It might be difficult dealing with the complexity of healthcare coverage as you get closer to retirement age. Thankfully, most Americans 65 and older have access to Medicare, a government-funded health insurance program that provides important medical coverage. You can choose between Original Medicare and a Medicare Advantage Plan (Part D) inside Medicare.

What is a Medicare Advantage Plan?

It is an alternative way to receive your Medicare benefits, offered by private insurance companies approved by Medicare. These plans combine Part A (hospital insurance) and Part B (medical insurance) into a single plan, often including prescription drug coverage (Part D) as well. Additionally, some plans may offer extra benefits not covered by traditional Medicare, such as vision, dental, hearing, and wellness programs.

How Does a Medicare Advantage Plan Work?

Here’s a breakdown of how it works:

Enrollment: You choose a Medicare Advantage Plan that meets your needs and fits your budget.

Network: Each plan has a network of doctors and hospitals you must use for covered services, except in emergencies or urgent care situations.

Premiums and Cost-Sharing: You’ll typically pay a monthly premium for your plan, along with potential cost-sharing for services, such as deductibles, copayments, and coinsurance.

Claim Submission: The healthcare provider invoices your Advantage Plan directly when you obtain covered services.

Medicare Payment: Medicare pays the plan back at a fixed price for services that are covered.

Advantages:

Convenience: Combines multiple parts of Medicare into one plan and often includes Part D coverage.

Potential cost savings: May offer lower out-of-pocket costs compared to Original Medicare with a Medigap plan.

Predictable costs: Monthly premiums and cost-sharing help you budget for healthcare expenses.

Extra benefits: May offer additional benefits like vision, dental, hearing, and wellness programs, not covered by Original Medicare.

Network of providers: Allows you to choose from a network of contracted doctors and hospitals.

Disadvantages:

Limited network: You must use the plan’s network of providers, except in emergencies or urgent care situations.

Potentially limited coverage: Some plans may have limited coverage for certain services or medications.

Switching plans: Switching plans mid-year can be difficult and may involve coverage gaps.

Network changes: The plan’s network of providers may change year-to-year.