How Medicare Advantage works
To join, you need both Part A and Part B and must live in the plan’s service area. The plan then handles your hospital and medical claims, and you show its card instead of your red, white and blue Medicare card. Keep that card anyway: Original Medicare still pays for hospice care and some clinical research costs while you are in the plan, and you will need it if you switch back.
Each plan sets its own premium, deductibles, copays and coverage rules, and what you pay can change only on January 1. Most plans include Part D drug coverage, many require prior authorization for certain services, and you can belong to only one plan at a time. The five designs differ mainly in how tightly they hold you to a network:
- HMO: care from the plan’s network except emergencies, urgent care and out-of-area dialysis, usually with a primary care doctor and referrals to specialists.
- PPO: a network plus coverage outside it at a higher cost, with no referrals needed.
- Private Fee-for-Service: any Medicare-approved provider who accepts the plan’s payment terms and agrees to treat you.
- Special Needs Plan: limited to people who also have Medicaid, have certain severe or chronic conditions, or live in or need the level of care of a nursing facility; every one includes drug coverage.
- Medical Savings Account: a high-deductible plan plus a bank account the plan funds with Medicare money each year; no drug coverage, so you add a separate Part D plan.
What Medicare Advantage costs in 2026
Joining a plan doesn’t replace the Part B premium. In 2026 you still pay the standard $202.90 a month, or more with IRMAA, plus any premium the plan charges. Some plans charge none, and some in certain areas pay part of your Part B premium.
The real cost shows up when you use care. Instead of Original Medicare’s $283 Part B deductible and 20% coinsurance, you pay the plan’s own deductibles, copays and coinsurance. Every plan must set a yearly limit on what you pay for covered Part A and Part B services, within a maximum that CMS recalculates each year; a PPO may add a second, higher limit that also counts out-of-network care. Once you reach the limit, covered services cost nothing for the rest of the year.
Drug costs sit outside that limit and count toward the Part D out-of-pocket cap instead, $2,100 for 2026. A realistic worst case adds the Part B premium, the plan premium, the medical limit and the drug cap, plus anything the plan doesn’t cover.
Pros and cons vs. Original Medicare with Medigap
The choice most people face at 65 is between Medicare Advantage and Original Medicare paired with a Medigap policy and a stand-alone Part D plan. Neither is cheaper for everyone. Medicare Advantage works like pay-as-you-go: low premiums, then cost sharing on each visit, scan or stay until you reach the plan’s limit. Medigap works like prepaying: a larger fixed premium every month, then little or no cost sharing at any doctor or hospital in the U.S. that takes Medicare. The trade-offs:
- Pro: low premiums, sometimes $0 beyond Part B, with medical and usually drug coverage on one card.
- Pro: a yearly out-of-pocket limit on covered services, which Original Medicare alone lacks.
- Pro: extras such as some dental, vision and hearing benefits.
- Con: networks, referrals and prior authorization shape where and when you get care, which matters most if you travel or split the year between two states.
- Con: a bad year can cost far more than the premium suggests, up to the plan’s limit plus drug costs.
- Con: returning to Original Medicare is easy each fall, but outside a few protected windows a Medigap insurer can ask health questions, charge more or turn you down.
When you can join, switch or leave
You can first join during your Initial Enrollment Period when you first get Medicare, for most people the seven-month window around your 65th birthday explained under Medicare enrollment periods. After that, changes happen in fixed windows unless a life event opens a Special Enrollment Period, such as moving out of the plan’s service area, losing other coverage, or qualifying for Medicaid or Extra Help. Insurers also decide each year which counties they serve, so a plan can leave your area, and you would then pick another plan or return to Original Medicare.
- October 15–December 7: join, switch or drop a plan, or move between Medicare Advantage and Original Medicare, effective January 1.
- January 1–March 31: if you are already in a plan, make one switch to another plan or back to Original Medicare.
- First three months with Parts A and B: if you joined during your Initial Enrollment Period, you can change plans or return to Original Medicare.
- Medigap trial right: if you joined a plan when first eligible at 65, or dropped Medigap to try Medicare Advantage for the first time, leaving within 12 months gives you a federal right to buy certain Medigap policies.
Common Medicare Advantage mistakes
Most regrets come from judging a plan by its premium in a healthy year. The better test is what it would cost in a bad year, and whether the care you might need then is inside its network. Plans reset their premiums, deductibles and copays every year, and insurers decide again which areas to serve, so a plan that fit last year deserves a fresh look each fall, before the October 15–December 7 window closes. The most common errors:
- Checking your primary care doctor but not the hospitals and specialists you might need later.
- Joining a plan and losing employer or union retiree coverage, possibly for a spouse and dependents too, which you may not be able to get back.
- Adding a stand-alone Part D plan while in an HMO or PPO, which can’t be paired with one: joining a separate drug plan can end your Medicare Advantage enrollment.
- Expecting routine care nationwide or abroad from a plan built around a local network.
Illustrative numbers
Budgeting a bad year in a $0-premium HMO, 2026
Part B premium, $202.90 × 12$2,434.80
Plan premium$0
This plan’s in-network out-of-pocket limit (each plan sets its own)$6,500
Part D out-of-pocket cap for covered drugs$2,100
Worst case for covered in-network care and drugs$11,034.80
A healthy year might cost little more than $2,434.80 of Part B premiums and a few copays, while a hard year can reach $11,034.80 before out-of-network bills, uncovered services or IRMAA. Setting that range against the steadier premiums of Medigap plus a Part D plan is the fairest way to compare the two routes.
At a glance
Medicare Advantage vs. Original Medicare with Medigap and Part D
| Feature | Medicare Advantage | Original Medicare + Medigap + Part D |
|---|---|---|
| Doctors and hospitals | Usually the plan’s network; PPOs pay out of network at a higher cost | Any provider in the U.S. that takes Medicare |
| Monthly premiums | Part B plus the plan’s premium, which can be $0 | Part B plus Medigap and Part D premiums |
| Cost when you get care | Copays and coinsurance up to the plan’s yearly limit | Little or none, depending on the plan letter |
| Yearly out-of-pocket limit | Yes, for Part A and B services | None in Original Medicare; Medigap fills most gaps |
| Drug coverage | Usually built in | Separate Part D plan |
| Prior authorization | Often required for certain services | Not needed in most cases |
| Care outside the U.S. | Generally not covered; some plans add emergency care | Some Medigap plans pay 80% of emergencies abroad |
| Switching later | Back to Original Medicare each fall or January–March | Medigap bought later may involve health questions |
Put it in your plan
Medicare Advantage in MoneyWhatIf
MoneyWhatIf’s Medicare setting charges each person from the plan year they turn 65: the 2026 standard Part B premium of $202.90 a month, the $38.99 Part D base premium as a placeholder rather than a quote, and a monthly supplemental amount you enter per enrolled person, which is where a Medicare Advantage plan premium belongs. The total grows at plan inflation plus two percentage points, and IRMAA is charged separately. Copays, deductibles and a plan’s out-of-pocket limit aren’t modeled, so add expected costs as spending if you want the forecast to carry them.
Common questions
Medicare Advantage FAQs
Do you still pay the Part B premium with Medicare Advantage?
Yes. Everyone in a Medicare Advantage plan keeps paying the Part B premium, $202.90 a month for most people in 2026, and higher-income members also pay the IRMAA surcharge on Part B and on the plan’s drug coverage. The plan’s own premium comes on top, though some plans charge none and some pay part of your Part B premium for you.
Can you have Medigap and Medicare Advantage at the same time?
No. It is illegal for anyone to sell you a Medigap policy while you are in a Medicare Advantage plan unless you are switching back to Original Medicare, and Medigap can’t pay a Medicare Advantage plan’s copays, deductibles or premiums. People who drop Medigap to try a plan for the first time get a single 12-month trial period to return and buy their old policy back, if the insurer still sells it.
Does Medicare Advantage cover you in another state?
Emergency and urgent care are covered even outside the plan’s network. Routine care away from home depends on the plan type: an HMO generally pays only for its own network, a PPO pays out-of-network providers at a higher cost, and a Private Fee-for-Service plan pays any Medicare-approved provider who accepts its terms. If you move out of the plan’s service area, you get a Special Enrollment Period to pick a new plan. Care outside the U.S. is generally not covered.
Can you use an HSA to pay Medicare Advantage premiums?
Yes. Once you are 65, IRS rules let a health savings account pay Medicare premiums tax-free, which covers Part B, Part D and Medicare Advantage premiums but not Medigap premiums. You can no longer contribute to the HSA once you are enrolled in Medicare, so the balance you built before then is what pays these costs.