To get the best Medicare Advantage plan for your needs, it’s helpful to know how to compare these plans, how they work, and what you can get with one that Original Medicare doesn’t provide.
What Is Medicare Part C Coverage?
Unlike Original Medicare, Medicare Advantage plans have an annual limit on your out-of-pocket expenses and might cover some (or all) of your Part B premium. Plus, they often include prescription drug coverage and benefits that Original Medicare does not. Think of MA plans as a way to bundle your Original Medicare benefits, usually along with prescription drug benefits (which you’d otherwise get from Medicare Part D) and extra benefits (such as hearing, vision, and dental coverage). Because of the way MA plans are structured, many have no premium or even help pay your Part B premium. You can also get perks that you’d otherwise have to buy a Medigap policy for, such as paying lower deductibles and out-of-pocket expenses relative to Parts A and B alone.
Medicare Advantage Plan Types
Because Medicare Part C coverage is administered through private insurance companies, shopping for coverage means comparing various plans. Medicare Part C plans are required to provide at least the benefits you’d get with Parts A and B—except for hospice care, which is still covered by Original Medicare. Much like other types of health insurance, certain plan structures determine where and how care is provided—some are more expensive than others, offering greater flexibility and benefits, while some are more restrictive than others but are also more affordable. Before comparing specific MA plans, it can help to know how you’d like your plan to be structured.
Health Maintenance Organizations (HMOs)
Also known as HMOs, these are the most restrictive types of policies. Generally, you have to:
See doctors in the plan’s network.Choose a primary care physician (PCP).Get a referral from your PCP to get care from a specialist.
Additionally, out-of-network emergency care is covered under an HMO. An HMO is the most affordable plan.
Preferred Provider Organizations (PPOs)
Also called PPOs, preferred provider organizations have a preferred network of physicians, but you can pick doctors outside of the network—as long as you’re willing to pay more out of pocket. You don’t need to choose a primary care physician, and you generally don’t need to get a referral to see a specialist. Because of the added flexibility, these plans tend to be more expensive than other options. PPOs and HMOs make up the majority of the choices you’ll have through your MA coverage.
Medical Savings Accounts (MSAs)
A medical savings account (MSA) is similar to a health savings account (HSA) in that it’s not an insurance plan on its own. Instead, it has two parts: an actual savings account and a high-deductible Medicare Advantage plan. The MSA deposits money into the savings account portion that you can use to pay for covered services, including the deductible. You aren’t generally bound by a network or to any particular provider.
Private Fee-for-Service (PFFS) Plans
Private fee-for-service plans are less common than PPOs and HMOs. You can generally go to any provider, and you don’t need to choose a PCP or get a referral for specialty care. Drug coverage may or may not be included. Because of their flexibility, PFFS plans may be more expensive.
How to Compare Medicare Advantage Plans
Since individual insurance companies offer Medicare Advantage plans, their coverage often differs; sometimes, there can be dramatic differences. So as you compare MA plan types, premiums, deductibles, and features, keep the following information in mind as a benchmark:
The average premium for MA plans in 2022 is $18 per month.In 2022, the out-of-pocket maximum that any MA plan can charge is $7,550 for in-network services ($8,300 for 2023) and $11,300 for in-network and out-of-network services ($12,450 for 2023).
When shopping for Medicare Part C (MA) coverage, you should also have a complete list of the prescription drugs you take. Use Medicare’s Plan Finder to search for plans with a drug formulary that works with your specific needs. You can also input your preferred pharmacy. Once you find a few plans you like, you can view the provider network for that plan to make sure it works with your doctor. As you evaluate the options, consider which coverages you’d like as well as how they affect your premium and out-of-pocket costs. You’ll find that many plans include limited coverage for vision, hearing, and dental. Some may also provide coverage for less common benefits like in-home support.
Medicare Advantage vs. Original Medicare
Switching from Original Medicare to MA may be able to reduce your costs. But if you aren’t comfortable making the switch or you’d like to compare costs, here’s a quick overview of the costs for Original Medicare in 2022 and 2023.
Medicare Part A (Hospital Stays)
Part A, known as hospital insurance, pays for hospital stays. The Part A deductible is $1,556 in 2022 ($1,600 for 2023). If you have an inpatient hospital stay, the first 60 days of your stay are fully covered once you’ve paid the deductible. Here’s the breakdown of the costs beyond 60 days:
Days 61-90: $389 copayment daily ($400 in 2023)Days 91-150: $778 copayment daily ($800 in 2023)After day 150: You pay 100% of the costs
Part A only fully covers up to 20 days of skilled nursing care. You’ll then pay $194.50 per day in 2022 ($200 for 2023) for days 21–100, and you’ll be responsible for 100% of the costs after day 100. Most people do not pay a premium for Part A. However, Part A has no maximum on your out-of-pocket expenses—Medicare Advantage plans do.
Medicare Part B (Medically Necessary Services)
Part B is the piece of Medicare that covers medically necessary services, like doctor’s visits, diagnostic services, and preventive services. Medicare Part B monthly premiums are $170.10 in 2022 ($164.90 for 2023). You’ll pay a higher premium if you earned more than $91,000 and filed an individual tax return or if you earned more than $182,000 and filed a joint return. The 2022 Medicare Part B deductible is $233 ($226 in 2023). After paying the deductible, you pay 20% of the Medicare-approved amount for care, but there’s no limit to what you’d pay. For example, if your medical bills were $100,000, you would pay $20,000.
Medicare Part D (Prescription Drugs)
Part D covers prescription drugs. Once you’ve paid the deductible for your plan, you’ll pay a copay or coinsurance for covered drugs during the initial coverage phase, depending on the plan and the drug tier. Once you have spent $4,430 in 2022 ($4,660 in 2023), you’ll enter a coverage gap known as the “donut hole.“During this phase, you’ll pay no more than 25% for prescription drugs. You’ll leave the coverage gap once your total out-of-pocket spending is $7,050 in 2022 ($7,400 in 2023) and enter the catastrophic coverage phase.At this point, you’ll generally pay no more than 5% of the cost of covered drugs for the remainder of the year.
The Bottom Line
When it comes to Medicare coverage, there’s a lot to consider: should you get it at all, which plan you should purchase, and whether you should stick with Original Medicare. Keep in mind that Original Medicare on its own can leave you vulnerable to large expenses as it has no limit on out-of-pocket costs. One way to mitigate this is by purchasing a Medigap plan. Another is to purchase “bundled” Medicare coverage via a MA plan.
