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Medicare Advantage plans — also known as Part C or MA — allow private insurers to offer Medicare-approved alternative health plans to Medicare Parts A, B and sometimes D.

Across the country, Medicare Advantage plans are quickly gaining popularity, with 46% of the Medicare population, or more than 26 million people, holding a Medicare Advantage plan in 2021, according to the Kaiser Family Foundation.

However, while the number of policyholders is increasing, it’s important to know that Medicare Advantage has its pros and cons. While Medicare Advantage can be a cheaper alternative to getting Plans A, B and D separately, it also comes with geographical and network restrictions and, sometimes, surprise out-of-pocket costs. By learning more about the pros and cons of Medicare Advantage, you can find the best Medicare Advantage provider for your needs.

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What Are the Pros & Cons of Medicare Advantage Plans?

A Medicare Advantage plan consolidates all Original Medicare benefits, including Part A and B, and often, Part D coverage, into one plan. Part A covers skilled nursing facilities, inpatient hospital care, hospices, lab tests and surgeries, while Part B covers outpatient care, durable medical equipment and preventive services. Part D covers prescription drugs.

While a consolidated Medicare Advantage plan may sound like a better alternative to Original Medicare, it does come with disadvantages. For instance, even with a Medicare Advantage plan, Part B has to be paid for separately, though in some cases, at a reduced premium. Not to mention, this consolidated plan often includes geographical and network restrictions, which may lead to you paying more for health care when you need it if you cannot go to an in-network provider.

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  • Bundled plans that consolidate Medicare coverage
  • Additional benefits are often covered, like prescriptions, dental, vision and hearing
  • Options for low or zero-dollar monthly premiums and reduced Part B costs
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  • Small networks with limited providers
  • Access to health care restricted to your coverage area
  • Higher copays and deductibles can make health care expensive

Pros of Medicare Advantage Plans

Medicare Advantage plans combine all the benefits of an Original Medicare plan under one policy. While you’ll still have to pay for Part B premiums, these come at a reduced cost, which can make a Medicare Advantage plan more affordable overall.

Additionally, Medicare Advantage plans limit your out-of-pocket expenses. For instance, if you’re visiting a primary care physician with a Medicare Advantage plan, your copay may only reach as high as $10 before your policy pays for everything. Conversely, Original Medicare, which has a coinsurance of 20%, will require you to pay money out-of-pocket before coverage kicks in.

Medicare Advantage plans may also include additional medical benefits, such as coverage for vision, hearing and dental services.

Cons of Medicare Advantage Plans

Because private companies offer Medicare Advantage plans, policyholders are subject to their rules and requirements. These can include only working with the company’s network of providers or needing to provide a doctor’s referral before seeing a specialist. Depending on which company you work with, you may be faced with a limited selection of providers and a small overall network. If you need to receive care outside this network, your costs may not be covered.

Another disadvantage of Medicare Advantage plans is that providers often charge higher copays and deductibles for extra visits, which can make care expensive. Such instances can also make understanding or predicting your health care costs difficult.

Generally, Medicare Advantage plans are a better option for healthy individuals who can stick to the providers in their area. However, if you travel outside your coverage area often, visit the doctor frequently or prefer to have more health care choices, you may want to opt for Original Medicare instead and purchase a Medigap plan to help with copays and deductibles.

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According to the Kaiser Family Foundation, most people have an average of 39 Medicare Advantage plans to choose from. Before deciding on a plan, it’s crucial that you carefully review the costs listed in any prospective Medicare Advantage plan. A $0 monthly premium may quickly become expensive if you’re charged $200 for each health care service needed when you find yourself sick.

Pros & Cons of Medicare Advantage Plans vs. Original Medicare

Both Original Medicare and Medicare Advantage plans offer Part A, B and D coverage, but the way they deliver these coverages differs. Understanding the differences can help you choose the right plan for your needs.

For instance, Original Medicare grants you access to physicians nationwide, meaning you’re not limited by a network. Additionally, you don’t need to provide a referral to see a specialist.

However, it also requires you to pay 20% of your Medicare-approved amount after your deductible, referred to as coinsurance. There is also no yearly limit on your out-of-pocket costs, meaning you may have to pay more in coinsurance and deductibles if you visit the doctor frequently. Depending on your expenses, your coinsurance under Original Medicare may be more than what you’d pay under a Medicare Advantage plan. Supplemental coverage (Medigap) is often recommended along with an Original Medicare plan to help offset these costs.

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  • Can be used anywhere in the U.S.
  • Referrals generally are not needed to see a specialist
  • Offers widespread coverage for those over 65, regardless of medical history
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  • No out-of-pocket maximum to limit health care costs
  • Must purchase Part A, B and D coverage separately
  • No coverage for dental, vision or hearing

To help pay for copayments, deductibles or health care while traveling, policyholders can purchase a Medigap plan, which supplements your Original Medicare plan. While these plans cost an additional premium, they may cost less in the long run for those who frequently need health care.

Knowing which plan is best for you is crucial. You can only switch back to Medicare during open enrollment, so if you fall ill while on a Medicare Advantage plan in the middle of the year, you could face significant out-of-pocket expenses.

Medicare Advantage Plan FAQs

At first glance, a Medicare Advantage plan may seem like the best choice, but understanding its pros and cons is crucial to making the right decision for your needs. After all, you don’t want to get stuck with high out-of-pocket health care costs. Review the most commonly asked questions about Medicare Advantage plans below to see if it is right for you.

About Mark Fitzpatrick

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Mark Fitzpatrick is a senior content director at MoneyGeek with over five years of experience analyzing the insurance market, conducting original research and creating content that can be personalized for every buyer. He has been quoted on insurance topics in several publications, including CNBC, NBC News and Mashable.

Mark earned a master’s degree in Economics and International Relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his economics and insurance knowledge to bring transparency around financial topics and help others feel confident in their money moves.