Types of Medicare Advantage

A Medicare Advantage plan is a type of health insurance offered through a private company that contracts with Medicare to provide your Part A and Part B benefits. Understanding the different types of Medicare Advantage plans can help you choose the one that best fits your healthcare needs and budget.

There are four main types of Medicare Advantage plans, each with its own rules about how you access care, which doctors you can see, and what you'll pay out of pocket. Here's what you need to know about each one.

HMO Plans: Health Maintenance Organization

HMO plans are the most common type of Medicare Advantage plan. They require you to use doctors, hospitals, and other providers within the plan's network, except in emergencies. You'll typically need to choose a primary care physician (PCP) who coordinates your care and provides referrals to specialists.

If you don't already have a primary care doctor, the plan will pair you with one when you enroll. “If you don't have a primary care physician and are enrolling in an HMO, the carrier will assign you one,” says Ron Hamilton, a licensed Medicare agent in North Carolina. “If, for some reason, you don't care for the PCP assigned to you, you can change at any time.”

HMO plans tend to have lower premiums and out-of-pocket costs compared to other plan types, but they offer less flexibility in choosing providers. If you see a doctor outside the network (other than in an emergency), you'll usually pay the full cost yourself. For a detailed comparison of network rules, see our guide on HMO vs PPO Medicare Advantage plans.

PPO Plans: Preferred Provider Organization

A PPO plan gives you more flexibility than an HMO. You can see any doctor or specialist — both in-network and out-of-network — without needing a referral. However, you'll pay less when you use providers that are part of the plan's network.

Worth knowing: even though PPOs don't require referrals from the plan itself, individual specialists may still ask for one. “Many people like PPO plans because they typically do not require a referral to see a specialist. However, that does not necessarily mean the specialist or doctor's office won't request one,” explains Julie Kovacevich, a licensed Medicare agent in Nevada. “Some physicians may still require a referral based on their own office policies, so it's always best to check directly with the provider before scheduling an appointment.”

PPO plans typically have higher premiums than HMOs, but they're a good fit if you want the freedom to see specialists directly or if you travel frequently and need coverage outside your home area.

PFFS Plans: Private Fee-for-Service

A Private Fee-for-Service plan determines how much it will pay healthcare providers and how much you'll owe when you receive care. Providers don't have to agree to the plan's terms, so not every doctor will accept a PFFS plan. Before scheduling an appointment, you should confirm that your provider accepts the plan's payment terms.

Because the payment structure is different from HMOs and PPOs, the rules can catch people off guard. “Medicare being a PFFS (Private Fee For Service) benefit delivery model, no referral is required for therapies,” notes Roberto Alonso, a licensed Medicare agent in Florida. “But since the providers must accept Medicare's standard fees, terms, and conditions, and the treatment must be deemed medically necessary, I always advise my customers to have the provider's office confirm coverage with Medicare.”

PFFS plans may or may not include a provider network. If the plan has a network, you'll pay less for using in-network providers. These plans can include hospital coverage and other services, but the rules differ from traditional Medicare and Medigap plans.

SNP Plans: Medicare Special Needs Plans

Special Needs Plans are designed for people with specific diseases or conditions, those who are eligible for both Medicare and Medicaid (dual-eligible), or those who live in certain institutions like nursing homes. SNPs tailor their benefits, provider networks, and drug formularies to meet the unique needs of their members.

“Special Needs Plans are designed for Medicaid-eligible clients or for clients with specific health issues like cardiac issues, diabetes, and similar conditions,” says Bill Holland, a licensed Medicare agent in Tennessee. “These plans have benefits specifically designed to meet the needs of certain populations.”

Because SNPs focus on specific populations, they can often provide more targeted and coordinated care than other plan types. If you qualify for a SNP, it may offer better coverage for the services you need most, including specialized support for chronic conditions like heart disease.

For someone with a serious chronic illness, a Chronic Condition SNP (C-SNP) can be especially valuable. “For someone with chronic kidney disease, the best Medicare plan is often a Medicare Advantage C-SNP if one is available in your area, because it's designed specifically for people with conditions like CKD and may offer extra care coordination,” says Priscilla Ramos, a licensed Medicare agent in Ohio. “If a C-SNP isn't available, Original Medicare plus a Medigap Plan G plus a Part D drug plan often provides the most flexibility for seeing specialists and receiving treatment.”

Key Considerations When Choosing a Plan

• Healthcare Needs: Assess your current health status and anticipate future needs to determine which plan aligns best with your situation.
• Provider Preferences: If maintaining access to specific doctors or specialists is important, ensure they are included in the plan's network.
• Financial Factors: Evaluate premiums, deductibles, copayments, and out-of-pocket maximums to understand the overall cost implications.
• Additional Benefits: Consider whether the plan offers extra benefits, such as prescription drug coverage, dental, vision, or hearing services.
• Travel Considerations: If you travel frequently, examine the plan's coverage area and policies regarding out-of-network care.

Verifying your doctors are covered is something a good agent will handle for you. “It's the agent's job to make sure the Advantage plan being considered is accepted by her current doctors. Every carrier provides access to its roster of in-network providers,” says Edward Fisher, a licensed Medicare agent in Michigan. “If the plan is an HMO, you must go to an in-network doctor or they won't pay. If the plan is a PPO, you can go outside the network, but you will pay a higher copay.”

By evaluating these factors, you can select a Medicare Advantage plan that suits your healthcare needs and lifestyle. If you later decide your plan isn't the right fit, you can learn how to switch from Medicare Advantage to Medigap. Review your options during the Medicare Advantage enrollment period, and consider working with a local Medicare agent who can walk you through the plans available in your area.