Medicare Advantage Plans: When They Work and When They Don't

What Is Medicare Advantage (Part C)?

Medicare Advantage – formally known as Medicare Part C – is a private insurance alternative to Original Medicare (Parts A and B). When you enroll in a Medicare Advantage plan, you are still technically enrolled in the Medicare program, but your coverage is administered by a private insurance company such as UnitedHealthcare, Humana, Aetna, or a regional insurer.

These private plans contract with the Centers for Medicare & Medicaid Services (CMS) and receive a fixed payment per enrollee from the federal government. In return, they are required by law to cover at least everything that Original Medicare Parts A and B cover. Most plans go further, adding benefits that Original Medicare does not include. As of 2025, more than half of all Medicare-eligible beneficiaries are enrolled in a Medicare Advantage plan – a share that has grown steadily over the past two decades.

It is important to understand what you are trading when you choose Medicare Advantage. You gain additional benefits and cost protections, but you also accept network restrictions, prior authorization requirements, and geographic service limitations that do not exist under Original Medicare.

What Medicare Advantage Typically Includes

One of the primary appeals of Medicare Advantage is the bundled benefit structure. Rather than managing separate policies for hospital coverage (Part A), outpatient coverage (Part B), prescription drugs (Part D), and a supplemental Medigap policy, an MA plan combines most or all of these into a single package.

Most Medicare Advantage plans include:

• Part D prescription drug coverage – integrated into the plan, eliminating the need for a standalone drug plan
• Dental coverage – ranging from basic preventive care (cleanings, exams) to more comprehensive services (fillings, crowns, dentures)
• Vision coverage – routine eye exams and allowances toward glasses or contact lenses
• Hearing coverage – hearing exams and, in many plans, a benefit toward hearing aids
• Fitness programs – gym memberships through SilverSneakers or similar wellness programs
• Over-the-counter allowances – a quarterly or monthly credit for OTC health products like vitamins, pain relievers, or first aid supplies
• Transportation benefits – rides to medical appointments in some plans

None of these supplemental benefits are available through Original Medicare alone. For retirees who would otherwise pay out of pocket for dental, vision, and hearing care, these extras can represent meaningful value.

How Medicare Advantage Costs Work

The cost structure of Medicare Advantage plans differs significantly from Original Medicare. Understanding these differences is essential to making an informed decision.

With Medicare Advantage, you continue paying your Part B premium (the standard amount is $185 per month in 2025, though higher-income beneficiaries pay more through IRMAA surcharges). Many MA plans charge no additional monthly premium beyond that Part B payment – these are the widely advertised "$0 premium" plans. Some plans, particularly PPOs or those with richer benefits, charge a modest additional premium.

Instead of the deductible-and-coinsurance structure of Original Medicare, MA plans typically use copays and coinsurance for individual services. You might pay $20 for a primary care visit, $40 for a specialist visit, and a percentage of the cost for hospital stays or outpatient procedures.

The most significant cost advantage of Medicare Advantage is the annual out-of-pocket maximum. In 2025, the CMS cap for in-network costs is $8,850. Once you reach that limit, the plan covers 100% of your in-network care for the rest of the year. Original Medicare has no equivalent cap – there is no limit on what you could owe in a given year, which is precisely why many people on Original Medicare purchase a Medigap supplement policy.

That said, Medigap policies (especially the popular Plan G) effectively reduce your out-of-pocket exposure under Original Medicare to near zero – but they come with monthly premiums that typically range from $100 to $300 or more, depending on your age, location, and the insurer.

When Medicare Advantage Could Work Well

Medicare Advantage is not inherently better or worse than Original Medicare. It is a different model with a different set of trade-offs. For many retirees, it is the right choice. Here are the situations where MA plans tend to work well:

• You are generally healthy and want predictable low costs. If you primarily need preventive care and occasional office visits, a $0 premium MA plan with low copays can be significantly less expensive than Original Medicare plus a Medigap supplement plus a standalone Part D plan.
• You prefer all-in-one simplicity. A single plan that covers hospital, outpatient, drugs, dental, vision, and hearing is easier to manage than coordinating three or four separate policies.
• You live in one area year-round. MA plans work best when you receive care within the plan's service area. If you live and receive most of your care in a single metro area, network restrictions are less likely to be a problem.
• You are comfortable with network restrictions and referral requirements. HMO-style MA plans require you to use in-network providers and get referrals for specialists. If your preferred doctors are in the network and you do not mind the referral process, this is manageable.
• You want dental, vision, and hearing benefits. These benefits are not covered by Original Medicare. Adding them through standalone policies can be expensive and complicated.
• You are budget-conscious and the Medigap premium is a stretch. For retirees on a fixed income, the $150-$250 monthly cost of a Medigap plan plus a Part D plan can be a significant burden. A $0 premium MA plan with built-in drug coverage eliminates that expense.

When Medicare Advantage Might Not Work

For all their benefits, Medicare Advantage plans impose meaningful limitations that can become serious problems in certain situations. The following scenarios are where MA plans most commonly fall short:

• You travel extensively or split time between states. If you winter in Florida and summer in Ohio – or if you travel frequently – an MA plan's geographic service area becomes a real constraint. Emergency care is covered anywhere, but routine and specialist care outside your plan's network can be costly or unavailable. Original Medicare works with any Medicare-accepting provider nationwide.
• You have complex health conditions requiring specialist flexibility. Managing cancer treatment, autoimmune disorders, or other complex conditions often requires coordinated care across multiple specialists. MA network restrictions and prior authorization requirements can create barriers to timely, coordinated treatment.
• You have long-standing relationships with doctors outside the network. Switching to an MA plan means verifying that every provider you see is in-network. If your cardiologist, orthopedist, or other specialist is out of network, you face a choice between changing doctors or paying significantly more for out-of-network care.
• You may need care at academic medical centers or specialized facilities. Major academic hospitals and specialized treatment centers are not always included in MA plan networks. If you need care at the Cleveland Clinic, Mayo Clinic, or a similar institution, an MA plan may not cover it – or may require a lengthy prior authorization process.
• You can comfortably afford Medigap premiums and want maximum flexibility. If your retirement budget can absorb $150-$250 per month for a Medigap supplement, the freedom to see any Medicare-accepting provider without referrals, prior authorization, or network concerns is a meaningful quality-of-life benefit.

The Prior Authorization Problem

One of the most significant and least understood differences between Original Medicare and Medicare Advantage is prior authorization. Under Original Medicare, your doctor orders a test, procedure, or treatment, and Medicare pays its share. The process is straightforward.

Medicare Advantage plans, however, frequently require prior authorization – meaning your doctor must request approval from the insurance company before delivering certain services. This can include imaging studies, surgeries, specialist referrals, certain medications, and even some types of therapy.

The impact on beneficiaries is well documented. CMS and the Office of Inspector General (OIG) have found that MA plans sometimes deny prior authorization requests that would have been covered under Original Medicare. An OIG report found that a notable percentage of MA plan denials were for services that met Medicare coverage criteria – meaning the patient would have received the care without delay under Original Medicare but was denied under their MA plan.

For healthy retirees who rarely need complex care, prior authorization is a minor inconvenience. For those managing serious health conditions, it can delay critical treatment, create administrative burdens for physicians, and add stress during an already difficult time.

Network Types: HMO vs. PPO vs. PFFS

Not all Medicare Advantage plans work the same way. The three most common structures differ in how much flexibility they offer:

• HMO (Health Maintenance Organization): The most restrictive type. You must use in-network providers for all non-emergency care and typically need a referral from your primary care physician to see specialists. HMO plans generally have the lowest premiums and copays.
• PPO (Preferred Provider Organization): More flexible than HMOs. You can see out-of-network providers, but at higher cost-sharing. No referrals are required to see specialists. PPO plans typically have higher premiums than HMOs but offer more provider choice.
• PFFS (Private Fee-for-Service): The least common type. These plans set their own payment terms, and you can see any provider who accepts the plan's terms. PFFS plans offer more flexibility but may have fewer provider options since not all doctors agree to participate.

When evaluating MA plans, the network type matters as much as the specific benefits. A $0 premium HMO with excellent benefits is of limited value if you cannot see the doctors you need or if you require frequent specialist care without the referral friction.

The "Lock-In" Risk

This is arguably the most critical and least discussed planning consideration around Medicare Advantage. It involves your future ability to purchase a Medigap supplement policy if you later decide to switch back to Original Medicare.

When you first become eligible for Medicare at age 65, you have a six-month Medigap Open Enrollment Period. During this window, insurers must sell you any Medigap policy they offer at standard rates, regardless of your health status. This is your guaranteed issue right.

If you choose Medicare Advantage at 65 and later decide – perhaps at age 72, after a health event – that you want to switch to Original Medicare with a Medigap supplement, you may face a serious problem. In most states, Medigap insurers can use medical underwriting once your initial open enrollment period has passed. That means they can charge you significantly higher premiums based on your health conditions, or they can deny you a policy altogether.

Some states (such as New York, Connecticut, and Massachusetts) have continuous Medigap guaranteed issue protections, but most do not. There are limited circumstances that trigger new guaranteed issue rights – such as if your MA plan leaves your area or if you switch back within 12 months of initially trying Medicare Advantage – but these exceptions are narrow.

The practical implication is important: choosing Medicare Advantage can be a one-way door for some people. If your health changes and you want the unrestricted access of Original Medicare plus Medigap, you may not be able to get there at an affordable price. This risk should be weighed carefully before enrolling in any MA plan.

Star Ratings and Plan Quality

CMS evaluates every Medicare Advantage plan annually using a Star Rating system ranging from 1 to 5 stars. These ratings assess multiple dimensions of plan quality, including:

• Preventive care and health screenings
• Chronic condition management
• Member satisfaction and complaints
• Customer service responsiveness
• Drug pricing and patient safety

Star ratings matter for practical reasons beyond quality comparison. Plans rated 4 stars or higher receive bonus payments from CMS, which they typically reinvest as richer benefits or lower premiums for members. Additionally, members of 5-star plans gain access to a Special Enrollment Period that allows them to switch plans outside the normal Annual Enrollment Period.

When comparing MA plans, check the star ratings at Medicare.gov. A plan with strong benefits but a 2-star rating may signal problems with claims processing, member satisfaction, or care quality that are not immediately obvious from the benefits summary alone.

How to Evaluate a Medicare Advantage Plan

If you are considering a Medicare Advantage plan, the following checklist will help you evaluate whether a specific plan is a good fit:

1. Verify your doctors are in-network. Check the plan's provider directory for every physician, specialist, and facility you currently use. Call the provider's office to confirm – directories are not always up to date.
2. Check your prescriptions against the formulary. Every MA plan with drug coverage maintains a formulary – a list of covered medications and their cost tiers. Make sure all of your current medications are covered and note which tier they fall on, as this determines your copay.
3. Understand the prior authorization policies. Ask the plan which services require prior authorization. If you are managing an ongoing condition, find out whether your current treatments would need re-authorization under the new plan.
4. Review the out-of-pocket maximum. Compare the plan's maximum annual out-of-pocket cost with what you would expect to pay under Original Medicare plus a Medigap policy. Consider your likely utilization – not just the best-case scenario.
5. Assess the plan's service area against your lifestyle. If you travel, maintain a second home, or spend extended periods outside your home area, understand how the plan handles out-of-area care for both emergencies and routine needs.
6. Check the star rating. Compare the plan's CMS star rating with other available options in your area. Prioritize plans rated 4 stars or higher when possible.
7. Read the Evidence of Coverage document. Every MA plan publishes a detailed Evidence of Coverage (EOC) document. This is the legally binding description of what the plan covers, what it costs, and what rules apply. Read it before enrolling.

Bringing It All Together

Medicare Advantage plans offer genuine value for many retirees – bundled benefits, cost protections, and simplified coverage that Original Medicare cannot match on its own. For healthy retirees on a budget who live in one area and are comfortable with managed care, an MA plan can be an excellent choice.

But Medicare Advantage is not the right answer for everyone. The network restrictions, prior authorization requirements, geographic limitations, and the risk of being locked out of Medigap coverage later in life are real trade-offs that deserve careful analysis.

The best approach is to evaluate your specific situation: your health status, your medications, your doctors, your travel patterns, and your financial picture. What works for your neighbor or your colleague may not work for you. And because MA plan offerings change every year – networks shift, benefits adjust, and premiums fluctuate – this is a decision worth revisiting annually during the Open Enrollment Period.

Medicare planning does not happen in isolation. It is one piece of a broader retirement plan that includes Social Security timing, investment withdrawals, tax planning, and long-term care considerations. Getting the Medicare decision right can save thousands of dollars per year and, more importantly, ensure you have access to the care you need when you need it.

This article is for educational purposes only and does not constitute medical or financial advice. Medicare rules change annually – always verify current plan details at Medicare.gov or with a licensed insurance professional before making enrollment decisions. For personalized guidance on how Medicare fits into your retirement plan, contact Summit Investments & Financial Planning.