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Here's Each Type of Medicare Advantage Plan, And How They Work

By Zawn Villines
Most people can choose from dozens of Medicare Advantage plans. So which type of Medicare Advantage is right for you?

One of the best things about Medicare Advantage is that many of the plan options mirror that which you'd receive from an employer.

When you opt for a Medicare Advantage plan, you get to choose from a variety of plan options. In 2020, there were 3,148 total plans available, giving consumers in most states a few dozen plans to choose from.

So what types of Medicare Advantage plans are available to you? And how can you decide which option is best? Here's an overview of each type of Medicare Advantage plan.

Medicare Advantage HMO

A Medicare Advantage health maintenance organization (HMO) offers care within a network of providers. Except in certain emergency situations, you must seek care from one of the network's preferred providers. Some important things to know about these plans include:

  • Most, but not all, HMOs cover prescription drugs.
  • You usually need to choose a primary care provider (PCP). Your PCP must then refer you to a specialist if you need additional care.
  • In most cases, the plan will not cover care outside of its network, even after you meet your deductible. There may still be coverage for emergency care, and for care when you travel outside of the area the HMO covers.
  • While HMOs cover a wide range of services, you must know and follow the plan's rules to get full coverage.

Medicare Advantage PPO

A Medicare Advantage preferred provider organization (PPO) offers discounts for choosing providers within the plan's preferred provider network. In some cases, there may not be coverage for other providers until you reach your deductible. In other cases, the copay for choosing an out-of-network provider may be significantly higher. Some other important facts about PPO plans include:

  • You can seek care from any provider who accepts Medicare, but the costs may be significantly higher if you choose an out-of-network provider.
  • Most Medicare Advantage PPO plans cover prescription drugs.
  • You do not have to choose a PCP with these Medicare plans, and you do not usually need a referral to a specialist.
  • You may have coverage for a number of services not covered by original Medicare, although the fee for these services may be higher.

Medicare Advantage PFFS

A Medicare Advantage private fee-for-service (PFFS) plan is private insurance. These plans are different from PPO and HMO plans in that the plan rules vary greatly from plan to plan. Each plan has its own reimbursement rates and copays. Some important things to consider include:

  • There is significant variability from plan to plan. Some have a preferred provider network that offers significant discounts. Others allow you to choose any provider you want. You can go to any provider who accepts Medicare, but the cost may change depending on the plan's rules.
  • PFFS plans usually cover prescription drugs.
  • You are not required to select a PCP or get a referral before seeing a specialist.
  • A provider must agree to treat you under the plan and accept the payment terms under the plan. Even if you've seen a provider before, they might elect not to treat you.

Medicare Advantage SNP

A Medicare Advantage special needs plan (SNP) caters to a group of people with specific needs. These plans often work with people who have similar or related disabilities, such as dementia, autoimmune disease, or diabetes. You must seek care from in-network providers unless there is an emergency, you have end-stage renal disease and need dialysis outside of the coverage area, or you travel outside of the area the plan covers and need urgent care. Some other considerations include:

  • SNPs are required to cover prescription drugs.
  • Most plans require you to select a PCP and get a referral to see a specialist.
  • SNP plans offer specialist care for the disease or symptoms the plan covers.
  • Some plans are limited only to people who live in institutional settings, such as people in memory care facilities.

Other Medicare Advantage Plan Options

A handful of other Medicare Advantage plans are less popular, and might not be available to all beneficiaries. They include:

  • Health maintenance organization point of service (HMOPOS) plans. These plans are similar to HMOs, but allow some out-of-network services, usually at a higher cost. They can be a good choice for people who like HMOs but who also have a doctor or specialist who is not in-network.
  • Medical savings account (MSA) plans. These plans have higher deductibles than original Medicare or Medicare Advantage. They also allow beneficiaries to open a savings account that can help fund medical costs.