Please ensure Javascript is enabled for purposes of website accessibility

7 Facts About Medicare Advantage You Didn't Know

By Selena Maranjian - Nov 20, 2016 at 11:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Don't ignore the option of Medicare Advantage plans, as one might serve you well, offering greater coverage at a lower price than original Medicare.

What's that? You haven't heard of Medicare Advantage plans, or you have but you don't know what they are? That's a situation that should be remedied, because a Medicare Advantage plan might serve you very well -- either now or down the road. Here are seven key things about it that many people don't know.

Image source: Getty Images.

It's an alternative to original Medicare

First off, understand that what is now referred to by many as "original" Medicare includes Part A (hospital coverage), Part B (physician/medical insurance). Enrollees can opt to add Part D (prescription drug coverage) and also a private Medigap plan to pay for more of what Medicare doesn't pay. Medicare Advantage plans, meanwhile, are sometimes referred to as Part C, and you can choose one instead of going the original Medicare route.

It has to provide at least as much coverage as original Medicare

Medicare Advantage plans are offered by private organizations (such as health insurance companies), but are regulated by the federal government. A Medicare Advantage plan must offer at least as much coverage as original Medicare (i.e., Part A and Part B), but it will often provide more than that, such as vision care, dental care, and/or prescription drug coverage, in order to attract customers.

Image source: Getty Images.

Medicare Advantage plans have rules

Not surprisingly, like many programs including original Medicare, Medicare Advantage plans have rules. For example, while original Medicare lets you see any healthcare provider who accepts Medicare, Medicare Advantage plans will typically limit you to a network of doctors -- though these networks can be very big sometimes. If you want to see a specialist, you will often need a referral. If you see a provider out of the plan's network, you may have to pay more or the visit may not be covered at all.

Medicare Advantage can be better -- or worse than original Medicare

Medicare Advantage plans provide at least as much coverage as original Medicare's Part A and Part B and they frequently offer more than that, too. Still, for you,a Medicare Advantage plan may be better -- or worse -- than original Medicare. For example, while original Medicare doesn't cover healthcare provided outside the U.S., some Medicare Advantage plans do so. If you travel a lot, a Medicare Advantage plan might serve you better. (Alternatively, you could choose to stick with original Medicare and buy supplemental Medigap coverage that includes some coverage outside the U.S.) If you need to be able to see a wide range of doctors, some of whom aren't in any available Medicare Advantage plan, then original Medicare is likely your better option. For many people, though, Medicare Advantage plans will offer more bang (and coverage) for the buck.

Image source: Getty Images.

It can cost you less -- or more

What, exactly, does a Medicare Advantage plan cost? Well, the premiums are frequently lower than those for original Medicare. In fact, some Medicare Advantage plans charge no premium! While original Medicare will often have you footing 20% of many bills, a Medicare Advantage plan might charge you a low copay per doctor visit or service. Here's another important distinction: Medicare Advantage plans also have out-of-pocket limits , beyond which the plan will pick up all your healthcare costs for the year. In other words, once you hit the limit, the rest of your care won't cost you anything for the remainder of the year. That doesn't happen with original Medicare. For 2016, the average out-of-pocket cap is $5,223, but many plans feature caps below $3,000. The maximum allowed limit in 2016 is $6,700.

You can change your mind

If you're worried about making the wrong choice or regretting switching to a Medicare Advantage plan, know that your decision isn't permanent. At least once a year, you will be able to switch between them. To help you figure out what your best option is, make a list of the prescription drugs you take and the doctors you see. Also list the kinds of healthcare services you need and use, noting any upcoming surgeries or big-ticket expenses. When you review the plans you're considering, see which drugs they cover and which doctors are included -- and how much you'll likely spend out of pocket with each one. The Medicare Plan Finder at the Medicare website can help you compare and choose. Note the star ratings of your candidate plans and favor plans that sport four-star or five-star ratings.

Image source: Getty Images.

It's extremely popular

Finally, know that Medicare Advantage plans are not any kind of obscure option. They may not be widely understood, but as of 2016, more than 17 million Americans had enrolled in one, up from about 7 million in 1999. Enrollment in them has been steadily rising for more than a decade and now represents about 30% of the entire Medicare market.

Give Medicare Advantage plans some consideration -- or aim to do so when it comes time for you to enroll in Medicare.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.