Advantages and Disadvantages of Medicare Advantage Plans

With the rising costs of healthcare all around the world, it becomes increasingly difficult to get medical insurance. But, with more and more people getting health insurance, there are more varieties to choose from. Most of the time, these differences are so nuanced that common people who do not have a knowledge of insurance policies cannot understand them. Thus, it is important to do as much research as possible on your own before going to an insurance specialist. A new kind of healthcare policy that has is available in the US are the Medicare advantage plans. As is to be expected, they have their own advantages and disadvantages.

Let’s find out more about these plans.


These are health insurance plans provided by a private health insurer. They are also known as Medicare Part C plans. This is because they provide advantages on top of Part A and Part B benefits. Part A covers inpatient hospital services, whereas Part B covers outpatient services. Some plans also include prescription drug coverage, which is Part D. They can also have additional benefits, such as dental coverage or gym memberships. In a Medicare Advantage plan, a Medicare beneficiary pays a monthly premium to a private insurance company and receives coverage for Part A to Part D services.

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However, the specifics of a Medicare advantage plan depend on the type of plan it is.


There are various types of Medicare advantage plans. They are:

Health Maintenance Organization (HMO)

An HMO is a network of doctors, hospitals, and other healthcare professionals. Under this plan, you generally must get your care and services from providers in the plan’s network. However, there are certain services that are not covered by HMO. These include emergency care, out-of-area urgent care, and out-of-area dialysis. Service providers under HMO serve the insurance holders at a discounted rates. In exchange for this, insurance holders are required to get services only from the service providers in the network.

They tend to be cheaper than most forms of health insurance.

Most HMO plans cover prescription drugs. They require the insurance holder to choose a primary care doctor, and if this doctor leaves the network, the holder is notified. They also require referrals to see a specialist. If an insurance holder avails of services outside the HMO’s network, they have to pay the full price.

Preferred Provider Organization (PPO)

PPOs and HMOs are quite similar. Under both plans, there is a network of healthcare providers. Unlike HMOs, PPOs don’t require the insurance holder to use service providers from within the network. However, it does cost less to do so. Due to this flexibility, PPOs are more expensive than HMOs.

There are more differences between HMOs and PPOs. Under this plan, insurance holders do not need referrals to see specialists. This is extremely beneficial for patients who are familiar with their illnesses. If they know what kind of specialist they need to go to, it can cut the treatment time to a long extent. They don’t mandate primary care physicians either. Some PPOs also provide prescription drug coverage.

Private Fee-for-Service (PFFS)

These are plans designed specifically for Medicare. On the other hand, HMOs and PPOs are common private health insurance plans. While some PFFSs have a network of healthcare providers, all PFFSs allow insurance holders to see any service provider. The only condition is that they should agree to the rules and regulations of the plan and should be eligible to receive payments for Medicare. However, the onus is on the insurance holder to confirm whether or not the healthcare professional accepts to provide treatment under the insurance plan, considering all rules and regulations. If they refuse to do so and the policyholder still receives treatment, the insurance company does not cover any amount of the treatment. Thus, the patient has to pay in full.

PFFSs, like PPOs, do not require the selection of a primary care doctor or referrals to see specialists.

Advantages and Disadvantages of Medicare Advantage Plans

Medical Savings Account (MSA)

If Medicare were to have a health savings account, MSA would be it. MSAs have two parts. They have a health insurance plan with a high deductible, which refers to the amount you pay for covered health care services before your insurance plan starts to pay. Secondly, they have a special savings account. The insurance company deposits money into this account. This money can be used to pay healthcare expenses. A big feature of MSAs is that this money can be used to cover expenses that aren’t covered by Medicare. However, MSAs do not provide prescription drug coverage. This means that the policyholder would have to buy a Medicare Part D plan for that.

None of the money deposited into this savings account is taxable if spent on healthcare expenses.

Advantages of Medicare Advantage Plans

Coordinated Care

Some plans under MAs require insurance holders to select a primary care doctor. This person is responsible for coordinating the insurance holder’s treatment. They are made familiar with the insurance holder’s medical history, and they have to coordinate all aspects of the holder’s healthcare. This includes medications and appointments to therapy and tests.

This also means that any providers the insurance holder visits will be in communication with each other to provide coordinated and effective medical care.

Limits Expenses

There are 3 parts to this. Firstly, insurance premium. Under a Medicare Advantage plan, the insurance holder continues to pay the Part B premium. However, some plans require the holder to pay an additional premium. This varies from plan to plan and can be as low as $0.

The second aspect of this is the co-payment. Under Original Medicare, the insurance holder pays 20% of the bill when visiting a physician. However, Medicare Advantage plans limit this amount at $10.

Lastly, out-of-pocket expenses. Original Medicare does not have an upper limit on this. Thus, every time the insurance holder avails of healthcare services, they have to cover a part of the expenses. However, Medicare Advantages plan sets a limit on the maximum out-of-pocket expense. Once that limit is reached, the insurance holder does not pay any medical expenses for the rest of the year.

More Benefits

Even the most basic of Medicare Advantage plans provide more benefits than original Medicare.

They offer Part A and Part B coverage and then added benefits. They can offer routine vision care, hearing aids, routine dental care, and prescription drug coverage. Some plans also offer and gym membership.


Medicare Advantage plans have the capability of becoming a one-stop-shop for all healthcare needs.

Some of them offer a network of healthcare providers, all of whom work under the plan. They work under the policies of the plan and offer treatment at discounted rates.

Most MA plans also cover a wide variety of healthcare needs. These range from vision, dental, and hearing care to prescription drug coverage.

Advantages and Disadvantages of Medicare Advantage Plans

Disadvantages of Medicare Advantage Plans

Limited Service Providers

Directly or indirectly, some MA plans limit the choice of healthcare providers available to the insurance holder. MA plans that have a network of healthcare providers do not cover the cost of treatment if the insurance holder uses a healthcare provider out of the network of the plan.

In some cases, this cost isn’t added to the out-of-pocket maximum either.

Other plans do offer some/full flexibility, but they are costlier.

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An important distinction between Original Medicare and Medicare Advantage is the geographical coverage they provide. Original Medicare covers medical expenses all over the country. Medicare Advantage plans, however, do not. They provide coverage that is specific to one state. MA plans do not cover out-of-state services. This is especially harmful for people who travel frequently.

Moreover, this doesn’t just affect the services that the plan covers. This also creeps into their eligibility criteria. To enroll, the customer must reside in the Medicare Advantage plan’s service area at least 6 months of the year.

Too Many Options

Medicare Advantage plans provide a wide variety of options for customers to choose from. However, this is only a good thing to an extent.

With the sheer variety of options, it can get overwhelming and confusing for customers. This is especially for those who do not have knowledge of insurance policies.

Pros and Cons of Medicare Advantage Plans


Coordinated Care

Limited Service Providers

Limits Expenses

More Benefits

Too Many Options