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Understanding Medicare Advantage

Medicare Advantage is critical to providing comprehensive healthcare benefits to Americans.  Learn more about the unique aspects of Medicare Advantage and navigate to additional resources below.

What is Medicare Advantage?

For over 20 years, the Medicare Advantage program has been integral to the Medicare guarantee, offering choices and meeting the comprehensive healthcare needs of American seniors. Under this public-private partnership, plans must cover the same services as fee-for-service Medicare. The savings generated through care coordination are reinvested into lowering beneficiaries’ premiums and out-of-pocket costs and providing supplemental benefits such as dental, vision, hearing, meals, and transportation.

More Supplemental Benefits

In addition to covering the same services as fee-for-service Medicare, nearly all Medicare Advantage (MA) plans also provide supplemental benefits, such as dental, vision, hearing, meals, and transportation.  For the 2022 plan year, 94% of individual MA plans will offer dental coverage, 98% will offer vision coverage, and 95% will offer hearing exams and / or hearing aids1.  Additionally, 67% of individual MA plans will offer a meal benefit and 38% will offer transportation services for the 2022 plan year1.  A growing body of research suggests factors related to social determinants of health (such as lack of access to healthy food, housing, transportation) have a profound impact on health outcomes. Supplemental benefits under MA can help reduce health-related disparities. 

1.  Kaiser Family Foundation, “Medicare Advantage 2022 Spotlight: First Look” (Figure 8), November 16, 2021. Medicare Advantage 2022 Spotlight: First Look | KFF

Minorities Disproportionately Rely Upon MA 

Recent survey data shows that 53% of Hispanic beneficiaries and 49% of Black beneficiaries are enrolled in MA, compared to just 31% of other minorities and 34% of white beneficiaries1. More than half of all Medicare Advantage beneficiaries have an annual income of less than $24,500, and an estimated 77% of Black and 80% of Hispanic Medicare Advantage beneficiaries have incomes 200% below the federal poverty level1. 

1. Analysis by ATI Advisory; Data Brief: “Medicare Advantage Offers High Quality Care And Cost Protections To Racially And Ethnically Diverse Beneficiaries,” June 2021; BMA_2021-Q2-Data-Brief_6.15.21.pdf

Keeping Costs Low

With more flexible coverage and plan design, and increased incentives to keep costs low, the average annual spending by Medicare Advantage beneficiaries is $1,598 lower compared to those in fee-for-service Medicare1. Medicare Advantage beneficiaries also report less cost-burden (spending 20% or more of their income on out-of-pocket costs and premiums) than those in fee-for-service Medicare1.

1. Analysis by ATI Advisory; Data Brief: “Medicare Advantage Outperforms Traditional Medicare on Cost Protections for Low- and Modest-Income Populations,” March 2020; BMA_Modest_LowIncome_Report.pdf

Better Quality Care

Medicare Advantage beneficiaries as a whole have more complex medical conditions compared to fee-for-service Medicare. A recent analysis revealed nearly 50% of Medicare Advantage beneficiaries had more than three chronic conditions versus nearly 45% of individuals in fee-for-service Medicare1; however, given the increased emphasis on the quality of care under Medicare Advantage, Medicare Advantage beneficiaries experienced 33% fewer emergency room visits, 29% fewer potentially avoidable hospitalizations, and 41% fewer avoidable acute hospitalizations than those in fee-for-service Medicare2.

1. Analysis by ATI Advisory; Data Brief: “Medicare Advantage Offers High Quality Care And Cost Protections To Racially And Ethnically Diverse Beneficiaries,” June 2021; BMA_2021-Q2-Data-Brief_6.15.21.pdf

2. Avalere Health, “Medicare Advantage Achieves Cost-Effective Care and Better Outcomes for Beneficiaries with Chronic Conditions Relative to Fee-for-Service Members,” July 2018; Medicare Advantage Achieves Better Health Outcomes and Lower Utilization of High-Cost Services Compared to Fee-for-Service Medicare | Avalere Health

Better Quality Care

Nearly all Medicare Advantage plans offer prescription drug coverage with their plans and 90% of Medicare Advantage enrollees receive prescription drug coverage with their plans1. Of these individuals, 65% pay no premium for their prescription drug coverage and 85% pay $49 a month or less1.

1. Kaiser Family Foundation, “Medicare Advantage in 2021: Premiums, Cost Sharing, Out-of-Pocket Limits and Supplemental Benefits,” June 21, 2021. Medicare Advantage in 2021: Premiums, Cost Sharing, Out-of-Pocket Limits and Supplemental Benefits | KFF

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