What is Medicare Part C? The ultimate guide to choosing a plan
What is Medicare Part C all about?
Medicare Part C works similarly to Original Medicare, but some of the differences may work to your advantage. In this guide, we’ll explain what Medicare Part C covers, enrollment, costs, the types of plans available.
What is Medicare Part C?
Medicare Part C, also called Medicare Advantage (MA), is 1 of the 4 Medicare parts: A, B, C, and D.
Part C plans offer:
- Medicare beneficiaries an alternative way to get Medicare benefits.
- Plans sold by private insurance companies that contract with the Centers for Medicare & Medicaid Services (CMS).
You’re still a part of the Medicare program when you enroll in Part C.
- Your Part A (hospital insurance) and Part B (medical insurance) are combined into one Medicare Advantage plan.*
- Medicare Advantage plans can also include extra benefits, such as dental care and Part D prescription drug coverage.
The 3 Cs of Medicare Part C
Although Medicare Advantage plans vary, overall, plans offer many advantages. Below are 3 highlights we like to call “The 3 Cs of Medicare Part C.”
- Convenience: Medicare Advantage offers a way to bundle your hospital, medical, and prescription drug benefits all under a single policy.
- Choice: You can choose a plan that has the supplemental benefits you want and get one with or without Part D drug coverage.
- Cap on out-of-pocket spending: Unlike Original Medicare, MA plans have a cap, or limit, on out-of-pocket costs for in-network Part A and B services.** After you’ve met the plan’s maximum out-of-pocket limit, the plan pays 100% of the cost for additional covered expenses.
In 2023, the maximum out-of-pocket limit for in-network expenses is $8,300 per year.1
What does Medicare Part C cover?
With the exception of hospice care, Medicare Part C plans cover all Part A and Part B benefits. Some plans include supplemental health benefits Original Medicare doesn’t cover.
- Most plans come with prescription drug coverage, and those are known as Medicare Advantage Prescription Drug Plans (MA-PDs).2
- You can also enroll in a stand-alone prescription drug plan (PDP) through a private, Medicare-approved insurance company to add drug benefits to certain Part C plans, such as a private-fee-for-service plan or a Medicare MSA plan. In 2023, there are 801 PDPs available nationwide.3
All Part C plans must provide coverage for emergency care outside the plan’s service area, but not outside the United States. Plans can also change benefits each year.
Below, is an overview of covered benefits to help you learn more about Medicare Part C.4
|Medicare Advantage Summary of Benefits
|Part A Hospital Insurance
|Part B Medical Insurance
|Supplemental Health Benefits+
|Part D Prescription Drug Benefits++
+Benefits vary by plan.
++Each plan has a unique formulary of covered drugs.
Who should set Medicare Advantage?
Anyone who is eligible for Medicare Part C can enroll in a plan. But you may be an ideal candidate for a Medicare Advantage plan if you:
- Want to take advantage of low premiums. The 2023 average monthly premium for an MA plan is $18.5 This is 8% lower than 2022 premiums. Premiums can be lower or higher depending on the county, the plan type, and other plan characteristics.
- Have experience with plans that use networks. You may be familiar with some of the different types of individual and family health insurance plans that use provider networks, such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Plan options like these are also available with Medicare Advantage, and they work in a similar fashion.
- Live in a service area with strong network options. Some Medicare Advantage service areas have strong networks because there are more providers in that area who contract with plans to give enrollees access to care. Metro areas, for example, usually have more provider options, such as doctors, specialists, and hospitals.
- Don’t do a lot of extended travel. If you frequently travel to locations that are outside your MA plan’s service area or network and you need medical care, care received may not be covered (unless it’s an emergency), or it may cost you more to use an out-of-network provider.
- Prefer to have a copay rather than a coinsurance. MA plans, many of which are HMOs or PPOs, are more likely to have fixed copayments instead of a coinsurance. With a coinsurance, the amount you pay out of pocket depends on the total cost of covered services. Most covered services under Original Medicare have a 20% coinsurance.6
Who is eligible for Medicare Part C?
To qualify for Medicare Part C, you must:
- Have both Medicare Parts A and B to be eligible for Part C.
- Live in a Medicare Advantage service area where private insurance companies offer plans.
- If you have end-stage renal disease (ESRD), you can enroll in a Medicare Advantage plan during Open Enrollment, which usually runs from October 15 to December 7. (Your coverage would begin January 1.)7
When can I enroll?
Did you know you don’t have to enroll in Medicare Part C coverage? If you’re on Medicare and choose not to enroll in Part C, you will continue to receive your Medicare Part A and/or Part B benefits, as well as any drug coverage you may have from a stand-alone drug plan.
If you do decide to enroll in Medicare Advantage, there are different enrollment periods in which you may do so. These include specific dates during the year, when you turn 65, or when you are under 65 and have a disability.
Below are 4 types of enrollment periods for Medicare Advantage plans.
1. Initial Coverage Election Period (ICEP) turning 65
You first become eligible to enroll in Medicare Advantage at the same time you become eligible for Medicare Parts A and B, when you’re turning or have turned 65.
This is a 7-month period that includes the 3 months before the month of your 65th birthday, your birthday month, and the 3 months after your birthday month. This also applies if you already have Medicare because of a disability and are turning 65.
2. ICEP Under 65
If you first became eligible for Medicare because you’re under 65 and have a disability, your Part C Medicare enrollment happens during the 7 months surrounding your 25th month of receiving disability benefits from Social Security or the Railroad Retirement Board. This includes the 3 months before your 25th month of disability benefits, the 25th month, and the 3 months after the 25th month.
3. ICEP if you only got Part A when you were first eligible
If you already had Medicare Part A but didn’t get Part B until the Part B General Enrollment Period (January 1 to March 31), you can enroll in an MA plan with or without prescription drug benefits between April 1 and June 30.
4. Medicare Annual Enrollment Period (AEP)
AEP is when you can shop for Medicare plans, which includes switching from Original Medicare (Parts A and B) to a Medicare Advantage plan with or without Part D drug coverage. This period occurs annually from October 15 to December 7.
What is Medicare Part C Special Enrollment Period?
Certain life events trigger special enrollment periods (SEPs) when you can switch from one Part C plan to another or sign up for Medicare Part C coverage for the first time.
There are several life events that count as SEPs for Medicare Advantage. Many of these SEPs also apply to Medicare Part D prescription drug plans.
Some of these SEPs include:
- Plan not renewing or reducing its service area: You can enroll in another MA plan starting December 8 and ending the last day of February.
- Medicare ending (terminating) the plan’s contract: You can switch to another MA plan starting the 2 months before the contract terminates and ending 1 full month after the contract terminates.
- Losing eligibility for Medicaid: If you receive a notice that you will no longer be eligible for Medicaid benefits for the current plan year, you will have 2 full months after receiving the notice to join an MA plan. If you will not be eligible for Medicaid the following year, you can enroll in an MA plan between January 1 and March 31 (the same dates for the Part B General Enrollment Period).
- Living in a Part C or Part D service area with an overall 5-star quality rating: You can join an MA plan (or a Part D or Medicare Cost plan) with an overall 5-star quality rating one time between December 8 and November 30.
Enrollment by the Numbers
An increasing number of Americans are enrolling in Medicare Advantage plans each year.
- As of 2023, about 31 million Medicare beneficiaries (45% of Medicare recipients) are enrolled in an MA plan.8
Disenrolling from Medicare Advantage
Besides certain SEPs that allow you to disenroll from or drop your Medicare Advantage plan, you can drop your plan and return to Original Medicare during the Medicare Open Enrollment Period (OEP).
October 15 to December 7 is the Medicare Open Enrollment Period.
- It allows you to disenroll from Medicare Advantage and re-enroll in Original Medicare with coverage effective January 1.
During this time, you can also:
- Switch from your Part C plan to another
- Join, drop, or switch prescription drug plans
Medicare Advantage Plan types
Medicare Advantage HMO plans
As of 2023, 58% of MA plans offered are HMOs.9 Receiving care through an HMO is usually limited to in-network providers, unless you have a medical emergency or need urgent care and can’t get to an in-network provider.
- You usually need to get all your basic healthcare through your primary care physician (PCP) and need a referral from your PCP to see a specialist.
- Many plans also include Part D drug coverage. If you have such a plan, you can’t enroll in a stand-alone prescription drug plan (PDP).
Medicare Advantage PPO plans
One of the main differences between HMO and PPO plans is that PPO plans are more flexible—you can go outside the plan’s network for care.
Like HMO plans, Medicare Advantage PPO plans usually include drug coverage, and you can’t enroll in a PDP if your Part C plan already provides drug benefits.
In learning more about what is Medicare Part C and its plan types, you should know that there are two types of Medicare Advantage PPO plans:
- Local PPOs: As of 2022, 40% of Part C plans offered are local PPOs.9 Local PPOs (as well as HMOs—both of which are coordinated care plans) can pick which counties to serve upon approval from the Centers for Medicare & Medicaid Services (CMS). Plans can also have different premiums and benefits among counties.
- Regional PPOs: Regional PPOs are also coordinated care plans. Plans operate in 1 of the 26 Medicare Advantage regions mandated by the CMS. A region can be a single state or multiple states. Unlike local PPOs, benefits and premium rates for regional PPOs are the same for all regions the plan serves. Regional PPOs also have more network flexibility.
Special needs plans
SNPs are designed for Medicare beneficiaries who have:
- Specific medical conditions
- A dual eligibility status
- Or a need for care in an institutional facility (also known as a residential facility).
To help make sure enrollees have the proper care management, plans usually require they choose a PCP or care coordinator.
There are 3 types of SNPs. Each has specific provider options, benefits, and drug formularies, as well as a requirement to include Medicare Part D drug coverage. Plan types vary by location, so some may not be available in certain U.S. regions or counties.
The 3 type of SNPs include:
1. Severe or Disabling Chronic Condition SNPs (C-SNPs):
Only people with certain chronic medical conditions are eligible for C-SNPs. Conditions must meet one of these criteria:
- Be life threatening
- Be substantially disabling
- Carry a high risk of hospitalization
- Require specialized delivery systems
2. Dual SNPs (D-SNPs):
Most special needs plan members are enrolled in Dual SNPs. Dual here means you must have both Original Medicare (Parts A and B) and Medicaid to enroll. But plans can decide that only people in certain Medicaid categories are eligible. Choosing a PCP and getting a referral to see a specialist is often required with D-SNPs. Access to a care coordinator is also available with many plans.
3. Institutional SNPs (I-SNPs):
To be eligible for this type of Part C Medicare plan, you must need or be expected to need 90 or more days of care in an:
- Intermediate care facility (ICF)
- Assisted living facility (ALF)
- Long-term care skilled nursing facility (SNF)
- Or other type of institutional nursing facility
Some plans, called “Institutional Equivalent SNPs,” provide coverage to eligible people who live at home (also referred to as living in the community) if the setting meets an institutional level of care.
Private Fee-For-Service (PFFS) plans
PFFS plans allow you to visit any Medicare provider who is willing to accept the terms and conditions of the plan.
- Plans decide the amount you pay for care and how much they will pay providers.
- Plans can also decide whether or not to offer prescription drug coverage for seniors and younger people on Medicare.
- If no drug coverage is offered, you can join a stand-alone PDP. If the plan offers drug benefits, you must accept them, and you cannot enroll in a PDP.
HMO Point of Service (HMO/POS)
This plan works like an HMO, but you have the flexibility to get certain medical care outside the plan’s network through the POS option.
- You have higher cost sharing when you go out of network.
- That means your deductibles and coinsurances or copayments are usually higher than other types of plans.
- You usually need to file a reimbursement claim with the plan for services you paid for out of pocket.
Medicare Medical Savings Account (MSA)
This plan combines 2 parts:
- A high-deductible health plan (HDHP)
- A special type of savings account. You must meet the deductible before the plan starts to pay for covered services.
The savings account part is funded by the plan from money it receives from Medicare.
- You can use funds for covered Part A and Part B expenses, which count toward your deductible, or on expenses that are not covered.
- If you have additional medical costs and there’s no money left in the account, you pay for those costs out of pocket until the plan’s deductible is met.
- If there’s money left in the account at the end of the year, the money stays in the account, and you can use it on future medical expenses.
Below are some other important things to know about Medicare MSAs:
- Eligibility. You can’t join a Medicare MSA if certain situations apply, such as being eligible for Medicaid.
- Prescription drug coverage. MSA plans don’t include prescription drug coverage—you would need to join a PDP to get drug benefits.
- Additional benefits. Some plans include extra benefits, such as long-term care, vision, and dental coverage, for an additional cost.
- There are no networks—you can visit any provider in the U.S. who accepts Medicare.
- You don’t pay a monthly premium to your MSA plan, but you still continue to pay your Part B premium.
6 tips to help you choose a Medicare Advantage plan
There’s a lot of things to consider when you’re looking for a Medicare Advantage plan that meets your healthcare care needs. Here are 6 tips to help you choose a plan that works for you:
- Assess your needs and budget. Example: Would you prefer a plan with in-network care to help save money on premiums?
- Compare plans in your area—benefits and premiums are different for each plan.
- Check your network. whether healthcare providers you use are in the plan’s service area and network.
- Make sure your prescriptions are covered on the plan’s formulary if drug coverage is included.
- Understand how the plan works before you enroll.
- Review your coverage each year to decide whether you want to change plans.
Need more help? Check out these Medicare tips for choosing a plan.
Medicare Advantage Plans by state
Medicare Advantage plans by state are typically divided by counties that represent a Medicare Advantage service area.
- Plans are available in most counties within the United States.
- A service area can also be divided into regions, as is the case with regional PPO plans. Regions can include one state or multiple states.
What are Medicare Advantage costs?
A key factor in understanding Medicare Part C costs is knowing that you still pay your Medicare Part B premium (directly to Medicare) in addition to the monthly premium (if any) for your Part C plan.
The standard 2023 premium for Medicare Part B will be $164.90 (or higher depending on your income).10
But if your Part B premium is paid through your Social Security benefit, your rate could be lower.
If you’re eligible for a lower rate, Social Security will determine your exact Part B premium. On average, Part C premiums are typically lower than what you pay for Part B***.
- Plan type
- Geographic location
- And other characteristics
The average MA monthly premium is $18 in 2023.5
- Information on monthly premium rates is usually focused on Medicare Advantage Prescription Drug Plans (MA-PDs) because these are the vast majority of plans.
- If you didn’t join an MA-PD, PDP, or other Medicare plan that offers Part D drug coverage when you were first eligible, you may pay a late enrollment penalty for Part D, which will be added to your monthly premium.
- But there’s no penalty if you get Extra Help">Extra Help or have other creditable drug coverage.
Below are more details on what Medicare Advantage costs for some of the different types of plans that include prescription drug benefits.
- HMO: Since the Affordable Care Act (ACA) was passed in 2010, premiums for Medicare Advantage HMOs have decreased. The weighted average monthly premium for Medicare Advantage HMO plans in 2023 was $18.9
- Local PPO: Average premium rates have also decreased for local PPOs since the passing of the ACA. In 2022, the weighted average monthly premium was $20.11
- Regional PPO: Average premiums for regional PPOs have decreased. The 2022 weighted average premium was $49.11
Medicare Advantage zero-dollar premium plans
Medicare Advantage plans can choose to pass on savings on healthcare costs to members, resulting in a $0 monthly premium.
- A plan can also be designed to not have a monthly premium, as is the case with a Medicare MSA.
- In understanding Medicare Part C and its costs, you should be aware that zero-premium Medicare Advantage plans are not free.
- You still pay your Part B premium as well as other Medicare out-of-pocket costs, such as deductibles.
The Kaiser Family Foundation reports that 69% of MA-PD enrollees have a zero dollar premium plan, with exception to their Part B premiums.11
Other facts to know about Medicare Part C
Here is a list of other important facts you need to know about Medicare Part C plans:
- Rights and protections. Because you’re still in the Medicare program, you have rights and protections.
- Plan and network changes. At any time during the year, providers can leave a Part C Medicare plan, and plans can change network providers.
- Fees. Part C plans are not allowed to charge more than Original Medicare does for certain services, such as skilled nursing facility care, dialysis, and chemotherapy.
- Prescription drug coverage. You can’t have prescription drug benefits through a Medicare Advantage (MA) plan and a stand-alone prescription drug plan (PDP) at the same time. If you’re enrolled in an MA plan with drug coverage and you enroll in a PDP, you will be disenrolled from your MA plan and re-enrolled in Original Medicare.
- Supplemental insurance. You can’t have Medicare Advantage and Medicare Supplement insurance If you want to join a Medicare Supplement plan, also called Medigap, you would need to make sure you can leave your MA plan before your Medigap coverage begins.
- Medicare MSA. If you’re enrolled in a Medicare MSA, an insurance company can’t legally sell you a Medigap policy.
Get help to find the best Medicare plan for you
Did you know there’s 3,998 Medicare Advantage plans to choose from in 2023?9
There’s a lot of options. Want a little help to find the right plan for you?
Call (800) 827-9990 to talk with a licensed insurance agent today or find one in your area.