Key Takeaways:
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Medicare Advantage plans can offer benefits beyond Original Medicare, but you need to understand the trade-offs.
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Costs, coverage, and provider networks vary significantly, so review every detail carefully before committing.
Know What Medicare Advantage Really Covers
Medicare Advantage plans, also called Part C, bundle your Medicare Part A (hospital insurance) and Part B (medical insurance) into one plan. Many also include Part D (prescription drug coverage) and extra perks like dental, vision, and hearing benefits. However, these plans are not all created equal. The coverage varies widely depending on the plan you choose and your location.
Keep in mind that while these plans often include additional benefits, they also come with specific rules. For example, most Medicare Advantage plans require you to use a network of providers to get the lowest out-of-pocket costs. If you go out of network, you could end up paying significantly more. Understanding these restrictions is crucial to making an informed decision.
Watch Out for Out-of-Pocket Costs
Even though Medicare Advantage plans often have lower premiums than Medigap policies, the out-of-pocket costs can add up quickly. These plans have annual limits on what you’ll pay out of pocket for services, but those limits can be as high as $9,350 for in-network services in 2025. For combined in-network and out-of-network services, the cap can reach $14,000.
Be sure to check the plan’s deductible, copayments, and coinsurance rates for common services like doctor visits, lab tests, and hospital stays. Some plans may also have separate deductibles for prescription drugs. If you require frequent medical care, a plan with lower out-of-pocket costs might save you money in the long run, even if it has a higher monthly premium.
Understand the Provider Network
Medicare Advantage plans typically operate within specific networks of doctors, hospitals, and other healthcare providers. These networks can be restrictive, especially in Health Maintenance Organization (HMO) plans, which generally don’t cover out-of-network care except in emergencies.
Preferred Provider Organization (PPO) plans, on the other hand, offer more flexibility but often at a higher cost for out-of-network services. If you have a trusted doctor or specialist, make sure they’re included in the plan’s network. Otherwise, you may need to switch providers, which could disrupt your continuity of care.
Prescription Drug Coverage Isn’t Always Simple
If your Medicare Advantage plan includes prescription drug coverage, pay close attention to the plan’s formulary—the list of covered medications. Formularies vary between plans and can change annually. Make sure the medications you take regularly are covered and check their cost tiers.
Some plans impose restrictions like prior authorization or step therapy, requiring you to try less expensive drugs before covering the prescribed medication. Be prepared to navigate these requirements if your medications fall under these categories.
Compare Plans During Open Enrollment
The Medicare Open Enrollment Period runs from October 15 to December 7 each year. During this time, you can join, switch, or drop a Medicare Advantage plan. Any changes you make will take effect on January 1 of the following year.
This is your opportunity to shop around and compare plans. Use Medicare’s Plan Finder tool to evaluate coverage options, premiums, and out-of-pocket costs. Even if you’re happy with your current plan, reviewing your options ensures you’re not missing out on better coverage or cost savings.
Understand Medicare’s Part B Requirement
When you enroll in a Medicare Advantage plan, you’ll still need to pay your Medicare Part B premium, which is $185 per month in 2025. This is separate from any premium you may owe for the Medicare Advantage plan itself.
Some Medicare Advantage plans help offset the cost of your Part B premium, but these options usually come with trade-offs, such as narrower provider networks or higher out-of-pocket limits. Make sure you’re comfortable with the balance of benefits and costs before selecting a plan.
Consider Extra Benefits and Limitations
Many Medicare Advantage plans offer benefits that Original Medicare does not, such as gym memberships, transportation to medical appointments, or over-the-counter allowances. While these extras are appealing, don’t let them distract you from the plan’s core coverage.
Check whether these additional benefits come with any restrictions. For example, transportation services may only be available for a limited number of trips, or dental benefits might only cover preventive care, not major procedures like crowns or implants. Make sure the extras align with your actual healthcare needs.
The Importance of Annual Notices
Each fall, Medicare Advantage plans send out an Annual Notice of Change (ANOC). This document details any changes to your plan for the upcoming year, including premiums, deductibles, copayments, and covered services. Reviewing this notice is essential to avoid surprises come January.
If you don’t receive an ANOC or if the changes seem unclear, contact your plan provider for clarification. Ignoring this document could leave you stuck in a plan that no longer meets your needs or budget.
Know When to Switch or Drop a Plan
If your current Medicare Advantage plan isn’t meeting your needs, you’re not stuck with it forever. In addition to the Open Enrollment Period, there’s a Medicare Advantage Open Enrollment Period from January 1 to March 31. During this time, you can switch to another Medicare Advantage plan or return to Original Medicare.
Keep in mind that switching plans may affect your prescription drug coverage, so choose carefully. Additionally, if you’re returning to Original Medicare and want to buy a Medigap policy, you may face medical underwriting unless you’re in a guaranteed issue period.
Final Thoughts on Picking the Right Plan
Choosing a Medicare Advantage plan is a big decision that can significantly impact your healthcare costs and access to services. By understanding what these plans cover, how they work, and what costs you might face, you’ll be better equipped to make a choice that fits your needs. Always take the time to review your options during Open Enrollment, and don’t hesitate to ask questions or seek guidance if you’re unsure about anything.
