Medicare Advantage: What Is It and How Does It Work?

If you’ve ever wondered about Medicare Advantage (also called Part C), it’s a way to get your Medicare benefits through a private insurance company approved by Medicare. These plans cover your Part A (hospital insurance) and Part B (medical insurance) benefits. Most also include Part D coverage for the prescription medicines you take, and many offer extra benefits like coverage for dental, vision, and hearing care.

When you enroll in Medicare, you can choose between original Medicare and Medicare Advantage. The key difference is who administers your coverage:

• Original Medicare (Parts A and B): The federal government administers your benefits.
• Medicare Advantage (Part C): A private insurance company administers your benefits.

“Since they both share the name ‘Medicare,’ it can be confusing to sort out the differences between the two,” said Ryan Ramsey, a Medicare expert and Associate Director of Health Coverage and Benefits at NCOA.

If you opt for Medicare Advantage, you still have Medicare; you just get your benefits a different way. This article covers the nuts and bolts of what Medicare Advantage is, how it works, and why some people choose it for their Medicare coverage.

How does Medicare Advantage work?

With Medicare Advantage, Medicare pays private insurance companies to provide your covered care, and you get your Part A and Part B benefits through the plan. To join a plan, you must have both Part A and Part B and live in the plan’s service area. You keep paying your Part B premium. You may also pay a separate plan premium. But according to KFF, in 2026, 75% of people enrolled in individual Medicare Advantage plans with Part D pay only their Part B premium, with no additional monthly plan premium.¹

Most Medicare Advantage plans include prescription drug coverage. Depending on the plan, you may need to use network providers, get referrals to specialists, or obtain approval before receiving certain services. Your deductibles, copays, and coinsurance vary by plan.

Each plan limits how much you pay out of pocket each year for covered Part A and Part B services. Premiums and prescription drug costs don’t count toward that limit.

What are the types of Medicare Advantage plans?

There are many different types of Medicare Advantage plans, and each functions in a unique way. These plans include:

• Health maintenance organizations (HMOs): Plans that generally limit your coverage and benefits to a defined network of health care providers
• Preferred provider organizations (PPOs): Plans that offer a broader selection of in- and out-of-network providers, though your costs are lower in-network
• Special needs plans (SNPs): Can be HMOs or PPOs specifically intended for people who meet narrow eligibility criteria
• Private fee-for-service (PFFS) plans: Plans that pre-negotiate how much they will pay your doctors and other providers for care you receive at Medicare-approved facilities
• Medicare Savings Accounts (MSAs): High-deductible plans that include a special vehicle for putting pre-tax money aside to pay for your out-of-pocket costs

Not all types of Medicare Advantage plans are available in all areas or to all Medicare enrollees. It’s also important to note that if you have Medicare Advantage, you can't also have a Medigap (supplemental insurance) policy.

Why choose Medicare Advantage?

Medicare Advantage plans must cover all the same services that original Medicare does. These include hospital stays, short-term nursing home stays, doctor visits, and diagnostic and laboratory tests.

But Medicare Advantage plans may also offer additional benefits that original Medicare does not provide. These include:

• Vision care and eyeglasses
• Hearing care and hearing aids
• Dental services
• Health club memberships
• Medically necessary transportation

Some Medicare Advantage plans will even provide non-medical benefits such as:

• Special debit cards for groceries
• Help with utility bills
• Credits toward purchasing over-the-counter health items

How much does Medicare Advantage cost per month?

If you enroll in a private Medicare Advantage plan, you will pay a monthly premium for your Part B (medical) benefits. This premium is $202.90 for most people in 2026, projected to increase to $209.50 in 2027 based on the 2026 Medicare Trustees Report.

In addition to the Part B premium, you'll also pay a monthly premium to maintain your Medicare Advantage plan. The amount depends on the insurer and plan you choose and may be as low as $0. The estimated average monthly premium for all Medicare Advantage plans—including those with prescription drug coverage and Special Needs Plans (SNPs)—is $14.00 in 2026. This is projected to drop to $12.00 for 2027.

“Don’t assume this will be the case, though,” Ramsey said. “It’s important to shop around and compare.”

For some services covered through Medicare Advantage, you will be responsible for paying a deductible and a portion of the cost of those services. These extra premiums and cost-sharing helps pay for the additional benefits many Medicare Advantage plans offer their members.

How the costs are structured varies by the type of plan. If you enroll in Medicare Advantage, you may be eligible to get help paying for your coverage if you qualify for Medicaid or a Medicare Savings Program.

What does Medicare Advantage cover for seniors?

Medicare Advantage pays for medically necessary services covered by original Medicare (Parts A and B), including hospital stays, doctor visits, preventive care, and emergency care. Most plans will bundle Part D (prescription drug) coverage into them. Others only offer health coverage, requiring you to buy a separate Part D drug plan to help pay for your medications. Many Medicare Advantage plans offer extra benefits, such as dental, vision, and hearing coverage. These benefits and their coverage limits vary from plan to plan.

Here’s a key difference with Medicare Advantage: With original Medicare, you can go to any doctor, hospital, or other health-care provider that accepts Medicare. But when you join a Medicare Advantage plan, you must follow the rules of the plan to get your coverage.

For instance, many plans require you to stay within a network of providers the plan has contracted with. If you go to a doctor's office or a hospital outside of this network, your plan won’t cover it. Other plans might offer out-of-network coverage, but you’ll pay more money out-of-pocket for it.

How do I enroll in Medicare Advantage?

There are several specific enrollment periods during the year when you’re allowed to sign up for, change, or drop a Medicare Advantage plan. These are explained below.

Initial Enrollment Period (IEP)
Ongoing

If you are newly eligible for Medicare based on your age (you are turning 65) or a qualified disability, you can select a Medicare Advantage plan during this time. Your IEP depends on your birthday month and/or whether you have met a 24-month waiting period following a disability determination. Learn more.

Medicare Advantage Open Enrollment Period
Jan. 1 – March 31

During this time, you may make a one-time decision either to change your existing Medicare Advantage plan to a different one, or to drop your Medicare Advantage plan and enroll in original Medicare instead. Learn more.

Annual Open Enrollment Period
Oct. 15 – Dec. 7

If you have original Medicare, and want to switch to a Medicare Advantage plan, you can do that during Open Enrollment. You also may do the reverse: change from original Medicare to a Medicare Advantage plan. Finally, you can switch your existing Medicare Advantage plan to a different one. Learn more.

Special Enrollment Periods
Ongoing

Sometimes, your life circumstances change. If you move away from the area covered by your Medicare Advantage plan, if your income changes, if you experience a government-declared disaster, or if you made a mistake when first signing up, you have the opportunity to change your plan. This is called a Special Enrollment Period. Learn more.

What changes are coming to Medicare Advantage in 2027?

Some changes expected to affect Medicare Advantage plans (including those with Part D drug coverage) in 2027 are outlined below:

• Fewer extra benefits: Many insurers are reducing or eliminating benefits such as vision, dental, non-medical transportation, and fitness programs, or placing more limits on their use.
• Higher costs for some care: Some plans may increase copays or annual out-of-pocket limits, meaning members could pay more for covered services.
• Enrollment restrictions: Some insurers are limiting enrollment in certain plans, so those plans may not be open to everyone who wants to join.
• Fewer plan choices in some areas: Some Medicare Advantage plans are leaving certain service areas. People in rural communities may have fewer choices and may need to consider original Medicare or other coverage options.
• Higher projected original Medicare costs: The Part A deductible is projected to rise from $1,736 to $1,788. The standard Part B monthly premium is projected to increase from $202.90 to $209.50, and the annual Part B deductible from $283 to $292. 
• Higher out-of-pocket spending cap: For Part C plans, the maximum allowed annual out-of-pocket limit for covered in-network Part A and Part B services will rise to $9,850. Individual plans may set lower limits.
• Higher Part D cost limits: The maximum Part D annual deductible will rise from $615 to $700, and the annual out-of-pocket cap for covered Part D drugs will increase from $2,100 to $2,400.

Ramsey says these changes make it especially important for older adults to check if their coverage still meets their health needs and budget during Medicare Open Enrollment (Oct. 15 – Dec. 7). 

“Your monthly premium is only one piece of the picture,” he explained. “Read your Annual Notice of Change carefully. Check what you’ll pay out of pocket in 2027, whether your doctors and prescriptions will still be covered, and what extra benefits you’ll be able to keep. Even if you’re happy with your plan today, make sure it will still work for you in the year ahead.”

Get help understanding your Medicare Advantage options

There are many factors to explore if you’re thinking about enrolling in a Medicare Advantage plan or exploring other coverage options. . Talking to trusted friends, family members, and others you may know about their experiences can help.

You also can contact the local office of your State Health Insurance Assistance Program (SHIP) by calling 1-877-839-2675. SHIPS offer no-cost, unbiased insurance counseling to older adults, their families, and caregivers. You can make an appointment with your local SHIP office to go over coverage options. This should take about 30-40 minutes—and could make a big difference in helping you choose the right plan for your needs.

Source

1. KFF. Medicare Advantage in 2026: Premiums, Out-of-Pocket Limits, Supplemental Benefits, and Prior Authorization. June 5, 2026. Found on the internet at https://www.kff.org/medicare/medicare-advantage-in-2026-premiums-out-of-pocket-limits-supplemental-benefits-and-prior-authorization/