Also called Medicare Advantage, Medicare Part C is private health insurance offered through Medicare
Medicare Part C plans are run by private insurance companies and work similarly to other private health insurance plans
Plans often cover more benefits than traditional Medicare plans, including vision, dental, hearing, and prescription drug coverage
Plans put an annual cap on out-of-pocket expenses, unlike standard Medicare
Plans restrict you to a much smaller, local network of available doctors and health care providers
Medicare is a federal health insurance program that primarily serves Americans age 65 and older. It’s also available to younger individuals with certain disabilities or health conditions. Medicare consists of multiple parts, which each cover different types of health services.
Medicare part C, also called Medicare Advantage, is an alternative to traditional Medicare. It provides many of the same benefits but usually has additional coverage. Most Medicare Part C plans come with vision, dental, hearing, and prescription drug coverage, none of which are covered by Original Medicare (Part A and Part B).
People often choose to buy a Medicare Advantage plan because it covers more benefits than Original Medicare. However, that extra coverage comes at a price. For one, you cannot opt out of Original Medicare and so you need to continue paying its premiums on top of any Medicare Part C premiums.
Medicare Advantage is run by private insurance companies, and even though prices may be lower than traditional private health insurance, a lot of the complexities from private plans exist in Medicare Part C.
Medicare Advantage plans (sometimes called MA plans) also require you to use a local network of providers. You cannot sign up unless you live within a certain distance of a plan’s network. With Original Medicare coverage, you can go to any health care provider in the country that accepts Medicare.
Unlike traditional health insurance plans, Medicare is divided into four parts that each cover different services.
If you’re already claiming Social Security benefits, then you will be automatically enrolled in Medicare Part A and Medicare Part B once you turn 65. These two parts are known as Original Medicare. (You can also sign up during several enrollment periods.) This is the traditional Medicare that people commonly talk about and it covers most of the care that people receive, such as hospital care, hospice care, routine doctor’s visits, preventive care services, and lab work.
Medicare Part C, commonly called Medicare Advantage, is an alternative to Original Medicare. It provides nearly all the same benefits plus some extra coverage. Most Medicare Part C plans come with vision, dental, hearing and prescription drug coverage, none of which are covered by Original Medicare. (Medicare Part D offers prescription drug coverage that you can opt into if you only have parts A and B.)
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The Medicare program is run by the Centers for Medicare & Medicaid Services (CMS), a federal agency, but Medicare Advantage plans are run by private insurers. For that reason, Medicare Advantage plans often look similar to traditional health insurance plans. Prices are lower than regular private insurance, but the types of costs and the structure of plans are the same. So if you’re interested in Medicare Advantage, it’s useful to also brush up on the basics of how health insurance works
You can purchase a Medicare Part C plan as long as you have enrolled in Original Medicare. You must also live in a particular Advantage plan’s network to buy it.
The law requires that Medicare Part C cover emergency care and other urgent care. Medicare Advantage plans also cover almost all of the services Original Medicare covers. That includes hospital care and other inpatient care that you can get through Medicare Part A. It also includes the outpatient care, like preventive care and lab services, that you receive from Medicare Part B.
Most Medicare Advantage plans also come with vision, dental, hearing, and prescription drug coverage. Medicare prescription drug plans that are part of Part C are known as Medicare Advantage Prescription Drug (MAPD) plans.
Some Medicare Advantage plans cover additional other services like transportation to doctor visits or adult day care services. Certain plans also tailor their benefits to chronically ill enrollees.
However, all of the benefits and services that go beyond what Original Medicare covers are optional. Insurers do not have to offer them and not all plans include them. Read the benefits information for a specific plan to see exactly what it covers.
No Medicare Advantage plan covers hospice care. However, Original Medicare (specifically Medicare Part A) still covers hospice care even if you primarily use Medicare Advantage.
Medicare Advantage prices vary greatly by plan, so how much you pay really depends on your individual plan. There are some particular costs you should pay attention to, though. In particular, let’s cover the basics of your monthly premiums, copays, annual deductible, coinsurance, and maximum out-of-pocket limit.
You have to enroll in Medicare Parts A and B to buy Medicare Part C, and you will always have to pay the Medicare Part B premium. The Medicare Part B premium is typically $148.50 a month in 2021, but it may be higher if you earn a higher income.
Beyond that, prices can vary greatly by plan. Medicare Advantage premiums average $33 in 2020, according to data from the CMS compiled by Policygenius. At the same time, premiums can reach up to $481. Many Medicare Advantage plans have a $0 premium, but they still charge other costs, like copays.
Getting a plan with a larger network of doctors and hospitals will usually come with higher premiums than plans that offer a smaller, more local network.
Learn more about paying premiums.
A copay is a flat fee that you pay whenever you receive certain services. For example, a hospital stay for a surgery could come with a copay of $100 per day. If you stay three days, you will end up paying $300 in copays plus other costs the visit incurs.
You will need to pay out of pocket for all your health care costs until you hit your deductible. Once you spend enough to hit the deductible, your insurance will begin to cover some of your costs.
Deductibles vary greatly by plan but your deductible may also vary within a plan, based on what services you receive. Note that copays typically don’t count toward your deductible. Your deductible will also reset each year. So if you don’t reach your deductible until December, you will need to start again from zero once January comes around.
Insurance starts to pay some of your costs after you hit your deductible, but you will still need to pay for a portion of the costs. The percentage of the final bill that you have to pay is your coinsurance.
Medicare Advantage coinsurance is typically 20%, but this varies by plan and some plans may not even have coinsurance.
Once you spend a certain amount out of pocket each year, your insurance will step in to cover 100% of the remaining costs. The maximum you will ever have to spend out of pocket each year is your out-of-pocket limit or out-of-pocket maximum.
The Medicare program has maximum out-of-pocket limit that varies depending on what services you receive and whether you get them from an in-network or out-of-network health care provider. (We’ll explain how your network works in the next section.)
If you have Medicare Part C, for services that Medicare Parts A and B cover, the maximum out-of pocket limit is $7,550 per year in 2021 if you go to in-network care providers. The limit is $11,300 per year for combined in-network and out-of-network costs.
Actual limits vary by plan because insurers can set their own limits, as long as they stay within these maximum legal limits. The average out-of-pocket limit for Medicare Advantage enrollees was $5,059 in 2019, according to the Kaiser Family Foundation.
Read more about the costs of Medicare.
Medicare Advantage plans all offer you care through a network of health care providers. Plans are divided into multiple types based on whether you can use providers outside of your network and how much you would have to pay for doing so. This is the same system that other (non-Medicare) private insurance plans use. Plans may not advertise very clearly what type they are, so make sure to check the plan details for more information.
The table below lays out the major features for each type of Medicare Advantage, and then we go into more detail on each one.
|Primary care physician required?||Yes, in most cases||No||No||Yes, in most cases|
|Out-of-network coverage||Only in emergencies||Covered, but at a cost||Usually covered, but at a cost||Sometimes|
|Referral necessary for specialist visit?||Yes||Yes, in most cases||No||Only in emergencies or if you have end-stage renal disease (ESRD)|
|Prescription drug coverage?||Yes, in most cases||Yes, in most cases||Sometimes||Yes|
Medicare Advantage HMOs are insurance plans that only cover services within your network of providers. If you go outside of that network, your insurance will not cover any medical expenses you incur. The only exception is for emergency services, which all plans must cover even if you go out of network.
The other major feature of a health maintenance organization is that you are required to select a primary care physician (PCP). Your PCP is the person who all your care goes through. For example, your insurance will not pay for you to see a specialist physician (like an opthamologist or surgeon) unless your primary care doctor refers you to that specialist.
Learn more about how HMOs work.
One subset of HMO plans to note is an HMO point-of-service plans (HMOPOS). An HMOPOS allows you to get some services out-of-network for a higher copayment or coinsurance.
A Medicare Advantage PPO offers more flexibility than an HMO because your insurance will usually cover out-of-network providers. It will cost you more than what you would pay if you went in-network, though. PPOs also don’t require a primary care physician and they allow you to see a specialist without a referral.
A PFFS plan allows you to visit any Medicare-approved health care provider that agrees to treat you. Some PFFS plans have a network, but you can still go to out-of-network providers as long as they agree to treat you. It will cost you more to go out of network.
PFFS plans are appealing for some people because they give you more flexibility on where you receive care. However, providers can choose whether or not to accept your insurance each time you visit. So even if you’ve been to that provider before, they can opt not to treat you. This means you may actually have a harder time finding someone to treat you, depending where you live. You should always ask ahead of time to see if a provider will take you as a patient.
In a PFFS plan, the insurer has more control over how much you pay for care. The other types of plans have to stick to prices set by Medicare. In general, PFFS plans have higher out-of-pocket costs than HMOs and PPOs.
SNPs cover people who have specific conditions or characteristics. SNPs target specific types of consumers, and they tailor their plans — benefits, available providers, and list of prescription drugs — to better serve that target consumer. Conditions that SNPs may cover are diabetes, end-stage renal disease (ESRD), HIV/AIDS, chronic heart failure, and dementia.
All SNPs provide prescription drug coverage. Most require you to select a primary care physician, and most also require you to receive a referral if you want to visit a specialist (and have your insurance cover it). Some SNPs cover visits to out-of-network providers, but not all do. Check an individual plan’s details.
MSAs are a bit different from the types of plans above. An MSA works very similarly to a high-deductible health plan (HDHP) paired with a health savings account (HSA). With an MSA plan, Medicare will deposit money into an account that you can then use to pay for your health care services. Your insurance will not start to pay for your medical expenses until you spend enough to hit your deductible.
Deductibles vary by plan, but can be thousands of dollars. If you spend all of the money in your MSA before reaching your deductible, you will need to pay expenses out of pocket until you hit your deductible. (Though once you hit the deductible, insurance still won’t cover 100% of your costs.) Make sure to take the high deductible into account before getting an MSA.
First, enroll in Original Medicare (Medicare Part A and Medicare Part B). You cannot enroll in Medicare Part C until you do this. If you’re on federal retirement benefits, meaning you have paid Medicare tax through your payroll taxes for at least 10 years, you’re automatically enrolled in Medicare on the first day of the month you turn 65. You’re also automatically enrolled once you’ve been receiving federal disability payments for 24 months regardless of your age.
If you’re 65, but not receiving federal retirement benefits, you have to enroll for Medicare by visiting your local Social Security office, calling 1-800-772-1213, or filling out an online application through the Social Security Administration website at ssa.gov.
Once you’re enrolled in Original Medicare, then you can shop for a Medicare Advantage plan. You can search for plans on the Medicare website and purchase the one you want directly from the insurer.
However, you can only enroll within a designated time period each year. New Medicare recipients have seven months to buy coverage, starting three months before the month you turn 65. This is your initial enrollment period. Outside of initial enrollment, these are the times you can purchase or make changes to a Medicare Advantage plan:
Open enrollment for Medicare Part C and Medicare Part D, which runs from Oct. 15 to Dec. 7 each year. This is also called the annual election period (AEP).
Special enrollment, which follows an event such as moving or the loss of other health coverage. This is known as a special election period (SEP).
Medicare Advantage disenrollment period (MADP), a window from Jan. 1 to Feb. 14 each year where you can drop your Medicare Part C plan and revert back to Original Medicare.
Learn more about how to apply for Medicare.
Enrollment in Medicare Part C plans has been growing, largely because Advantage plans offer more benefits than standard Medicare plans. Medicare Advantage plans usually aren’t the best option for low-income recipients because they can often qualify for other Medicare savings programs. Medicare Advantage also isn’t generally necessary if you’re still receiving employer-sponsored coverage.
Pros of Medicare Part C
Provides coverage for services Original Medicare does not, like vision or dental
Usually offers prescription drug coverage
Caps out-of-pocket expenses, unlike traditional Medicare
Cons of Medicare Part C
Likely have to pay two premiums, one for Medicare Part B and one for your Advantage Plan
Many types of individual plans, each with their own rules on the coverage and costs for using out-of-network providers
Your network of available health care providers is smaller than with Original Medicare plans
Not all in-network providers are necessarily accepting new patients
Can’t be used in conjunction with employer-sponsored health care benefits that supplement Original Medicare
Derek is a personal finance editor at Policygenius in New York City, and an expert in taxes. He has been writing about estate planning, investing, and other personal finance topics since 2017. His work has been covered by Yahoo Finance, MSN, Business Insider, and CNBC.
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