Financial Basics · Healthcare

Medicare Advantage

Definition

Medicare Advantage (Part C) is private health insurance that replaces Original Medicare. Plans bundle Parts A, B, and usually D, often add dental/vision, and typically use HMO or PPO networks.

Why it matters in retirement

Nearly half of Medicare beneficiaries now choose Advantage plans — usually for the $0 premium and extra benefits. But Advantage plans use prior authorization, narrow networks, and step therapy in ways Original Medicare does not. For healthy retirees the trade-off often makes sense; for those expecting serious illness, it often doesn't.

Key Numbers — 2026

Avg premium
$17/mo
Max out-of-pocket (2026)
~$9,350
% of Medicare enrollees
~50%
Denial rate on prior auth
~7–10%

Pros

  • Usually $0 premium
  • Includes dental/vision/hearing
  • Annual out-of-pocket max
  • Fitness/wellness benefits

Cons

  • Narrow networks
  • Prior authorization required for many services
  • Hard to switch back to Original Medicare + Medigap
  • Geographic restrictions

Common mistakes

  • Picking a plan based on premium without checking drug formulary
  • Ignoring whether your doctors are in-network
  • Assuming you can always switch back to Medigap (often you can't)
  • Not re-shopping plans during annual open enrollment

Related

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