Medicare Part C: Medicare Advantage Plans 

“Medicare Advantage” – Medicare part C is the privatized version that combines the benefits of Medicare parts A and B and offered by private insurers verses "Original Medicare" (Parts A&B) that is offered by the government agency.

Conceptually Medicare Part C (Medicare Advantage) was theorized to provide Medicare beneficiaries improved and/or potentially additional benefits at the same or lower cost that "Original Medicare" alone.

Structurally Medicare pays the private health plan a set amount each and every month for each enrolled member. The enrollees/members of the Medicare Advantage plans pay a monthly premium (Often this may be $0.00) in addition to the Medicare Part B premium, and then whatever amounts are set forth in the plan for benefits. One example of the difference can be seen with the common PCP (Primary Care Physician) visit. In original Medicare the member would first have to meet to annual deductible ($147 in 2015) but in most MA plans it is common that the cost for this is a much lower fixed amount - a copayment of $20, for example. This is generally much easier for middle and lower income retirees, allowing for earlier and conceptually better care over time. The copayment can be higher to see a specialist. 

The private plans are required to offer a benefit “package” that is at least as good as Medicare’s and cover everything Medicare covers, but they do not have to cover every benefit in the same way. Plans that pay less than Medicare for some benefits, like skilled nursing facility care, can balance their benefits package by offering lower copayments for doctor visits. Private plans use some of the excess payments they receive from the government for each enrollee to offer supplemental benefits.

Some plans put a limit on their members’ annual out-of-pocket spending on medical care, providing some insurance against catastrophic costs over $5,000, for example. But many plans use the excess subsidies to offer added benefits like dental coverage and other services not covered by Medicare but they can leave members exposed to high medical bills if they fall seriously ill. Plan members can end up with unexpectedly high out-of-pocket costs. But this is also true if one had "Original Medicare" alone without a Medicare Supplemental Insurance Plan a.k.a. Medigap plan.

In 2006, enrollees in Medicare Advantage Private Fee-for-Service plans were offered a net extra benefit value (the value of the additional benefits minus any additional premium) of $55.92 a month more than the traditional Medicare benefit package; enrollees in other Medicare Advantage plans were offered a net extra benefit value of $71.22 a month more.[1]

Most Medicare Advantage Plans also include the Part D prescription drug benefits are known as a Medicare Advantage Prescription Drug plan or a MAPD. In fact it is important to note that if you have a MA plan you must get your Part D drug benefit through the plan. There are a few exceptions although uncommon they are PFFS, MSA and Cost plans.

The biggest downside to all MA/MAPD plans is they typically restrict access to doctors and hospitals. This is generally done to control costs in the plan. Even in a PPO type plan you have even higher out of pocket cost if you try to use a doctor or Hospital that is not in the Medicare Advantage network.