What is Medicare Advantage?

Medicare Advantage plans are among the most discussed plans in the world of Medicare. With nonstop television commercials promising free stuff, and seemingly endless pieces of mail that rain down on Medicare beneficiaries boasting $0 premium insurance plans, they have become popular, but also very controversial.

​The easiest way to define Medicare Advantage plans would be as an all-in-one comprehensive plan that provides a person on Medicare medical coverage, prescription coverage, and additional benefits that can include dental, vision, and hearing benefits, as well. 

​The person purchasing this plan essentially has their Medicare run through a private insurance company. Meaning, the private insurance company comes in and takes over the risk of covering that individual. 

How Much Does Medicare Advantage Cost?

That is the million-dollar question! To understand the price and cost of Medicare Advantage plans, you must first understand they make money. These private insurance companies take all the responsibility in terms of a person’s claims, taking a huge burden off Medicare. Because of this, Medicare agrees to fund the private insurance company every month for taking care of the person’s needs.

​Since they receive this funding, the typical cost of an Advantage plan is very low. Many areas have Medicare Advantage plans available with no premium. This is where all the $0 premium talk comes from. People that enroll in a Medicare Advantage plan must keep their Medicare Parts A & B active for their Advantage plan to work (that means that they still pay their Medicare Part-B premium). Usually, the commercials leave that out. 

So… What’s The Catch?

While Medicare Advantage plans have a lot be excited about, they also have some important downsides that you need to be aware of. Unlike original Medicare, on a Medicare Advantage plan, you do not have the freedom to go to any doctor in America that accepts Medicare assignments. You are typically assigned a network of hospitals and doctors and either get decreased benefits when going outside of this network, or no benefits at all.

​Often Medicare Advantage plans have more restrictions, such as referral programs and prior authorizations on certain treatments and/or procedures. Advantage plans usually have a larger out of pocket expense because Advantage plans typically charge copays for most services provided; and copays add up. The two most common network types for Medicare Advantage plans are the HMO (Health Maintenance  Organization) and PPO (Preferred Provider Organization).