Medicare Advantage Plans are another way to get your Medicare Part A and Part B coverage. Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by Medicare-approved private companies that must follow rules set by Medicare.

Since the 1970s beneficiaries have received managed care through private insurers. In 1997, the program then called “Medicare Choice,” became official with the passing of the Balanced Budget Act. In 2003, Medicare Part D was created and Medicare Choice plans were renamed to Medicare Advantage plans.¹

Medicare Advantage plans expand a beneficiaries' choices to include private plans with coordinated care and more comprehensive benefits than those provided through traditional Medicare.²

UnitedHealth, Humana, Blue Cross Blue Shield and CVS Health are the most common insurers whom Medicare beneficiaries elect for Advantage plans.³ In many cases, you’ll need to use health care providers who participate in the plan’s network and service area for the lowest costs. Some plans offer out-of-network coverage, but sometimes at a higher cost. The most common types of Medicare Advantage Plans⁴ are:

1. Health Maintenance Organization (HMO) Plans 

   • HMO plans provide coverage through a network of hospitals, and health care providers that agree to coordinate care in return for a certain payment rate for their services. An HMO generally only covers care received from the plan's contracted providers, known as “in-network” providers.

2. Preferred Provider Organization (PPO) Plans

   • PPO Plans have network doctors, other health care providers, and hospitals. You pay less if you use doctors, hospitals, and other health care providers that belong to the plan's network, hence the moniker “preferred.”

3. Private Fee-for-Service (PFFS) Plans

   • PFFS plans aren’t the same as Original Medicare or Medigap. The plan determines how much it will pay doctors, other health care providers, and hospitals, and how much you must pay when you get care. 

4. Special Needs Plans (SNPs)

   • Medicare SNPs limit membership to people with specific diseases or characteristics. Medicare SNPs tailor their benefits, provider choices, and drug formularies to best meet the specific needs of the groups they serve. Medicare SNPs typically have specialists in the diseases or conditions that affect their members.

An Advantage plan’s costs can be varied; it depends on: whether the plan charges a monthly premium, the yearly deductible, copayments or coinsurance for visits, services or prescriptions, out-of-pocket limits, etc. Many Medicare Advantage Plans have a $0 premium, however if a plan does charge a premium, an enrollee will pay this in addition to the Part B premium.⁵

In 2021, more than 26 million people are enrolled in a Medicare Advantage plan, accounting for 42 percent of the total Medicare population, and $343 billion (or 46%) of total federal Medicare spending.³

The Congressional Budget Office projects that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will rise to about 51 percent by 2030.³

1. A Brief History of Medicare: Medicare Advantage | RetireMED®iQ. RetireMED®iQ. https://www.retiremediq.com/brief-history-medicare-part-2-medicare-advantage/.

2. MCGUIRE T, NEWHOUSE J, SINAIKO A. An Economic History of Medicare Part C. Milbank Quarterly. 2011;89(2):289-332. doi:10.1111/j.1468-0009.2011.00629.x

3. Freed M, Fuglesten Biniek J, Damico A, Neuman T. Medicare Advantage in 2021: Enrollment Update and Key Trends. KFF. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2021-enrollment-update-and-key-trends/. Published 2021. 

4. Medicare Advantage Plans | Medicare. Medicare.gov. https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans.

5. Costs for Medicare Advantage Plans | Medicare. Medicare.gov. https://www.medicare.gov/your-medicare-costs/costs-for-medicare-advantage-plans.