Medicare Advantage Overview

Pros and Cons of Medicare Advantage

You may be wondering, what are the pros and cons of Medicare Advantage? There isn’t a simple answer because Medicare Advantage plans have key features that many people find attractive and other characteristics that may not match with your personal preferences and/or lifestyle.

Pros of Medicare Advantage:

• They may provide more benefits than you receive under Original Medicare.
• Your cost sharing may be less under Medicare Advantage.
• Medicare Advantage plans limit your maximum out-of-pocket expense.
• Medicare Advantage plans can be less expensive than comparable coverage with Original Medicare
• Medicare Advantage plans that include prescription drug coverage may also provide Medication Therapy Management (MTM) services.
• Medicare Advantage plans may offer supplemental benefits, such as vision, dental, and hearing care.

Cons of Medicare Advantage:

• Include potential limitations and safeguards.
• Specific service areas known as networks.
• You may not have access to Medicare Advantage plans depending on your geographic location.

Stand-Alone Medicare Advantage vs. MA-PD

Both stand-alone Medicare Advantage plans (MA) and Medicare Advantage Part D (MA-PD) plans are administered by private insurance companies contracted with Medicare. While both plans also cover everything that Original Medicare (Part A and Part B) cover and may cover extra benefits as well, stand-alone Medicare Advantage plans do not include pharmacy Part D coverage. Medicare Advantage Part D (MA-PD) includes Part D coverage. Most MA or MA-PD plans have healthcare networks like an HMO or PPO that encourage you to use in-network services to minimize your out-of-pocket costs. 

Enrollment

If you enroll in a stand-alone Medicare Advantage plan, you are not eligible to add a separate Medicare Part D plan unless the Medicare Advantage plan is a Private Fee-for-Service (PFFS) Medicare Advantage plan without drug coverage or a Medicare Medical Savings Account (MSA) plan. 

Most beneficiaries enroll in a Medicare Advantage Part D plan to ensure their prescriptions are covered. Some beneficiaries may have prescription drug coverage through other sources like the Veteran Affairs (VA). 

There are rules within Medicare that you must follow. For example, if you enroll in a stand-alone Medicare Advantage plan and try to enroll in a Medicare Part D (PDP) plan, you will be disenrolled from your stand-alone Medicare Advantage plan and returned to Original Medicare but you will still be enrolled in the Medicare Part D plan.

Medicare Advantage Quality & Star Ratings

If you’ve ever researched or talked to someone about a Medicare Advantage (Part C) or Prescription Drug (Part D) plans, you might have noticed that each plan was rated on a 5-star scale. What do those ratings mean and where do they come from?

The star ratings come from the Centers for Medicare & Medicaid Services (CMS), not just from the plan beneficiaries themselves. So a plan’s star rating is not solely an indication of how satisfied its members are, although that is a major factor. In fact, there are 40 total areas on which plans can be rated.

Why are star ratings important for Medicare Advantage and Prescription Drug (Part D) plans?

The star quality ratings give you a way to quickly and easily compare plans based on factors like quality and performance—not just financial considerations like premiums, benefits, and network. These ratings are also important because CMS has created a Special Election Period (SEP) that allows Medicare beneficiaries to enroll in 5-star Medicare Advantage plans at any point during the year.

Starting in 2012, the star ratings took on increased significance for the insurance companies as well. As of this date, carriers can receive bonus payments from the government based on their quality ratings. With this incentive, plans have placed an increasing focus on improving their performance in disease management, preventive care, and customer service, key areas evaluated in the star rating program.

How do star ratings work in Medicare Advantage plans?

Medicare Advantage (MA, also called Part C) plans that include health coverage only and no prescription drug coverage are known as “stand-alone” MA plans. For these, the overall quality score is based on 30 different measures in 5 categories:

• Staying Healthy: Screenings, Tests, and Vaccines
• Managing Chronic (Long-Term) Conditions
• Member Experience with the Health Plan
• Member Complaints and Changes in the Health Plan’s Performance
• Health Plan Customer Service

How do star ratings work in Medicare Prescription Drug plans?

For plans that include prescription drug (Part D) coverage only and no health coverage, the overall quality score is based on 12 different topics in 4 categories:

• Drug Plan Customer Service
• Member Complaints and Changes in the Drug Plan’s Performance
• Member Experience with the Drug Plan
• Drug Safety and Accuracy of Drug Pricing

How Do Star Ratings Work in Plans that Have Both Medical and Prescription Drug Coverage?

The third category of plans to which the star rating program applies are those that have both medical coverage as well as prescription drug coverage. These are known as Medicare Advantage-Prescription Drug (or MA-PD) plans. These plans are rated across each category, meaning that they get both a medical plan star rating and a prescription drug plan star rating. Their over overall quality score is based on the average of those two scores and covers 40 unique quality and performance metrics

What Do the Stars Actually Mean?

Regardless of whether it is a stand-alone Medicare Advantage (MA) plan, a stand-alone Prescription Drug (PD), or a combined (MA-PD) plan, it will be rated on a scale of 1 to 5 stars, rounded to the nearest half star, in all of the relevant areas. This makes it easy to see how plans in your area compare to each other.

Medicare Advantage Costs

If you are enrolled in or planning to enroll in a Medicare Advantage plan, you may be responsible for premiums associated with that plan. You may have to pay your Part B premium, which for 2024 starts at $174.70, in addition to your Medicare Advantage premium. This is because Medicare Advantage plans are provided by individual carriers, their premiums may vary. 

In addition to premiums, depending on the private plan you choose, you may have additional cost sharing responsibilities and the amount you have to pay will vary depending on the plan you choose. Factors include where you live and the type of healthcare costs you incur. Medicare Advantage (Part C) plans typically offer lower premiums and have a fixed cap on out-of-pocket expenses. However, there are limitations, particularly in the network of doctors you can access. 

People with Medicare who have limited income and assets may qualify for the Low-Income Subsidy (LIS), also known as “Extra Help”, which can help with the costs of their prescription drugs. The Social Security Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS) work together to provide the benefit.

Some people get Extra Help automatically. These include people who are enrolled in both Medicaid and Medicare (often called dual eligibles), those receiving Supplemental Security Income (SSI), and those who qualify for a Medicare Savings Program (MSP). Anyone else who is not already enrolled in the benefits noted above must apply to the Social Security Administration to receive Extra Help.

Medicare Low-Income Subsidy (“Extra Help”)

People with Medicare who have limited income and assets may qualify for the Low-Income Subsidy (LIS), also known as “Extra Help”, which can help with the costs of their prescription drugs. The Social Security Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS) work together to provide the benefit.

Some people get Extra Help automatically. These include people who are enrolled in both Medicaid and Medicare (often called dual eligibles), those receiving Supplemental Security Income (SSI), and those who qualify for a Medicare Savings Program (MSP).

Anyone else who is not already enrolled in the benefits noted above must apply to the Social Security Administration to receive Extra Help.

How Does Extra Help Work?

The amount of Extra Help a beneficiary receives depends on their income and resources. Beneficiaries will receive either a full-subsidy or a partial-subsidy. Most people who qualify for Extra Help will pay:

• No premiums,
• No deductibles (unless receiving the partial subsidy), and
• No more than $9.20 in 2021 for each drug their plan covers.

In addition to lower out-of-pocket costs, beneficiaries with Extra Help have the following protections:

• A quarterly Special Enrollment Period (one time every three months between January – September and once during Annual Open Enrollment) to join or switch Medicare Part D drug plans during the year. These opportunities allow people who get Extra Help to not wait for the Annual Open Enrollment Period (Oct. 15 – Dec. 7) to change plans. Any plan changes made outside the Annual Open Enrollment Period will become valid for the following month.
• No Part D late enrollment penalty, even if the beneficiary enrolls late (that is, after they were first eligible to join a Part D plan and if they did not have other drug coverage).

How to Apply for Medicare Extra Help

To apply for the Medicare Low-Income Subsidy (LIS), you’ll need to fill out an “Application for Extra Help with Medicare Prescription Drug Plan Costs” (SSA-1020) form with the Social Security Administration (SSA). You can apply and submit this form by:

• Applying online.
• Calling Social Security at 1-800-772-1213 (TTY 1-800-325-0778) and requesting an application be mailed to you or applying over the phone. Social Security representatives are available by phone Monday through Friday, from 7AM to 7PM.
• You can also apply in person at your local Social Security office.

After you submit your application, the Social Security Administration will review it and send you a notification in the mail if you are eligible. If you qualify for Extra Help and are not yet enrolled in a Medicare Part D Prescription Drug Plan, you can enroll in a plan at that time.

Medicare Advantage Coverage

Medicare Advantage Plans must cover all of the services that Original Medicare covers. This includes Part A, inpatient care which is care that you receive in a hospital and Part B, outpatient care, which is care that you receive in a doctor’s office, and most Medicare Advantage plans include Part D pharmacy coverage.

However, if you’re in a Medicare Advantage Plan, Original Medicare will still cover the cost for hospice care, some new Medicare benefits, and some costs for clinical research studies. In all types of Medicare Advantage Plans, you’re always covered for emergency and urgently needed care.

Most Medicare Advantage Plans offer coverage for things that aren’t covered by Original Medicare, like vision, hearing, dental, and wellness programs (like gym memberships). Plans can also cover extra benefits than they have in the past, including services like transportation to doctor visits, over-the-counter drugs, adult day-care services, and other health-related services that promote your health and wellness. Plans can also tailor their benefit packages to offer these new benefits to certain chronically ill enrollees. These plans are called Special Needs Plans. 

Supplemental Benefits

Coverage of these benefits vary by individual Medicare Advantage plan and it’ll be important to look carefully at what’s in and what’s out. For example, for dental, cleaning and extraction may be covered with different co-pays depending on the plan.

Some plans may have benefits included as part of your premium, but may also include “buy ups,” which essentially means that you’d have to pay an additional premium to get some of those benefits.

And finally, you should expect that while these benefits may be part of your MA plan, they are likely administered through third parties, much as you have experienced with your health coverage through your employer.

Medicare Advantage Special Needs Plans (SNPs)

Special Needs Plans (SNPs) are a type of Medicare Advantage plan that limits enrollment to Medicare beneficiaries who meet certain eligibility criteria. These plans’ benefits are tailored to meet the needs of people with specific conditions or characteristics. Medicare Advantage Special Needs Plans include coverage for hospital services (Medicare Part A), medical healthcare needs (Medicare Part B), and prescription drugs (Medicare Part D) through a single plan.

The Centers for Medicare & Medicaid Services (CMS) has designated three types of Special Needs Plans (SNPs):

Chronic Care Special Needs Plans (C-SNPs) 

C-SNPs, tailor their benefits, provider choices, and drug formularies to best meet the specific needs of beneficiaries with one or more of the conditions CMS has designated as a qualifying chronic condition.

Dual Eligible Special Needs Plans (D-SNPs)

D-SNPs, tailor their benefits, provider choices, and drug formularies to best meet the specific needs of beneficiaries who are enrolled in both Medicaid and Medicare coverage. 

Institutional Special Needs Plans (I-SNPs)

I-SNPs, tailor their benefits, provider choices, and drug formularies to best meet the specific needs of beneficiaries that live in an institution such as a skilled-nursing facility or care at home.

To be eligible for a SNP, you must:

• Have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance)
• Live in the plan’s service area
• Meet the specific requirements that the Centers of Medicare and Medicaid has designated as qualifying for the C-SNP, I-SNP, or D-SNP population 
• Note: Medicare beneficiaries with end-stage renal disease (ESRD) are typically not allowed to enroll in a Medicare Advantage plan, with some exceptions. However, if there is a Special Needs Plan targeting ESRD beneficiaries in your service area, you may be eligible to enroll in this type of plan.

These packages provide benefits customized to treat those conditions. Medicare Advantage operates on a county-by-county basis. That means you may shop for a specific plan in one part of the country, find certain benefits included within your coverage, only to find out that if you moved across a county line, your benefits could be different. You may, for example, find that there are different cost-sharing requirements or, in some cases, that you don’t have access to certain benefits at all. There are three kinds of special needs plans (SNPs).

This means that it is important to research your plan options with a tool such as Ask Claire’s plan finder tool. You should also call prospective plans to make sure you understand your options and the eligibility criteria you have to meet to qualify for coverage.

Medicare Chronic Condition Special Needs Plans (C-SNPs)

Chronic Condition Special Needs Plans (C-SNPs) are specific types of Medicare Advantage Plans. These plans are required to cover the same Medicare services that all Medicare Advantage plans must cover. These SNPs may also cover extra services tailored to the special groups they serve, like extra days in the hospital. Each Special Needs Plan (SNP) may design benefits differently and so it’s best to research the options and consult the plan provider directly to make sure you understand what’s covered.

C-SNPs, tailor their benefits, provider choices, and drug formularies to best meet the specific needs of beneficiaries with one or more of the conditions CMS has designated as a qualifying chronic condition: 

• Chronic alcohol and other dependence
• Autoimmune disorders
• Cancer (excluding pre-cancer conditions)
• Cardiovascular disorders
• Chronic heart failure
• Dementia
• Diabetes mellitus
• End-stage liver disease
• End-Stage Renal Disease (ESRD) requiring dialysis (any mode of dialysis)
• Severe hematologic disorders
• HIV/AIDS
• Chronic lung disorders
• Chronic and disabling mental health conditions
• Neurologic disorders
• Stroke

According to the Centers for Medicare & Medicaid Services (CMS), Each Medicare SNP limits its membership to people in one of these groups, or a subset of one of these groups. For example, a Medicare SNP may be designed to serve only people diagnosed with congestive heart failure. The plan might include access to a network of providers who specialize in treating congestive heart failure. It would also feature clinical case management programs designed to serve the special needs of people with this condition. The plan’s drug formulary would be designed to cover the drugs usually used to treat congestive heart failure. People who join this plan would get benefits specially tailored to their condition, and have all their care coordinated through the Medicare SNP.

Now, it’s important to note that your area may not have a C-SNP for your particular condition, but if you are interested in exploring these options, our plan finder tool will allow you to include them in your plan comparison.

Medicare Dual-Eligible (Medicare-Medicaid) Special Needs Plans (D-SNPs)

D-SNPs are specific types of Medicare Advantage plans for beneficiaries enrolled in Medicare and Medicaid.These plans are required to cover the same benefits as Original Medicare and prescription drugs. That includes coverage for hospital services (Medicare Part A), medical health care needs (Medicare Part B), and prescription drugs (Medicare Part D) through a single plan. D-SNPs may also include social services available to help coordinate a beneficiary’s Medicare and Medicaid benefits.

When beneficiaries are eligible for both Medicare and Medicaid, they are called dual eligible. The cost-sharing requirements of the D-SNPs can’t be higher than what you pay in Medicaid or Original Medicare.

Medicare Institutional Special Needs Plans (I-SNPs)

Institutional Special Needs Plans (I-SNPs) are SNPs for Medicare beneficiaries who meet the state definition of 90 days or longer, have had or are expected to need institutional level of care (LOC). Medicare beneficiaries may reside in an institution or in the community. I-SNPs support greater coordination of care, social services, etc.

Medicare Advantage Enrollment Periods

You may be wondering to yourself, “when can I enroll in a new Medicare Advantage Plan?” Or, you may be confused by all these terms thrown around like Annual Enrollment Period (AEP), Open Enrollment Period (OEP), or Special Enrollment Period (SEP). These are reasonable questions, so let’s try to sort through this together. 

Medicare Annual Enrollment Period

Medicare’s Annual Enrollment Period (AEP) is held from October 15 through December 7 of each calendar year. During this period, you can reevaluate your coverage—whether it’s Original Medicare with supplemental drug coverage, or Medicare Advantage (Part C)—and make changes if you want to. This is typically the time of year when you’ll usually see a lot of advertising from brokers, health insurers, and others inviting you to see what they have to offer.

Auto-Renewal for Prescription Drug (Part D) or Medicare Advantage (Part C) Plans

If you’re already enrolled in a Medicare Part D prescription plan or a Medicare Advantage plan and you don’t want to make changes to your coverage for the coming year, you don’t need to do anything during AEP, assuming your current plan will continue to be available. If your plan is being discontinued and isn’t eligible for renewal, you will receive a non-renewal notice from your carrier prior to AEP. If you don’t, it means you can keep your plan without doing anything during this period.

Medicare Open Enrollment Period (OEP)

Between January 1 and March 31 each year, if you are enrolled in a Medicare Advantage plan, you can leave your plan and return to Original Medicare, and buy a Part D prescription drug plan to supplement your Original Medicare. You also have the option to switch to a different Medicare Advantage plan during this time. The effective date for an Medicare Advantage OEP election is the first of the following month. It is important to remember that Original Medicare beneficiaries are not eligible to use the Medicare Advantage OEP. They must use the Annual Enrollment Period if they wish to make changes. The Medicare Advantage OEP supersedes all other Medicare Advantage and Part D enrollment periods, except the Initial Coverage Election Period (ICEP).

Medicare Special Enrollment Periods (SEP)

According to the Centers for Medicare & Medicaid Services (CMS), there are special circumstances and situations where you may switch your Medicare Advantage (Part C) or Prescription Drug (Part D) plan outside the periods described above. There are a number of these situations like, if you move or you lose other insurance coverage. These chances to make changes are called Special Enrollment Periods (SEPs). Rules about when you can make changes and the type of changes you can make are different for each SEP. For details on the rules for those periods, please refer to information from CMS on that.

Medicare Advantage vs. Original Medicare

Thinking about how Medicare will cover your health needs is an important first step to determine if you should enroll in Original Medicare or a Medicare Advantage plan. 

Original Medicare provides you with more choices overall as you may receive services from physicians and facilities that participate and accept Medicare assignments. There are coverage and costs considerations to think through as well. 

Coverage

Original Medicare covers: inpatient care (Part A) which is care that you receive in a hospital and outpatient care (Part B) which is care that you receive in a doctor’s office. 

Original Medicare does not automatically cover:

• Routine Dental Care
• Routine Vision Care
• Routine Hearing Care
• Routine Foot Care
• Custodial Care at Home or in a Nursing Home
• Long-Term Care

Medicare Advantage plans typically provide greater care coordination, supplement benefits, and reduced out-of-pocket costs. However, there are plan and network limitations as well. 

Medicare Advantage Plans must cover all of the services that Original Medicare covers. This includes Part A, inpatient care which is care that you receive in a hospital and Part B, outpatient care, which is care that you receive in a doctor’s office, and most Medicare Advantage plans include Part D pharmacy coverage. There are also supplemental benefits such as vision, dental, hearing, transportation and more that may be covered based on your plan. 

Cost

Overall, Original Medicare is typically more costly than Medicare Advantage. With Original Medicare, the federal government sets the premiums, deductibles and coinsurance amounts for Part A (hospitalizations) and Part B (physician and outpatient services). For example, under Part B, beneficiaries are responsible for 20 percent of a doctor visit or lab test bill. The government also sets maximum deductible rates for the Part D prescription drug program, although premiums and copays vary by plan. Many beneficiaries who elect Original Medicare also purchase a supplemental – or Medigap – plan to help manage out-of-pocket costs. There is no annual cap on out-of-pocket costs.

Medicare Advantage, are managed by private health insurance carriers. Enrollees must pay the government-set annual Part B premium and sometimes an additional premium for the Medicare Advantage plan. These plans have set copays or coinsurance amounts and typically have set out-of-pocket costs which protect the beneficiary from extreme out-of-pocket costs.

Medicare Advantage vs Medicare Supplement

While both Medicare Advantage and Medicare Supplement (Medigap) plans are administered by private health insurance companies. Medicare advantage plans often include additional benefits beyond original Medicare Parts A and B. While, Medigap is designed to fill Medicare Parts A and B coverage gaps. Out-of-pocket costs include your copayments, coinsurance, deductibles or other out-of-pocket expenses for which you would otherwise be responsible.

A key distinction between the two is that Medicare Supplement plans work alongside Original Medicare. Meaning, a Medigap plan will cover what Parts A and B cover. Medicare Advantage is a different way to cover Original Medicare and have additional services covered. 

Medicare Advantage (Part C)

Medicare Advantage plans typically provide greater care coordination, supplement benefits, and reduced out-of-pocket costs. However, there are plan and network limitations as well. 

Medicare Advantage Plans must cover all of the services that Original Medicare covers. This includes Part A, inpatient care which is care that you receive in a hospital and Part B, outpatient care, which is care that you receive in a doctor’s office, and most Medicare Advantage plans include Part D pharmacy coverage. There are also supplemental benefits such as vision, dental, hearing, transportation and more that may be covered based on your plan. 

Medicare Supplement (Medigap)

A Medicare Supplement (Medigap) plan is administered by private health insurance companies, these benefits kick in after Medicare pays its share, and can only be applied to Medicare-approved services. Some supplement plans will also cover services that Medicare Parts A and B do not (such as care needed during travel outside the US). Costs like your copayments, coinsurance, deductibles or other out-of-pocket expenses for which you would otherwise be responsible.These plans are standardized and there are typically 10 options.

Medicare Advantage FAQs

What Is the Medicare Low-Income Subsidy? 

People with Medicare who have limited income and assets may qualify for the Low-Income Subsidy (LIS), also known as “Extra Help”, to help with the costs of their prescription drugs. The Social Security Administration (SSA) and the Centers for Medicare & Medicaid Services (CMS) work together to provide the benefit. There are specific income and eligibility requirements.

Is Medicare Advantage cheaper than Medicare Supplement?

The short answer is that it depends on where you live and the type of healthcare costs you incur. Medicare Advantage (Part C) plans typically offer lower premiums and have a fixed cap on out–of-pocket expenses. However, there are limitations, particularly in the network of doctors you can access. Medicare Supplement plans, also known as Medigap, may have higher monthly premiums and do have fewer restrictions on doctors.

What benefits are covered through a Chronic Condition Special Needs Plan (C-SNP)?

Chronic Condition Special Needs Plans (C-SNPs) are specific types of Medicare Advantage Plans. These plans are required to cover the same Medicare services that all Medicare Advantage plans must cover. These SNPs may also cover extra services tailored to the special groups they serve, like extra days in the hospital. Each Special Needs Plan (SNP) may design benefits differently and so it’s best to research the options and consult the plan provider directly to make sure you understand what’s covered.

Can I switch between Medicare Supplement and Medicare Advantage during annual enrollment?

During Annual Enrollment, you can select a Medicare Advantage Plan in your area even if you have a Medicare Supplement Plan. However, if you switch out of your Medicare Supplement Plan, switching back to Medicare Supplement if you’re not satisfied with your Medicare Advantage may not be as easy or straightforward, and there may be an impact on your premiums and your approval.