Medicare Advantage is a fast-growing form of private Medicare plan that offers all-in-one medical and drug coverage. Participation has doubled to about 10 million since 2003, when federal legislation was passed with the aim of revitalizing private plans through higher federal payments to the plans and creating new plan options. Medicare Advantage options include preferred provider organizations, health-maintenance organizations, and private fee-for-service and specialty plans.

When you join an Advantage plan, Medicare provides a fixed payment to the plan to cover your Medicare Part A (hospital) and Medicare Part B (medical insurance) coverage. There are usually additional copayments and deductibles, depending on the type of plan you join.

Advantage plans are required to use any savings they achieve between the government payments they receive and their costs to either reduce premiums or improve the benefi ts they offer. The plans also can offer-and charge for-supplemental benefi ts such as vision, hearing, and dental care.

Shopping for Medicare Advantage plans

Medicare Advantage  plans are offered at the state level, so you need to compare what’s available in your area. Enrollment for Medicare Advantage is done during an annual enrollment window from November 15th to December 31st. Also, if you’re planning to join an Advantage plan, it’s best to do so well ahead of the December 31 deadline, since coverage begins January 1st and you could experience paperwork snafus if you wait until the last minute.

It is important to shop carefully,  because costs are rising and benefits are shrinking. In 2010, Medicare D premiums and out-of-pocket costs jumped 11 percent and 60 percent of the plans charged deductibles, up from 45 percent in 2009, according to the Kaiser Family Foundation. Many Medicare Advantage plans are dropping benefits such as vision and dental coverage.

The new health reform law may impact Medicare Advantage benefits. The law will cut federal reimbursements to insurance company plans by $116 billion over a period of years. While that may not translate directly into benefit cuts in all cases, it makes sense to keep an eye on your plan’s offerings when the enrollment window comes around.

Study the plan’s provider network to see whether the doctors and hospitals you need are in it. The most popular Medicare Advantage plans are HMOs, which force patients to use in-network doctors and hospitals — or pay much higher fees for out-of-network providers.

Comparing Medicare Advantage options

The Medicare website offers an online tool that lets you compare traditional Medicare with Advantage, Medigap and Part D plans. Click here to access the Medicare comparison tool.

You can also get free counseling and assistance in selecting supplemental plans from your local State Health Insurance Assistance Program (SHIP), a government-sponsored counseling service for Medicare beneficiaries. Click here to find your local SHIP.

Official Medicare Handbook. Each year, Medicare beneficiaries receive “Medicare and You,” a very useful, comprehensive handbook on the program that is published by the Centers for Medicare and Medicaid. Click here to download the Medicare handbook as a pdf document.

Medicare news. Browse RetirementRevised coverage of Medicare.