How Medicare Advantage Works in 2026: Costs, Networks, Coverage

Here's how Medicare Advantage works: you still have Medicare, with the same rights and protections, but the private plan you pick, not Medicare, decides much of what you pay. The plan's network and approval rules also shape where you get care. Medicare Advantage, also called Part C, is a Medicare-approved private plan that gives you most of your Part A and Part B coverage in place of Original Medicare, and most of these plans include Part D drug coverage too.1

In This Guide

• What Is Medicare Advantage (Part C) and How Does It Work?
• What a Medicare Advantage Plan Must Cover
• Extra Benefits a Plan May Offer
• How Medicare Advantage Costs Work: What You Pay
• Plan Types, Networks, and Prior Authorization
• How Drug Coverage Works in Medicare Advantage
• Who Can Join a Medicare Advantage Plan
• When You Can Join, Switch, or Leave
• Can You Keep Medigap With Medicare Advantage?
• Questions to Ask Before You Pick a Plan
• Go Deeper: Medicare Advantage Guides
• Frequently Asked Questions
• Learn More

What Is Medicare Advantage (Part C) and How Does It Work?

So how does Medicare Advantage work? Medicare Advantage plans are, in Medicare's own words, "another way to get your Medicare Part A and Part B coverage." Private companies offer these plans, and those companies must follow rules set by Medicare.1

When you join a Medicare Advantage plan, you don't leave Medicare. Medicare's booklet Understanding Medicare Advantage Plans says you'll get most of your Part A and Part B coverage from the plan rather than from Original Medicare, and you keep the same rights and protections you'd have under Original Medicare. Most of these plans also include Medicare Part D drug coverage, so hospital, medical, and prescription coverage often come from one plan.1

That's the whole idea in one breath. The rest of this guide is the fine print that actually decides whether a particular plan works for you or your parent.

What a Medicare Advantage Plan Must Cover

The baseline is set by federal regulation. Under 42 CFR 422.101, each Medicare Advantage organization must cover all services covered by Part A and Part B (for an enrollee entitled to both) that are available to beneficiaries living in the plan's service area, with exceptions written in for hospice care and for Medicare entitlement that begins or ends during a hospital stay. Medicare puts it more simply: plans "must cover all medically necessary services that Original Medicare covers."1

A few costs stay with Original Medicare even after you join. If you're in a Medicare Advantage plan, Original Medicare still helps cover your costs for hospice care, some costs of clinical trials, and benefits that come from laws or Medicare policy decisions that the plan doesn't cover.1

So when a hospice conversation comes up for someone in one of these plans, that's a moment to ask how the bills will be split between the plan and Original Medicare.

Extra Benefits a Plan May Offer

This is where the mailbox ads get loud. Medicare says a Medicare Advantage plan may cover things Original Medicare doesn't, "like fitness programs (gym memberships or discounts) and some vision, hearing, and dental services (like routine checkups or cleanings)."1

The word to hold onto is "may." Under 42 CFR 422.102, the company running the plan can, with approval from the Centers for Medicare & Medicaid Services (CMS), build supplemental benefits into a plan that every enrollee must accept or pay for, and it can also offer optional supplemental benefits that an enrollee chooses to add. Which extras you actually get depends entirely on the plan you pick, so check the specific plan's documents instead of assuming.1

If you're curious about meals or benefits for people with chronic conditions, those have their own guides: Does Medicare Advantage cover meals or groceries? and SSBCI, Medicare's special supplemental benefits for the chronically ill.

How Medicare Advantage Costs Work: What You Pay

Short answer to the question everyone asks: yes, you still pay the Part B premium with Medicare Advantage. You pay the monthly Part B premium and may also have to pay the plan's own premium. Some plans may have a $0 premium and may help pay all or part of your Part B premium.1

After the premium, the plan writes the price list. Each year, these plans set the amount you must pay for premiums, deductibles, services, items, and drugs, and the plan (rather than Medicare) decides how much you pay for covered care. Those costs and rules can change each year.1

That's why the Annual Notice of Change matters. Your plan's Annual Notice of Change lists changes in coverage, costs, provider networks, service area, and more that take effect in January, and the plan sends a printed copy by September 30. If you're helping a parent, that envelope is the one to open.1

The yearly out-of-pocket limit

Medicare Advantage plans have a yearly limit on what you pay for covered Part A and Part B services, which may include different limits for in-network and out-of-network services. Once you reach your plan's limit, you pay nothing for covered services for the rest of the year.1

Under 42 CFR 422.100(f)(4), a Medicare Advantage local plan's in-network maximum out-of-pocket (MOOP) amount can be no higher than the annual limit CMS calculates, and the plan must track your out-of-pocket spending and alert you and your contracted providers when you hit the in-network limit. CMS calculates that ceiling every year, so a plan's in-network limit sits at or below the CMS figure. For current Medicare premium and cost figures, see our guide to Medicare costs.1

Plan Types, Networks, and Prior Authorization

Medicare Advantage isn't one product. Medicare lists six plan types, and the area where you live might have all, some, or none of them.1

The table draws on Medicare's booklet, on 42 CFR 422.4 for plan categories (that regulation sorts plans into coordinated care plans such as HMOs and PPOs, MSA plans, and private fee-for-service plans), and on 42 CFR 423.30 for the drug column.1

How HMO networks work

In a Medicare Advantage HMO, you generally must get care from doctors, other providers, and hospitals in the plan's network, with emergency care, out-of-area urgent care, and temporary out-of-area dialysis covered either way. If you get non-emergency care outside the plan's network without authorization, you may have to pay the full cost. In most cases you choose a primary care doctor, and many HMOs require a referral from that doctor before you see a specialist.1

That's the detail that bites families during a move. If a parent's HMO doesn't include the doctors at a new facility, the network rule is the problem, and the enrollment section below covers when a switch is possible.

How PPO networks work

A Medicare Advantage PPO also has a network, and you can generally go to out-of-network providers for covered services, but you'll usually pay more. For Part A and Part B items and services, Medicare adds a condition: the out-of-network provider has to agree to treat you and must not have opted out of Medicare. Out of network is an option in a PPO, not a guarantee.1

Prior authorization

A Medicare Advantage plan may require approval, called prior authorization, before it covers certain services or items. If the plan doesn't approve a prior-authorization request, you may have to pay the full cost of the service, item, or drug.1

If a plan has already said no, our guide to what to do when your Medicare Advantage plan denies care walks through the appeal. And since a network is only as good as its list, read are Medicare Advantage provider directories accurate? before you trust one. For the special plan types, see how Medicare Special Needs Plans work and how Medicare Advantage MSA plans work.

How Drug Coverage Works in Medicare Advantage

Most Medicare Advantage plans include Medicare drug coverage (Part D). Under 42 CFR 423.30(b), a person enrolled in a Medicare Advantage plan that includes drug coverage must get it through that plan.1

The trap is the plan without drugs. If you join a Medicare Advantage HMO or PPO without drug coverage, you can't join a separate Medicare drug plan. In plan types that don't include drug coverage, like Medical Savings Account plans and some Private Fee-for-Service plans, you can join a separate Medicare drug plan. All Special Needs Plans must include Medicare drug coverage.1

Picture a new retiree who grabs a $0-premium HMO with no drug coverage because he doesn't take any prescriptions yet. Under Medicare's rules, someone in a Medicare Advantage HMO without drug coverage can't add a stand-alone Part D plan. And Medicare warns that if you're in a Medicare Advantage plan that doesn't offer drug coverage, and you don't have a Medicare drug plan or other creditable prescription drug coverage, you may have to pay a late enrollment penalty if you decide to get Medicare drug coverage later.1

For how the penalty is figured, see Part D late enrollment penalties and creditable coverage. For how drug plans work in general, see how Medicare Part D works.

Who Can Join a Medicare Advantage Plan

Under 42 CFR 422.50 and Medicare's booklet, to join a Medicare Advantage plan you must:

• Have Medicare Part A and Part B (the regulation says entitled to Part A and enrolled in Part B)
• Live in the plan's service area
• Be a U.S. citizen or lawfully present in the U.S.1

The service-area rule has two narrow exceptions, and they apply only if the company running the plan chooses to offer them: someone who was already in a health plan from the same organization in the month before becoming entitled to both Part A and Part B, and members of an employer group health plan that includes the Medicare Advantage plan.1

You can join a Medicare Advantage plan even if you have a pre-existing condition, and even if you have End-Stage Renal Disease (ESRD). The ESRD restriction in 42 CFR 422.50 applied only to Medicare Advantage coverage before January 1, 2021. Our guide can someone with ESRD join a Medicare Advantage plan? goes further.1

Two more rules. You can only be in one Medicare Advantage plan at a time. And if you or your spouse has employer or union coverage, joining one might, in some cases, cause you to lose that coverage for yourself, your spouse, and your dependents, and you may not be able to get it back. Medicare's advice is to talk to your employer, union, or benefits administrator about their rules before you join.1

When You Can Join, Switch, or Leave

Medicare says you can only join, switch, or drop a Medicare Advantage plan during set enrollment periods. Here they are side by side.1

In most cases, once you join a Medicare Advantage plan you must keep it for the calendar year starting the date your coverage begins, which is why the windows above matter so much. People with Original Medicare can't use the January 1 to March 31 window to switch into a Medicare Advantage plan.1

If your parent is moving into long-term care

Many families assume they have to wait for October. Not necessarily. While your parent is eligible for Medicare Advantage and lives in a long-term care facility that counts as "institutionalized" under Medicare's definition, they can join a Medicare Advantage plan, switch to a different one, or drop back to Original Medicare at any time, not just in the fall, as long as the new plan is open to enrollees. The source is 42 CFR 422.62(a)(4), which uses the definition in 42 CFR 422.2.1

The Medicare Advantage enrollment period for institutionalized residents stays open until the last day of the second month after the month your parent moves out of one of the long-term care facility settings described in Medicare's definition of "institutionalized" (42 CFR 422.2). If your parent is moving into a facility such as a nursing home and their current plan's network doesn't include the facility's doctors, ask the plan or the facility whether your parent counts as institutionalized under 42 CFR 422.2.1

More on the other windows: the Medicare Advantage Open Enrollment Period, Medicare special enrollment periods, the 5-star special enrollment period, and Medicare enrollment periods.

Can You Keep Medigap With Medicare Advantage?

Medigap, or Medicare Supplement Insurance, is extra insurance from a private company that helps pay your share of costs in Original Medicare. Medigap and Medicare Advantage are built for different paths.1

Medicare's booklet states: "If you're in a Medicare Advantage Plan, it's illegal for anyone to sell you a Medigap policy unless you're switching back to Original Medicare." The same booklet says that if you aren't planning to drop your plan and someone tries to sell you a Medigap policy, you should report it to your State Insurance Department. The underlying law, Section 1882 of the Social Security Act, makes it unlawful to sell or issue a Medicare supplemental policy to someone in a Medicare Advantage plan with knowledge that the policy duplicates health benefits the person already has under the plan.1

If you already have Medigap, you can't use it to pay a Medicare Advantage plan's copayments, coinsurance, deductibles, and premiums, so you may want to drop the Medigap policy when you join. Just know that in most cases, if you drop a Medigap policy to join a Medicare Advantage plan, you may not be able to get the same policy back.1

There's one safety valve. If you join a Medicare Advantage plan for the first time and aren't happy with it, you have a trial right under federal law to buy a Medigap policy and a separate Medicare drug plan if you return to Original Medicare within 12 months of joining the plan. Our guide to switching between Medicare Advantage and Original Medicare covers how to use it.1

Questions to Ask Before You Pick a Plan

Every one of these comes straight from the rules above. Ask them of any plan you're considering, and get the answers in writing where you can.1

1. Are my doctors, hospitals, and any facility I might need in the network? In an HMO, non-emergency care outside the network without authorization may cost you the full bill.
2. Is this an HMO, HMOPOS, PPO, or another type? That decides whether out-of-network care is possible at all.
3. Which services need prior authorization, and do I need referrals to see specialists?
4. Does the plan include drug coverage? If it's an HMO or PPO without it, you can't add a separate drug plan, and going without creditable drug coverage can mean a late penalty later.1
5. What's the yearly out-of-pocket limit, in network and out of network?
6. What's the plan premium, and what are the deductibles and copays for the care I actually use?
7. What changed in this year's Annual Notice of Change?
8. Which extra benefits does this specific plan include? Don't assume dental, vision, or hearing coverage.
9. Will joining affect any employer or union coverage in my household?1

Weighing Medicare Advantage against Original Medicare itself is a bigger call, and it has its own guide: Original Medicare vs. Medicare Advantage: how to choose.

Go Deeper: Medicare Advantage Guides

Each of these picks up one question this overview only touches:

• Choosing between the two paths: Original Medicare vs. Medicare Advantage
• A plan denied care: What to do when your Medicare Advantage plan denies care
• Checking the network: Are Medicare Advantage provider directories accurate?
• Changing your mind: Switching between Medicare Advantage and Original Medicare and switching plans in January
• Extra benefits: Meals and groceries and SSBCI for chronic conditions
• Special plan types: Special Needs Plans and MSA plans
• Kidney failure: ESRD and Medicare Advantage
• Top-rated plans: The 5-star special enrollment period
• Your state: Medicare plans and coverage by state

Learn More

Find personalized help comparing Medicare Advantage plans in your area at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.