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What Are Medicare Advantage Plans?

What Are Medicare Advantage Plans and How Do They Work for Seniors?

Key Takeaways

Medicare Advantage benefits provide a comprehensive alternative to Original Medicare through private insurers, offering bundled coverage with additional benefits and cost protections that can significantly impact your healthcare experience and expenses.

Medicare Advantage benefits include all Original Medicare coverage plus extras like dental, vision, hearing aids, and fitness programs that traditional Medicare plans don’t cover.
These MA plans cap annual out-of-pocket costs at $9,250 in 2026, providing financial protection that Original Medicare lacks without supplemental coverage.
Most Medicare plans (67%) charge no monthly premium beyond your required Part B premium, with an average premium of just $14 monthly in 2026.
Provider networks restrict where you can receive care, requiring referrals for specialist care in HMO plans but offering more flexibility in PPO plan options.
Enrollment is limited to specific periods: Initial enrollment period around age 65, Annual Open Enrollment (October 15-December 7), and special enrollment periods such as moving or losing coverage.

Understanding these key differences between Medicare Advantage and Original Medicare helps you make an informed decision during enrollment periods. The combination of Medicare Advantage benefits, maximum out-of-pocket limit protections, and potential premium savings makes Medicare Advantage attractive to over 35 million seniors, though plan network restrictions require careful consideration of your preferred healthcare providers.

Medicare Advantage plans are private health plan options that companies contracted with Medicare offer to provide all your Part A and Part B benefits. Many seniors choose them over traditional Medicare plans. Most MA plans also include prescription drug coverage and additional benefits not covered by original Medicare, such as dental, vision, and fitness programs. These Medicare plans offer an affordable alternative with an estimated average monthly premium of $14.00 in 2026.

Why do so many seniors prefer them? This piece will explain how Medicare Advantage works and what they cover. You’ll learn how to determine if they’re right for you.

What Is Medicare Advantage

Medicare Advantage as Part C

Medicare Advantage is an alternative pathway to receive Medicare health benefits through private insurance companies rather than directly from the federal government. The Medicare system officially designates these Medicare plans as Medicare Part C [1]. You still have Medicare when you join a Medicare Advantage plan, but you receive most of your Part A and Part B coverage through your chosen private health plan instead of Original Medicare [1].

These bundled Medicare plans combine hospital insurance (Part A) and medical insurance (Part B) into a single package [1]. In 2025, nearly 9 in 10 MA plans included prescription drug coverage (Part D) [2]. More than 35 million people were enrolled in Medicare Advantage plans as of May 2025, representing about 51 percent of eligible Medicare beneficiaries [2].

How Medicare Advantage Is Different from Original Medicare

The structural differences between Medicare Advantage and Original Medicare affect how you access care and manage costs. You can use any doctor or hospital that accepts Medicare assignment anywhere in the United States with Original Medicare [2]. Medicare managed care plans require you to use doctors and providers within the plan network for non-emergency care [2]. Some Medicare plans offer out-of-network coverage, but you’ll pay more for those services [2].

Provider access operates differently under each system. You can see specialists without a referral under Original Medicare [2]. MA plans may require prior authorization before covering certain services or supplies [2]. A 2017 analysis found that Medicare Advantage networks included fewer than half (46%) of all Medicare physicians in a given county on average [3].

Cost structures vary between the two options. Original Medicare charges 20 percent coinsurance for Part B-covered services after you meet your deductible [2]. Medicare Advantage plans use copayments instead, such as $20.00 or $50.00 for physician visits [2]. Original Medicare has no yearly limit on out-of-pocket expenses unless you purchase supplemental coverage [2]. MA plans cap your annual spending with a maximum out-of-pocket limit of $9,250.00 for approved services in 2026 [3].

Coverage differences extend beyond basic medical services. Both systems must cover all medically necessary services [2]. Medicare Advantage benefits offer extra coverage that Original Medicare doesn’t include, such as vision, dental, and hearing services, as well as fitness programs and transportation to appointments [3]. You cannot combine Medicare Advantage with a Medigap policy or Medicare supplement insurance [3].

Who Administers Medicare Advantage Plans

Private insurance companies approved by Medicare administer these Medicare-approved plans under strict federal oversight. The Centers for Medicare & Medicaid Services (CMS) approves these companies and sets rules they must follow [4]. Medicare pays a fixed amount each month to the companies offering Medicare Advantage plans for your care [4].

The funding structure involves a bidding process. Each plan submits a bid to Medicare based on estimated costs of Part A and Part B benefits per person [5]. Medicare compares this bid against a benchmark, which is a percentage of average Medicare spending costs per person in each U.S. county [5]. The plan receives a percentage rebate from Medicare when its bid falls below the benchmark, and insurers can use this rebate to provide additional Medicare Advantage benefits or reduce monthly premiums [5].

Government payments to fund Medicare Advantage plan benefits were approximately $462.00 billion in 2024 and are projected to be $540.00 billion in 2025 [5]. Each Medicare Advantage plan can charge different out-of-pocket costs and establish different rules for accessing services [4]. These rules can change annually [4].

Private insurers manage networks of doctors and hospitals, which allows them to control healthcare costs in ways that Medicare alone may not [6]. The average beneficiary had 42 Medicare Advantage plans to choose from in 2025 [2]. But the availability of Medicare plans is more limited in rural areas [2].

How Do Medicare Advantage Plans Work

Medicare Advantage plans come in five distinct structures. Each has unique rules about accessing care and managing costs. Understanding how these Medicare plans operate helps you select the option that best fits your healthcare needs.

Health Maintenance Organizations (HMOs)

HMO plans (health maintenance organization plans) require you to get care exclusively from doctors and hospitals within the plan network, except for emergency care, out-of-area urgent care, or temporary out-of-area dialysis [7]. This network consists of doctors, hospitals, and medical facilities that contract with the plan to provide services [1].

You must choose a primary care doctor who coordinates your healthcare and provides referrals for specialist care [7]. Most of the time, you need a referral to see a specialist, though certain services like yearly mammogram screenings don’t require one [7]. Some HMO health plans offer Point-of-Service options that allow you to get some services out-of-network for a higher copayment or coinsurance [7].

HMO plan options charge a monthly premium in addition to your Part B premium [7]. You may pay the full cost yourself if you get care outside the plan network [7]. Most HMO plans include prescription drug coverage. You can’t enroll in a separate Medicare drug plan if you join one that doesn’t offer drug coverage [7].

Preferred Provider Organizations (PPOs)

PPO (preferred provider organization) plans offer greater flexibility in choosing healthcare providers. You pay less when using in-network doctors and facilities, but you can visit out-of-network providers for covered services at a higher cost [8].

Medicare Advantage PPO plans don’t require you to choose a primary care doctor or get referrals to see specialists, unlike HMO and PPO differences [8]. You can visit any provider who accepts Medicare and the plan’s terms, whether in-network or out-of-network [9]. Contact your Advantage PPO before getting services from an out-of-network provider to confirm the services are medically necessary and covered [8].

PPO plan options charge a monthly premium in addition to your Part B premium [8]. Most PPO plans cover prescription drugs. You must join a PPO that offers it to get drug coverage [8].

Private Fee-for-Service (PFFS) Plans

PFFS plans determine how much they pay doctors and hospitals, and how much you pay for care [10]. These Medicare plans usually charge a premium in addition to your Part B premium [10].

You can visit any Medicare-approved provider or facility that accepts the plan’s payment terms, agrees to treat you, and hasn’t opted out of Medicare [10]. You can see any network provider who has agreed to treat plan members if your PFFS plan has a network [10]. You can also choose an out-of-network provider who accepts the plan’s terms, but you may pay more [10].

PFFS plans don’t require you to choose a primary care doctor or get referrals to see specialists [10]. Your provider can decide at every visit whether to accept your plan’s payment terms [10]. Prescription drug coverage may be included. You can join separate Part D plans if your PFFS plan doesn’t offer drug coverage [10].

Special Needs Plans (SNPs)

Special needs plan options provide benefits and services to people with specific severe and chronic diseases, certain healthcare needs, or who have Medicaid coverage [11]. These Medicare plans tailor their benefits, provider choices, and covered drug lists to meet the specific needs of the groups they serve [11].

Three types of SNPs exist: Chronic condition SNPs (C-SNPs) for people with severe or disabling long-term health problems, Institutional SNPs (I-SNPs) for people who live in care facilities or get nursing care at home, and Dual Eligible SNPs (D-SNPs) for people who have both Medicare and Medicaid [1][12]. You can remain enrolled in a special needs plan only if you continue to meet the plan’s special conditions [11]. Some SNPs also serve people with end-stage renal disease (ESRD) who require specialized care coordination [11].

Medicare Medical Savings Account (MSA) Plans

MSA plan options combine a high-deductible health plan with a medical savings account [1]. Medicare deposits money into your account that you can use to pay healthcare costs [1]. The plan only begins to cover your costs once you meet a high yearly deductible, which varies by plan [1].

MSA plans don’t charge a monthly premium, but you continue paying your Part B premium [12]. These Medicare plans don’t include prescription drug coverage, so you must enroll in separate Part D plans if you want it [12]. You can visit any Medicare-approved provider or facility that agrees to treat you [12]. You don’t need to choose a primary care doctor or get referrals [12].

Medicare Advantage Plans Benefits for Seniors

Private insurers offering Medicare Advantage plans must provide detailed benefits that match or exceed those of Original Medicare. Understanding these Medicare Advantage benefits helps you assess whether a Medicare Advantage plan meets your healthcare needs and financial situation.

All Original Medicare Coverage Included

Medicare Advantage plans give almost all of your Part A and Part B benefits. This offers many new benefits resulting from laws or Medicare policy decisions [12]. MA plans must cover all Medicare-covered services that Original Medicare covers when medically necessary [12]. This requirement will give you the same foundational healthcare coverage, regardless of which private insurer you choose.

The bundled structure means your plan has hospital insurance coverage under Part A and medical insurance coverage under Part B [12]. Your Medicare Advantage plan must incorporate these updates at the time Medicare adds new covered services or expands existing benefits through policy changes. Private insurers cannot reduce the scope of what Original Medicare covers, though they can implement different cost-sharing structures and access rules to receive these services. Medicare Advantage plans also cannot deny coverage based on pre-existing condition status [12].

Additional Benefits Not Covered by Original Medicare

Medicare Advantage benefits may include extra coverage that Original Medicare doesn’t [12]. These supplemental benefits are among the main reasons seniors choose Medicare Advantage over traditional Medicare coverage. You may have coverage for things Original Medicare doesn’t cover with a Medicare Advantage Plan, like fitness programs (gym memberships or discounts) and some vision, hearing, and dental services (like routine checkups or cleanings) [12].

The availability of these extra benefits is widespread. All but one of these enrollees in individual MA plans are in plans that offer health-related supplemental benefits [13]. More than 99% of enrollees have access to eye exams and glasses. Dental care coverage reaches 98%, hearing exams and aids get to 95%, and fitness programs benefit 94% [13]. These percentages demonstrate how common supplemental benefits have become in the Medicare Advantage marketplace.

Annual Out-of-Pocket Maximum Protection

Medicare plans also have a yearly limit on your out-of-pocket costs for all Part A- and Part B-covered services [12]. You’ll pay nothing for Part A and Part B-covered services once you reach this maximum out-of-pocket limit [12]. This financial protection mechanism distinguishes Medicare Advantage from Original Medicare, which has no out-of-pocket spending cap.

The Medicare Advantage MOOP (maximum out-of-pocket) for Medicare Part C plans will decrease by $100 to $9,250 for approved services in 2026, but individual plans may set lower limits [13]. The average out-of-pocket limit for Medicare Advantage enrollees is $5,320 for in-network services and $9,547 for both in-network and out-of-network services in PPO plans [13]. You will not owe cost-sharing for Part A or Part B covered services for the remainder of the year after reaching your maximum out-of-pocket amount [13].

Prescription Drug Coverage in Most Plans

Most Medicare Advantage Plans have Medicare drug coverage (Part D) [12]. 96% of Medicare Advantage enrollees in individual plans open for general enrollment are in plans that offer prescription drug coverage in 2025 [13]. These combined plans are called Medicare Advantage Prescription Drug (MA-PD) plans.

You must join a plan that offers Medicare drug coverage if you’re planning to join a Medicare Advantage Plan and you want Medicare drug coverage (Part D) [12]. You still pay the Medicare Part B premium with an MAPD plan, but your Medicare Advantage premium may be as low as $0 [14]. Most people (76%) enrolled in individual MA plans with prescription drug coverage pay no premium other than the Medicare Part B premium ($185 in 2025) in 2025 [13].

All Part D plans and Medicare Advantage plans will have a $2,000 annual cap on out-of-pocket prescription drug costs starting in 2025, eliminating the coverage gap (also known as the donut hole) [13]. Your costs for covered prescriptions will be $0 for the rest of the year once you hit this threshold, entering catastrophic coverage [13]. Medicare Part D enrollees will have the option to pay their out-of-pocket Part D prescription drug costs in monthly amounts over the course of the plan year beginning in 2025 [14].

What Does Medicare Advantage Cover

Medicare Advantage plans must meet specific coverage standards while offering flexibility to include supplemental benefits. Understanding what your plan covers helps you access the care you need without unexpected costs or balance billing issues.

Required Medicare Coverage

All MA plans must cover the same medically necessary Medicare-covered services that Original Medicare provides. This has hospital stays, doctor visits, preventive services, skilled nursing facility care, home health care, and durable medical equipment. Medicare plans cannot remove or reduce coverage for any service that Original Medicare covers, though they may use different cost-sharing methods, such as copayments rather than coinsurance, based on the Medicare-approved amount.

Vision, Dental, and Hearing Services

More than 97% of available Medicare Advantage plans offer dental, vision, and hearing benefits [12]. These services are divided into preventive and complete categories.

Dental coverage may include preventive care such as routine cleanings, exams, X-rays, and fluoride treatments at no cost to you [12]. Complete dental services vary by plan but can include fillings, crowns, root canals, extractions, and dentures [12][15]. Some plans cover preventive care only. Others extend to more specialized services [12].

Vision benefits provide a yearly routine eye exam at no cost, including refraction [12]. Medicare plans offer an allowance for contacts or one pair of glasses, with standard single-vision, bifocal, trifocal, or progressive lenses and a scratch-resistant coating [12]. Coverage details vary. Some plans cover most glasses, and others limit coverage to specific types [12].

Hearing aid coverage has become standard in most plans. Original Medicare doesn’t cover hearing aids, but Medicare Advantage plans include a yearly routine hearing exam at no cost, access to over-the-counter and prescription hearing aids, and a 3-year manufacturer warranty on prescription hearing aids [12]. Some plans offer limited coverage while others provide more options [12].

Fitness and Wellness Programs

Original Medicare doesn’t cover gym memberships or fitness programs, but these benefits appear in many Medicare Advantage plans [16]. Programs like Renew Active and SilverSneakers offer access to gym networks, exercise equipment, fitness classes, and on-demand workout videos at no additional cost [17]. Some Medicare plans also include brain health programs and opportunities to connect with others through local wellness activities [17].

Provider Networks and Coverage Rules

Medicare Advantage plans contract with specific doctors, hospitals, and facilities to create provider networks [13]. You can find your plan network directory on the plan’s website or by contacting them [13]. In many cases, you can only use doctors and providers within the network for non-emergency care [13]. Some Medicare plans offer out-of-network coverage at higher costs [13].

MA plans can add or remove providers from their network at any time during the year [13]. Your provider may leave the network, and you’ll need to choose a new in-network provider to receive covered services [13]. Your plan should provide at least 30 days’ notice when a provider you see leaves their network [13]. Your evidence of coverage document outlines these network rules and your rights regarding changes to providers [13].

How Much Do Medicare Advantage Plans Cost

The cost structure of Medicare Advantage plans has multiple components that work together to determine your total healthcare expenses. Pricing varies substantially by plan, location, and individual circumstances. Some beneficiaries may qualify for a Medicare savings program to help with costs.

Monthly Premium Costs

The estimated average monthly Medicare Advantage plan premium stands at $14.00 for 2026 [18]. This average masks considerable variation, though. Around 67% of Medicare Advantage plans with prescription drug coverage charge no additional monthly premium beyond the Part B premium for 2026 [14]. Approximately 76% of enrollees in MA plans with Part D coverage paid no premium other than the Medicare Part B premium for 2025 [14].

Some Medicare plans offer Part B rebates. These reduce your monthly Medicare costs. Nearly one-third (32%) of individual Medicare Advantage plans available for general enrollment will offer some reduction in the Part B premium for 2026 [14]. More than a third (36%) of plans offering this benefit provide monthly reductions of $100.00 or more—another 23% offer reductions ranging from $50.01 to $100.00 [14].

Part B Premium Requirements

You must maintain Medicare Part B coverage and continue paying your Part B premium to stay enrolled in your Medicare Advantage plan [19]. The standard Part B premium is $202.90 per month for 2026, an increase of $17.90 from 2025 [20]. Both Medicare Advantage enrollees and traditional Medicare beneficiaries pay this monthly Part B premium [14].

You’ll pay an income-related monthly adjustment amount on top of the standard premium if your modified adjusted gross income exceeds certain thresholds. The total Part B premium ranges from $284.10 to $689.90 per month in 2026 for individual filers earning above $109,000.00 in 2024, depending on income level [20]. This coordination of benefits ensures that your premium is paid properly regardless of your income level.

Deductibles and Cost-Sharing

Medicare Advantage plans may charge annual deductibles before coverage begins. Amounts vary by plan, though [21]. The Part B deductible is $283.00 for 2026 [20]. Plans offering Part D prescription drug coverage may set deductibles up to $615.00 for 2026 [21].

Cost-sharing involves copayments or coinsurance. Copayments are flat fees, while coinsurance represents a percentage of the service cost [21]. Out-of-network providers carry higher cost-sharing amounts [21].

All Medicare Advantage plans must cap annual out-of-pocket spending at $9,250.00 for 2026 [21]. The average out-of-pocket limit for in-network services in 2024 was $4,882.00 [22]. The plan pays 100% of covered services for the remainder of the calendar year once you reach this maximum out-of-pocket limit [19].

Factors That Affect Your Total Costs

Your total costs depend on the type of Medicare Advantage plan you choose and the healthcare services you need. How often you receive care matters. Whether you use in-network providers affects costs too [18]. Medicare plans establish their cost structures on January 1 each year, and these amounts remain fixed for the entire year [18]. If you have retiree health plan coverage or union coverage, you’ll need to understand how these coordinate with your Medicare Advantage benefits.

How to Enroll in Medicare Advantage Plans

You can join, switch, or drop a Medicare Advantage plan during specific enrollment periods [12]. You need both Part A and Part B coverage before enrolling in any Medicare Advantage plan [15].

Original Enrollment Period

Your initial enrollment period begins three months before you turn 65, has your birthday month, and extends three months after [12]. Coverage start dates vary based on when you submit your enrollment request [12]. Coverage begins when Part A starts if you join before your Medicare Part A starts [12]. Requests submitted after Part A and Part B start will have coverage beginning the first of the following month [12].

Annual Open Enrollment Period

Anyone with Medicare can make coverage changes from October 15 through December 7 each year [12]. You can join, drop, or switch Medicare Advantage plans during this window. You can also move between Original Medicare and Medicare Advantage or modify prescription drug coverage [23]. Changes become effective January 1 [23]. Your plan will send you an evidence of coverage document before this period begins.

Medicare Advantage Open Enrollment Period

You get another chance to make one change between January 1 and March 31 if you’re enrolled in a Medicare Advantage plan [15][24]. You can switch to another Medicare Advantage plan or return to Original Medicare during this period [15]. Your new coverage starts the first day of the month after your request [24].

Special Enrollment Periods

Certain life events trigger special enrollment period windows [12]. To name just one example, moving outside your plan’s service area gives you two full months to switch Medicare plans [16]. Other qualifying events include losing employer coverage, changes in Medicaid coverage eligibility, and receiving an organization determination that affects your coverage [16].

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Private Insurance: Plans are run by private companies (e.g., HMOs, PPOs) that contract with Medicare. Aetna, Alignment Health Plan, Anthem, BlueCross BlueShield of Illinois, Cigna Healthspring, Devoted Health, Gerber Life Insurance, (GTL) Guarantee Trust Life Insurance Company, Humana, (Wellabe) Molina, Mutual of Omaha, NCD MetLife Dental, United of Omaha, Physicians Mutual, Scan Health Plan, Select Health, AARP, UnitedHealthcare, VSP Vision Care | Vision Insurance Wellcare and Zing Health.

Conclusion

Medicare Advantage plans offer a complete alternative to Original Medicare. They bundle hospital and medical coverage with prescription drugs and additional Medicare Advantage benefits such as dental and vision services. These Medicare plans provide valuable cost protections through annual maximum out-of-pocket limit caps. You need to understand the differences between HMO and PPO plan types and other Medicare Part C options to make the right choice. Your total costs depend on premiums, deductibles, and how you access care within provider networks.

Call James O’Neal to Learn More at (877) 808-2900 or visit www.ONealInsuranceGroup.com.

Enrollment periods are a great way to get coverage that fits your healthcare needs and budget.

Medicare licensed and certified Health Insurance Agency offers Free online and phone help you and your family members and Friends living in the following states: Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, and Washington, D.C.

FAQs

Q1. What are the main drawbacks of choosing a Medicare Advantage plan?
Medicare Advantage plans can be challenging to budget for due to variable out-of-pocket costs that depend on your healthcare usage. Unlike Original Medicare with supplemental insurance, where you pay predictable monthly premiums upfront, MA plans may have high cost-sharing when you actually need care, making it harder to anticipate your total annual healthcare expenses.

Q2. Which Medicare Advantage insurance companies are rated highest for seniors?
Top-rated Medicare Advantage providers include Humana for overall quality, Aetna for government performance ratings, UnitedHealthcare for extensive provider networks, and HealthSpring (formerly Cigna) for affordable plan options. The best choice depends on your specific healthcare needs, location, and budget preferences.

Q3. Should I choose Original Medicare or a Medicare Advantage plan?
The decision depends on your healthcare priorities. Medicare Advantage plans typically offer lower monthly premiums, include prescription drug coverage, and provide extra benefits like dental and vision care. However, they require you to use in-network providers and may result in higher costs when you need care. Original Medicare offers more provider flexibility nationwide but requires separate prescription drug coverage and doesn’t include a maximum out-of-pocket limit without supplemental insurance.

Q4. What is the maximum I would pay out of pocket with a Medicare Advantage plan?
Medicare Advantage plans must cap your annual out-of-pocket spending at $9,250 for approved services in 2026. Once you reach this maximum out-of-pocket limit, you pay nothing for Part A and Part B covered services for the rest of the year. Many Medicare plans set lower limits, with the average being around $5,320 for in-network services.

Q5. Do I need to keep paying my Part B premium if I have Medicare Advantage?
Yes, you must continue paying your Medicare Part B premium to remain enrolled in any Medicare Advantage plan. The standard Part B premium is $202.90 per month in 2026. This is in addition to any premium your Medicare Advantage plan may charge, though many Medicare plans have $0 monthly premiums beyond the Part B requirement.

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