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Medicare Part C

Medicare is a federal entitlement program that provides health insurance to people over the age of 65 as well as younger people with certain disabilities. Created in 1965, the program has four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage) and Part D (prescription drug coverage).

Medicare Part C is now known widely as Medicare Advantage, but there have been different iterations of this portion over the years. It’s the private portion of Medicare, meaning it’s sold by private, individual companies.

By law, Medicare Advantage plans cover the exact same benefits as Original Medicare, which includes Parts A and B together.

While regulated by the federal government, private Medicare Advantage plans have leeway in the types of benefits they offer beyond what’s required by law. That means these plans tend to cover things that Original Medicare doesn’t, such as prescription drugs, dental and vision benefits, telehealth visits, acupuncture, hearing aids, post-hospital meal delivery, transportation services, gym memberships and more.

Since Medicare Advantage plans are sold by individual companies, coverage and cost will vary widely based on where you live. But you’re more likely to find a Medicare Part C plan with prescription drug coverage than one without it, and not every MA plan charges an added premium for the extra benefits that you get.

As of 2021, nearly 27 million people with Medicare choose Advantage plans over traditional Medicare. That’s about 42% of total enrollment, according to data from the Centers for Medicare and Medicaid Services (CMS), which administers the program.

What’s the catch?

Why would a private health plan offer broader benefits without charging an arm and a leg? Well, that’s thanks in large part because these plans are subsidized by the federal government. Companies that sell MA plans essentially get paid to do it. It’s more complicated than that, but that’s what it boils down to. Medicare Advantage plans get a set amount for each enrollee, an amount that changes each year based on a complex formula.

For you, as the consumer and Medicare beneficiary, this translates into a plan that potentially offers broader benefits without much of a price increase in what you’d pay for traditional Medicare. Everyone pays a Part B premium, even those with Medicare Advantage. But some MA plans charge an additional premium for the added benefits they offer. Others don’t.

So there’s no “catch,” so to speak. These plans don’t cost as much as they could thanks to federal subsidization. And they offer broader benefits because they’re private plans competing for business.

Medicare Part C Enrollment

You can enroll in Medicare Advantage plans when you’re first eligible for Medicare and you’ve already signed up for both Part A and Part B. Initial eligibility for Medicare based on age lasts for 7 months: 3 months before the month you turn 65, the month you turn 65 and 3 months after that month.

So, for example, if your birthday is May 8th, your initial enrollment period (IEP) for Medicare runs from February 1st through August 31st the year you turn 65.

Once you enroll in Original Medicare via Social Security, you can then shop for a Medicare Advantage plan. These plans are sold directly by the companies offering them, through brokers or sales agents, or through sites like this one, where you can compare plans from different companies at once.

  • Important note: While Medicare Advantage plans are regulated and overseen by the federal government, Medicare does not sell private Advantage plans directly. You’ll need to buy a plan yourself on the private market.

Outside of your initial enrollment window, you’ll have to wait until the annual election period, also known as Medicare Open Enrollment, to switch to a Medicare Advantage plan. The open enrollment period runs from October 15th through December 7th each year. During this annual signup window, you can:

  • Change from Original Medicare to Medicare Advantage
  • Drop your MA plan and return to Original Medicare
  • Switch from one Medicare Advantage plan to another
  • Add a Part D plan to your Original Medicare coverage
  • Change or drop your Part D coverage altogether

Any changes to your Medicare coverage that you make during open enrollment take effect for the following year (January 1st).

There is another enrollment period you can use to enroll in Medicare Part C, but it’s for people who didn’t use their IEP to sign up for Medicare originally. If you have Part A but missed your IEP and later enrolled in Part B during general enrollment (January 1st through March 31st), then you can enroll in Medicare Advantage during a special enrollment period that runs from April 1st through June 30th. Coverage in this case would start on July 1st.

Advantages of Medicare Advantage

There are three primary advantages to getting a Medicare Advantage plan: coverage, potential cost savings and convenience.

Coverage

Original Medicare covers a lot, but it doesn’t cover everything. Neither Part A nor Part B will cover the kind of prescription drugs you get at a pharmacy counter. You also won’t find coverage for things like routine dental and vision care, hearing aids or exams, routine foot care, or most acupuncture. If you need these types of care — or even need something as basic as prescription drugs — look into Medicare Advantage plans.

These private plans come in all shapes and sizes. And while they have to cover at least the same benefits as what’s covered under Parts A and B, they can offer broader benefits than Original Medicare. This means you may find plans that cover:

  • Prescription drugs
  • Routine dental and vision care
  • Hearing aids and the exams to fit them
  • Telehealth visits
  • Post-hospital meal delivery
  • Gym memberships or fitness programs
  • Pest control

That last one might sound made up, but it’s true. In the last few years, the federal government has allowed Medicare Advantage plans to get creative in how they define their benefits. And in 2020, CMS established Special Supplemental Benefits for the Chronically Ill, a set of non-medical benefits that MA plans can offer to people with chronic health problems. It includes pest control.

At first glance, something like “pest control” might sound ridiculous as a health plan benefit. But for people with allergies or other health conditions, pest control may improve quality of life. MA plans have this leeway. They can offer benefits that might not be strictly medical but are designed with the goal of patient care in mind all the same.

Cost

Medicare Advantage plans don’t come with a set cost like Original Medicare does. You’ll always pay your Part B premium (and, if applicable, the Part A premium), but beyond that, costs vary widely with Medicare Advantage.

In 2021, about 99% of people with Medicare had access to at least one Medicare Advantage plan without a monthly premium, according to our analysis of CMS data. But the cost of these plans wasn’t high even with a premium. Overall, the average MA premium in 2021 was just over $26 a month.

Plus, unlike Original Medicare, Medicare Advantage plans have to cap out-of-pocket expenses for the year. In 2021, no MA plan can have a higher cap than $7,550 for in-network Part A and Part B services (with an $11,300 max for in- and out-of-network services combined). That’s just the upper limit. Plans can have lower caps, but they can’t exceed the amount set by the government.

Medicare Advantage plans also have different cost-sharing amounts. You might have a $20 copay to see your doctor when you’re sick, for example, instead of that 20% coinsurance rate for Part B with Original Medicare. You could also save on hospital costs, with lower coinsurance rates per day or coverage for an unlimited number of stays.

When you’re looking at your options for Medicare coverage, pay attention to the fine details of MA plans and the out-of-pocket costs you can expect. Depending on your medical needs, a Medicare Advantage plan could save you some money during the year.

Convenience

Original Medicare is fairly straightforward in terms of its benefits. Part A covers hospital care while Part B covers medical care. But these broad categories overlook some important benefits that you might need, especially as you get older.

Notably missing from Original Medicare, for instance, is coverage for prescription drugs. Part B will cover a specific set of medications, but these aren’t the kind you pick up at a pharmacy yourself. These are drugs like chemotherapy treatments or other medications a doctor usually has to administer. For drugs that you take regularly, like insulin or cholesterol pills, you need added benefits.

With Original Medicare, you could do that by adding a separate Part D plan. These are sold by individual companies and come with different premiums and coverage amounts.

Original Medicare also includes uncapped cost sharing. This means that no matter how high your bills get, you’ll still be responsible for paying your share. With a 20% coinsurance rate for Part B and no limit to what you might pay out of pocket, those costs can add up.

To offset those costs, you could consider a Medicare supplement plan (also called Medigap). This is a private plan that takes care of some or nearly all of your out-of-pocket costs under Original Medicare. But Medicare supplement plans come with their own monthly premium as well.

Instead of dealing with Original Medicare, a standalone Part D plan and a Medicare supplement plan, each with their own premiums, you could choose a Medicare Advantage plan with prescription drug coverage included. It’s a convenient way to bundle your benefits and potentially cut down on costs at the same time.

Medicare Advantage plans won’t necessarily eliminate your out-of-pocket costs like a Medicare supplement plan would, but it could lower them in the first place. Some MA plans, for example, have much lower per-day coinsurance for hospital stays than Part A does. Remember that, by law, Medicare Advantage plans have to cover at least the same benefits as Original Medicare. But these plans can also be more generous, and many are.

Combining your benefits into one convenient package could be less of a headache for you. Just make sure any MA plan you get includes the specific benefits you need.

Disadvantages to Medicare Advantage

No health plan is perfect, and we should highlight some important drawbacks to Medicare Advantage. There are two: network restrictions and plan requirements.

Network Restrictions

Original Medicare allows you to see any provider who accepts Medicare. There aren’t any networks. Medicare Advantage plans, on the other hand, usually have networks. With network restrictions in place, you may not have access to as broad a provider list as you would under Original Medicare.

Of course, this really depends on where you live and the kinds of plans available to you. People in more rural areas may not have as wide a range as people living in urban areas, for example. But if you live in a bigger or more well-known city, network restrictions may not be an issue for you.

That’s not universal, though. Living in a large city doesn’t guarantee that you’ll have more provider options. Regardless of where you live, network restrictions are just something to keep in mind with Medicare Advantage.

Plan Requirements

Private Medicare health plans come in several different forms, but the two major forms of Medicare Advantage plans are health maintenance organizations and preferred provider organizations.

  • Health maintenance organizations (HMOs).HMOs are more restrictive. They require you to have a primary care doctor, who coordinates your medical care inside the plan’s network. This means you’ll need a referral if you want to see a provider other than your primary care doctor, like a specialist. It also means you don’t get coverage for care outside of the plan’s network unless it’s an emergency. The tradeoff for HMO restrictions is that these plans tend to cost a lot less than PPOs.
  • Preferred provider organizations (PPOs).PPOs tend to cost more than HMOs but aren’t as restrictive. You don’t need a primary care doctor to coordinate your care, which means you don’t usually need a referral to see specialists. Preferred provider organizations typically also cover out-of-network care, though you’ll save money by seeing providers in the plan’s network.

With Original Medicare, you can see any provider who accepts Medicare. You don’t need a referral to see specialists, and you don’t need to worry about networks or other plan limitations that come with Medicare Advantage plans. For people living in rural areas or areas of the country without access to nearby specialists, an MA plan with a set of rules about who you can see (and when and where) may be an issue.

Disadvantages considered, Medicare Advantage still offers a convenient way to get Medicare benefits for most people. You may save money by choosing a private plan. At the very least, it doesn’t hurt to take a look. You can enroll in Medicare Advantage when you’re first eligible at age 65, or you can use the Open Enrollment Period from October 15th through December 7th to sign up. Think about your medical needs and your budget, and choose the Medicare plan that makes sense for you.