Medicare Advantage plans were created under the Balanced Budget Act of 1997 and signed into law by President Bill Clinton. These plans are commonly called Part C of Medicare. Some doctor’s offices call them replacement plans, more on that below.
Medicare Advantage plans, also known as MA are NOT similar to Medigap plans — they are different. Members get their benefits from a private insurance company instead of original Medicare. As we mentioned, sometimes you'll hear them referred to as Medicare replacement insurance.
Medicare is not really a fan of this language because it's not entirely accurate. You never permanently replace your Medicare when you join a Medicare plan. Instead you are just choosing to get your benefits from a private company for the rest of the calendar year.
How Medicare Advantage Works
A Medicare Advantage plan is a private Medicare insurance plan that you may join as an alternative way to get your Part A and Part B benefits. When you do, Medicare pays the plan a fee every month to administer your Part A and B benefits.
You must continue to stay enrolled in both Medicare Part A and B while enrolled in your Medicare Advantage plan. Medicare pays the Advantage plan company on your behalf to take on your medical risk. This is how Medicare Advantage plans are funded.
You will present your Advantage plan ID card at the time of treatment. Your providers will bill the plan instead of Original Medicare. Again, this is also why some providers consider them Medicare replacement plans, but it’s important to remember that you can always return to Original Medicare during a future annual election period.