Medicare Advantage Plan Options

4 things to know about your Medicare Advantage plan types:

  1. There are over 2,000 individual Medicare Advantage plans nationwide, according to the Kaiser Family Foundation (KFF).
  2. There are 5 major types of Medicare Advantage plans.
  3. The types of plans differ by network restrictions, drug coverage options, and referral requirements.
  4. Plan availability varies by location.

In 2014, there were a total of 2,014 different Medicare Advantage plans available in the United States, according to the Kaiser Family Foundation (KFF). Plan options vary around the country, so where you live could affect your plan options.

Every Medicare Advantage plan must offer the same set of basic benefits, and many plans provide additional benefits such as prescription drug coverage or wellness programs. The benefits you get will depend on the individual plan you buy, so you need to compare plans to get the right coverage for you.

Narrowing down your options may be difficult. The first step is to determine which of the 5 major types of Medicare Advantage plans most closely fit your health insurance needs.

Types of Medicare Advantage plans

There are 5 major types of Medicare Advantage plans. The following chart shows the major plan types and their popularity:

Source: Kaiser Family Foundation.

The major types of plans differ by network restrictions, referral requirements, and prescription drug coverage options.

Health Maintenance Organization (HMO) plans

HMO plans offer low-cost coverage options with network restrictions.

If you have an HMO, you will be covered only for medical providers and hospitals within the HMO’s specific network, unless it’s emergency or urgent care. If you go out of your network for care, your insurer might not pay for it. The provider networks are grouped based on ZIP codes or county lines.

HMOs require you to pick a primary care physician, and you will need a referral to see a specialist in most cases.

HMO plans usually provide prescription drug coverage, according to Medicare.gov.

There also is a less common version of HMO plans called HMO Point of Service plans (HMOPOS). HMOPOS are basically structured like an HMO but allow access to some out-of-network health care services for an additional cost.

Preferred Provider Organization (PPO) plans

PPO plans offer coverage through a provider network but allow you to access out-of-network care for an extra cost. If you go to doctors and hospitals in the plan's network, you will pay less.

You do not need to choose a primary care doctor with a PPO, and usually you do not need a referral to see a specialist.

Most PPO plans provide prescription drug coverage. However, if the plan lacks drug coverage, you cannot join a Medicare Part D prescription drug plan.

PPO plans operate both locally and regionally, depending on the specific plan. Local PPO plans are grouped into smaller areas such as counties. Regional PPO plans provide coverage in entire states or multi-state areas.

Most PPO plans are regional. Nearly three-quarters of Medicare Advantage PPO plans were regional plans in 2014, according to KFF.

Private Fee-for-Service (PFFS) plans

PFFS plans cover any doctor or health care facility that has agreed to treat members of your Medicare Advantage plan. You will be covered in an emergency even if the health care provider has not agreed to your plan’s terms.

Some PFFS plans may use a provider network. If you enroll in one of these plans and visit an out-of-network provider, you may face extra charges.

You do not need to choose a primary care doctor with PFFS plans, and you do not need a referral to see a specialist.

Some PFFS plans offer prescription coverage. If your plan does not offer coverage, you can join a Medicare Part D plan.

Special Needs Plans (SNPs)

SNPs are only available to Medicare beneficiaries with specific diseases or health conditions. The plans are structured to benefit their members according to their health needs.

SNPs limit membership to those with chronic or disabling conditions like dementia and HIV/AIDS or those living in institutions such as nursing homes. The plans are tailored for these members to provide the most suitable benefits, providers, and drug formularies for the group.

With an SNP, you need to visit in-network doctors and hospitals, unless you need emergency or urgent care or in other limited situations.

The plans usually require that you have a primary care doctor or a care coordinator. In addition, you will usually need a referral to see a specialist.

All SNPs must provide prescription drug coverage.

Medical Savings Accounts

Medical Savings Accounts provide you with a high-deductible health care plan and a bank account. Medicare will deposit money into the account and you can use the money to pay for your health care services throughout the year.

MSAs cover all of the required Medicare services and can provide additional benefits such as vision and dental coverage.

MSAs do not include prescription drug coverage. If you need coverage, you must join a Medicare prescription drug plan.