare Advantage vs. original Medicare, then, largely depends on weighing what is most important to you. “Beneficiaries who tend to benefit most from Medicare Advantage are those who prioritize low monthly premiums and are flexible about which specialists or hospitals they use,” Dr. Curto explains. Medicare Advantage plans also appeal to people who appreciate having their medical, prescription drug, and supplemental coverage bundled into one plan.
“Beneficiaries who may be better served by traditional Medicare are those who are less price-sensitive and willing to pay for a Medigap plan in exchange for broader access to specialists and hospitals,” she adds. Traditional Medicare also may be a better fit for people who already have serious health conditions and want the reassurance of maintaining access to their preferred providers.
Types of Medicare Advantage Plans
Medicare Advantage plans come in several forms. While all must provide the same Medicare-covered services, they differ in how beneficiaries access care and whether they can receive treatment outside a provider network.
- Health Maintenance Organizations. HMOs are the most common type of Medicare Advantage plan. They generally require members to receive care from doctors, hospitals, and specialists within the plan’s network, except during emergencies. Many also require referrals from a primary care physician before seeing a specialist. These plans typically offer lower premiums and out-of-pocket costs in exchange for less flexibility.
- Preferred Provider Organizations.PPOs offer more flexibility by allowing beneficiaries to receive care outside the preferred network, although doing so usually costs more. Referrals generally aren’t required.
- Special Needs Plans.SNPs serve beneficiaries with specific healthcare needs, including certain chronic conditions, people who qualify for both Medicare and Medicaid, and those living in nursing homes or other institutions. These plans often include specialized provider networks and disease management programs.
- Medical Savings Account (MSA) Plans.These less common plans combine a high-deductible health plan with a medical savings account funded by the insurer. Beneficiaries use the account to pay qualified medical expenses until they meet the deductible. MSA plans generally don’t include prescription drug coverage, so members typically purchase a separate Part D plan.
- Private Fee-for-Service (PFFS) Plans.Rather than using a traditional provider network, PFFS plans determine how much they’ll pay healthcare providers and how much beneficiaries must pay. Providers decide whether to accept the plan’s payment terms each time they provide care, so it’s important to verify participation before receiving services.
What Medicare Advantage Plans Cover
Every Medicare Advantage plan must cover all medically necessary services included in original Medicare, including hospital care, physician visits, preventive services, outpatient care, laboratory testing, emergency services, and durable medical equipment. Most plans also include Medicare Part D prescription drug coverage, though formularies, copayments, preferred pharmacies, and coverage rules vary.
Many plans also provide supplemental Medicare Advantage benefits, such as routine dental care, vision exams and eyeglasses, hearing evaluations and hearing aids, fitness memberships, transportation to medical appointments, meal delivery after hospitalization, and allowances for over-the-counter health products. While these extras can add value, it’s important to understand annual dollar limits, frequency restrictions, provider requirements, and Medicare Advantage eligibility rules before enrolling.
Medicare Advantage Costs to Expect
Costs vary considerably among Medicare Advantage plans, but most beneficiaries continue paying the standard Medicare Part B premium regardless of which plan they choose. Some plans charge an additional monthly premium, while many advertise premiums as low as $0 beyond the Part B premium. Like other health insurance plans, Medicare Advantage typically includes deductibles, copayments, and coinsurance for many services.
“Beneficiaries should consider both their expected healthcare use and how much financial risk they’re comfortable taking,” Dr. Curto says. “A plan with a lower premium may not be the least expensive option if it has higher cost sharing or a more limited provider network.” It’s also important to consider how your usage and costs may change over time, she adds. “Consider how the plan will work if your healthcare needs change in the future.”
Who Can Enroll in Medicare Advantage?
To enroll in a Medicare Advantage plan, you must already be enrolled in both Medicare Parts A and B and live within the plan’s service area. Most people become eligible for Medicare at age 65, although younger individuals with certain disabilities or end-stage kidney disease may also qualify.
If you receive retiree health benefits through a former employer or union, carefully review how enrolling in Medicare Advantage could affect those benefits. In some cases, employer-sponsored retiree coverage is built around a Medicare Advantage plan; in others, joining a separate plan could permanently end your supplemental coverage.
When You Can Join, Switch, or Leave a Plan
Most people first become eligible for Medicare Advantage plans during their initial enrollment period, a seven-month window beginning three months before the month they turn 65 and ending three months afterward.
Be aware of several Medicare Advantage enrollment periods. Each year, the main enrollment period runs from Oct. 15 through Dec. 7. During this time, beneficiaries can enroll in a Medicare Advantage plan, switch plans, return to original Medicare, or change prescription drug coverage. Changes take effect Jan. 1. Certain life events—such as moving outside your plan’s service area or losing employer-sponsored coverage—may qualify you for a special enrollment period, allowing changes outside the regular enrollment window.
People already enrolled in Medicare Advantage also have a Medicare Advantage open enrollment period from Jan. 1 through March 31 each year. During this time, they may switch to another Medicare Advantage plan or return to original Medicare and enroll in a standalone Part D prescription drug plan. If you choose a Medicare Medical Savings Account (MSA), a type of Medicare Advantage that pairs a high-deductible health insurance policy with a tax-advantaged savings account and then change your mind, you can cancel your enrollment by Dec. 15 of the same year. You have until Dec. 7 to join another health or drug plan. After Dec. 7 and up to Dec. 15, you can only return to original Medicare. Learn more here.
“What consumers often miss is that switching back to traditional Medicare later is harder than it sounds,” Dr. Curto advises. Traditional Medicare has no out-of-pocket maximum, so most people pair it with a Medigap plan to cover copayments, coinsurance, and deductibles. Medigap offers guaranteed enrollment only during the first six months after you enroll in Medicare. After that, insurers in most states can deny coverage or charge more because of pre-existing conditions. If you enroll in Medicare Advantage first and later decide to switch back, Medigap may no longer be available on the same terms.
What to Consider Before Choosing a Plan
Medicare Advantage “plans can differ meaningfully in which doctors are included, prior authorization processes, pharmacy coverage, exposure to out-of-pocket costs, care coordination, and other areas,” Dr. Skootsky stresses, so “before enrolling, make sure your primary care physician, specialists, preferred hospitals, and other healthcare providers participate in the plan’s network.”
The UCLA Health Medicare Advantage Plan, which is owned by the University of California, provides access to UCLA Health’s primary care, specialty care, hospitals, and a broader clinical network that includes independent physician associations and medical groups in Los Angeles County.
“Think honestly about how you use care,” Dr. Skootsky says. “For people who split time between states or rely on highly specialized care at multiple institutions, network rules are especially important, and a particular Medicare Advantage plan may not have services in all locations.”
If you take prescription medications, review each plan’s formulary to confirm your drugs are covered, and compare your expected out-of-pocket costs. “A good Medicare Advantage plan should fit your actual life, not just look attractive on paper,” he says.
Finally, think beyond your current health. A plan that works well today may not be the best choice if your healthcare needs become more complex in the future. “Most people enroll in Medicare Advantage when they are relatively healthy and provider network limitations do not feel significant,” Dr. Curto says. “However, if they are later diagnosed with a serious health condition, they may find their plan’s network does not include the specialists they would prefer, or that prior authorization requirements create meaningful barriers to getting care.”
If you’re unsure which option best fits your needs, free, unbiased counseling is available through your state’s State Health Insurance Assistance Program (800-318-2596) or by calling Medicare at 800-633-4227.
