Medicare Part C: Everything You Need to Know

Medicare is a health coverage program run by the U.S. government. It provides health benefits to people who are 65 or older, as well as those with long-term disabilities. As of early 2022, there were nearly 64.3 million people enrolled in Medicare.

Medicare has four "parts" or categories of coverage:

• Part A covers inpatient care, including hospice care and skilled nursing facility care.
• Part B covers physician and outpatient services, including certain vaccines, medications that are administered in a healthcare provider's office, kidney dialysis, durable medical equipment, and more. Together, Medicare Part A and Part B are known as Original Medicare, or Traditional Medicare. Both are administered by the federal government.
• Part C is commonly known as Medicare Advantage. This is private coverage (it's offered by a private health insurance company, as opposed to being administered by the government) that combines the benefits of Part A and Part B and is as an alternative to Original Medicare. Most Part C plans also include prescription coverage (Part D) and various additional benefits such as dental and vision coverage.
• Part D provides prescription coverage. This part of Medicare is also provided by private insurance companies. Medicare beneficiaries can get Part D integrated with a Medicare Advantage plan, or they can purchase Part D coverage as a stand-alone plan.

The popularity of Medicare Part C plans has been steadily increasing. As of early 2022, more than 45% of all Medicare beneficiaries had coverage under Part C.

This article will explain how Medicare Part C works, including eligibility, costs, and benefits. Throughout the article, we'll use the terms Medicare Part C and Medicare Advantage interchangeably, as they both mean the same thing.

Who Is Eligible for Medicare Part C?

To enroll in a Medicare Part C (Medicare Advantage) plan, you must be enrolled in Medicare Part A and Part B (or enrolling in them if you've just become eligible), and you must live in the service area of the Part C plan.

Before 2021, Medicare Part C was generally unavailable to Medicare beneficiaries who had end-stage renal disease (kidney failure). But that changed as of 2021 due to the 21st Century Cures Act. As a result of that legislation, Medicare beneficiaries are eligible for any Medicare Advantage plan available in their area, regardless of whether they have end-stage renal disease.

Most areas of the country have Medicare Part C plans available. But there are 65 rural counties, mostly in the Western U.S., where there are no Part C plans available as of 2022.

If you're in one of those counties, your only option is Original Medicare, which means you'll get Medicare Part A and Part B directly from the federal government. (You'll still likely need to purchase private coverage as well, as you'll need Medigap and Part D unless you have supplemental coverage from an employer or Medicaid.)

Assuming Medicare Advantage plans are available in your area, you can enroll in Medicare Part C when you're first eligible for Medicare during your initial enrollment period.

Or, you can switch to a Medicare Part C plan during the annual open enrollment period in the fall, which runs from October 15 to December 7. In that case, the Part C coverage will take effect on January 1. That window can also be used to switch from one Part C plan to another.

If you're already enrolled in a Medicare Part C plan, you can switch to a different Part C plan during the Medicare Advantage Open Enrollment Period, from January 1 to March 31. But this window cannot be used to switch from Original Medicare to Medicare Part C, as it can only be used by people who already have Part C coverage.

Paying a Premium for Medicare Part C

A premium is an amount you pay each month to purchase your coverage (you pay it regardless of whether you need medical care). Some Medicare Part C plans have premiums, while others do not.

People with Medicare Part C still have to pay the monthly premium for Medicare Part B since the Part C plan provides the benefits of Medicare Part A and Part B combined into one private plan.

For most Medicare beneficiaries, Medicare Part A does not have monthly premiums. But for those who don't have enough work history (or spouse's work history) to qualify for premium-free Medicare Part A, there will be a premium for Part A as well as Part B.

In 2022, the Part B premium for most Medicare beneficiaries is $170.10/month (it's higher for people with income above $91,000). So most people with Medicare Part C have to pay at least that amount for their coverage.

As of 2022, 59% of Medicare Part C plans have no additional premium other than the premium for Part B, and these are the plans that tend to be favored by Part C enrollees. The majority of these plans also include Part D (prescription drug) coverage in addition to the Part A and Part B benefits, but the beneficiaries only pay the premium for Part B.

Some of these plans even have a "giveback" rebate that pays a portion of the Part B premium on the enrollee's behalf. So in some areas, it's possible to have Medicare coverage under a Part C plan and pay less than the standard Part B premium each month.

The other 41% of Part C plans have a premium that has to be paid in addition to the Part B premium. These premiums vary from one plan to another.

Across all Medicare Part C plans, including those that have no premium, the average premium in 2022 is $19/month. Again, that's in addition to the $170.10/month that most Medicare beneficiaries pay for Medicare Part B.

Medicare Part C Coverage

Unlike Original Medicare, which has the same benefits and out-of-pocket costs everywhere in the U.S., Medicare Advantage (Part C) coverage varies from one plan to another. Private health insurance companies issue the plans. These companies are allowed to design their coverage within certain parameters set by the federal government.

Some Medicare Advantage plans are Special Needs Plans (SNPs) designed to cater to enrollees with specific health needs. But most Medicare Advantage plans are open to all beneficiaries, and it's important to carefully compare the various options before selecting a plan.

Medicare Part C plans must cover all of the services covered by Medicare Part A and Part B (except for hospice care, which is generally covered under traditional Medicare Part A even if the beneficiary is enrolled in a Part C plan).

Most Part C plans also provide Part D coverage for prescription drugs; as of 2022, 89% of Medicare Advantage plans have integrated Part D coverage (these plans are called MA-PDs).

But the specifics of the coverage for Part A and Part B benefits will vary considerably from one Part C plan to another. And out-of-pocket costs (deductibles, copays, coinsurance) will not be the same as they are under Original Medicare.

The majority of Part C plans also include additional benefits that aren't covered by Original Medicare, such as dental and vision coverage, hearing exam/aid coverage, acupuncture, gym memberships, etc. The scope of these extra benefits varies widely from one plan to another.

Unlike Original Medicare (Part A and Part B), Medicare Part C plans do have a cap on how high a person's out-of-pocket costs can be, as long as they stay in-network (only receive care from approved healthcare providers) and follow plan rules for things like prior authorization (receive approval before getting a healthcare service).

The government-set cap is $7,550 in 2022, although many Part C plans have a maximum out-of-pocket cap that's lower than this.

Note that this limit does not apply to prescription costs if the Part C plan is an MA-PD. The vast majority of Part C plans do include Part D benefits, but Part D does not have a cap on out-of-pocket costs, regardless of whether it's purchased as a stand-alone plan or part of a Medicare Advantage plan.

Also, Medicare Part C plans have healthcare provider networks that vary in scope; some are quite localized. Some plans will require a referral from a primary care provider to see a specialist—this is generally the case with Medicare Advantage health maintenance organizations (HMOs).

These factors will need to be considered in addition to the basic considerations like deductible (the amount you pay out-of-pocket before benefits begin) and copay (a set amount paid per service) amounts.

Should I Enroll in Medigap?

If you are enrolled in Medicare Part C, you do not need a Medigap plan (Medicare Supplement).

If you have Original Medicare plus a Medigap plan and want to switch to Medicare Advantage, you're allowed to keep the Medigap plan. But you will not be able to use it while you have Medicare Advantage, and you would have to continue paying monthly premiums to maintain the Medigap plan.

Keeping it would only be useful if you were to decide later that you wanted to return to Original Medicare and had health conditions that would make you ineligible to re-enroll in a Medigap plan.

Note that you have a one-year trial right period in such situations. You can drop your Medicare Advantage plan, return to Original Medicare, and re-enroll in the Medigap plan without medical underwriting (an approval process that considers pre-existing conditions). It's unnecessary to keep your Medigap plan "just-in-case" while you test out a Medicare Advantage plan for less than a year.

You'll want to keep the long-term picture in mind when enrolling in Medicare. Although there's an annual open enrollment period each fall when you can switch your Medicare Part C and D coverage, there is no similar ongoing enrollment opportunity for Medigap plans.

In most states, you only have one six-month window (when you're 65 and enrolled in Medicare Part A and B), during which you can enroll in Medigap without medical underwriting.

If you enroll in Medicare Advantage and then decide several years later that you want the more robust coverage and provider access that goes along with Original Medicare + Medigap, you might find that medical underwriting makes it difficult or impossible to make this switch.

These are important factors to keep in mind when you're enrolling in Medicare; you want something that fits your budget and lifestyle but will also keep up with your needs in later years.

Summary

Medicare Part C is generally referred to as Medicare Advantage. These plans are offered by private insurance companies, as an alternative to Original Medicare (which is administered by the federal government rather than private insurers).

Medicare Part C has been gaining popularity, and about 45% of all Medicare beneficiaries are enrolled in Part C rather than Original Medicare.

Medicare Part C plans must follow certain federal guidelines in terms of services that must be covered and out-of-pocket limits. But the insurers that offer Part C plans have a lot of flexibility to design their benefits and provider networks.

The coverage details will vary considerably from one Part C plan to another (unlike Original Medicare, which has uniform coverage throughout the United States).

A Word From Verywell

If you're transitioning to Medicare, it's important to consider all of your coverage options before deciding which one will best fit your needs.

You'll likely find that Medicare Advantage plans have lower monthly premiums than Original Medicare plus Medigap plus a stand-alone Part D plan. They will also tend to offer additional supplemental benefits that you can't get with Original Medicare + Medigap. But Advantage plans will also tend to have higher out-of-pocket costs and a more limited healthcare provider network.

There are a lot of factors to keep in mind when you're selecting your Medicare coverage. A Part C plan might fit your needs quite well, and you'll have a chance to pick a different plan each year during the annual open enrollment periods.

But note that if you have had a Medicare Advantage plan for more than a year and also have pre-existing medical conditions, you may find it difficult or impossible to transition to Original Medicare + a Medigap plan due to Medigap underwriting rules in most states.