The Pros and Cons of Medicare Advantage Plans

Are you unsure about whether you should consider a Medicare Advantage plan?

You may have heard "bad" things about Medicare Advantage (MA) Plans from your providers or friends. At the same time, you may be attracted by their marketing pitches, like low premiums, extra benefits, and more.

Are Medicare Advantage Plans truly bad?

Medicare Advantage Plans are not as bad as some people might have you believe, but they're often misunderstood.

Many enrollees don’t read their plan details upfront, so they're unhappy when caught off guard by additional payments like deductibles or copays.

As with any insurance product, there are pros and cons to Medicare Advantage Plans. We'll discuss these to help you decide what suits you.

What's a Medicare Advantage Plan?

Medicare Advantage is also known as Medicare Part C. These plans are offered by private insurance companies (mostly insurance companies regulated by the state) and are authorized by the federal government to offer benefits on top of Parts A and B.

Medicare Advantage | Source: NascentiaHealth

‎Medicare Advantage Plans are available throughout the United States, and about one-third of Medicare beneficiaries are enrolled in such plans. However, these plans are only approved in specific regions across the country, and only a limited number of insurers can offer these plans.

Pros and Cons of Medicare Advantage Plans

Pros and Cons of Medicare Advantage Plans

Let's go deeper on this chart.

The Pros of Medicare Advantage

Many Plans have Low Monthly Premiums

Medicare Advantage plans typically have low premiums, especially when you consider that a Medicare Supplement Plan G can cost $150 or more per month.

Like a Medicare Supplement plan, you will likely still need to pay the monthly Part B premium with a Medicare Advantage plan.

Plans Usually Include Drug Coverage

Most MA plans have prescription drug coverage. You get the benefits of Medicare Parts A, B, and D benefits at no extra cost.

It Typically Offers Additional Benefits Like Dental, Vision, and Hearing 

MA covers your Medicare Part A and Part B—and it usually covers prescription drugs. Some plans also provide additional dental, vision, and hearing coverage, not included in Original Medicare.

Plans Sometimes Include Free or Discounted Gym Memberships (in Addition to Other Potential Benefits!)

Some MA plans also provide extra coverage, like gym membership or fitness program benefits.

The Cons of Medicare Advantage

It Has a Limited Network of Doctors (HMO/PPO)

You can use the benefits of most Medicare advantage plans only within a limited network of doctors. These networks can be local or regional and contain only a few thousand providers.

However, Original Medicare and Medicare Supplements give you the freedom to visit any doctor or facility that accepts Medicare in the country.

Sometimes your preferred doctors might not be present in your specified network, or they may participate in an HMO plan but not a PPO plan. With some plans, you can't use the benefits of a particular MA plan outside your network.‎

In Most Cases, You May Only Switch Plans During Open Enrollment

Medicare Advantage Plans follow a specific calendar of enrollment periods, so you may run into trouble changing your plan if you're in between these periods. In most cases, you can only switch plans during the Annual Enrollment Period (AEP)—from October 15th to December 7th every year.

If you aren't satisfied with your plan, you likely have to wait until the annual enrollment period to change it.

You May Need a Referral to See a Specialist

Many Medicare Advantage Plans, particularly HMO plans, require a referral from a primary doctor to see a specialist.

If you want to see a specialist while on an HMO, you are usually obligated to visit your primary care provider first, which adds an extra step (and time) to the process.

Prior Authorization can Affect Coverage

One major disadvantage of the MA plan is that it may require prior authorization to conduct some tests and procedures. You might also need pre-approval for specific prescription drugs.

For instance, if your doctor requests certain tests, some MA plans will need them to be pre-approved by the insurance provider to receive coverage. Similarly, certain drugs get coverage only if they have received prior authorization. This may add a few extra steps and considerable time to some tests, procedures, and prescriptions.

Switching to a Medicare Supplement Plan Is Not Easy

Generally, Medicare Advantage plans don't require medical underwriting. So, you should be approved for coverage (after enrolling in Parts A & B) even if you have a pre-existing condition. However, if you want to switch to a Medicare Supplement, you'll usually need to undergo medical underwriting to qualify. This can be a problem if you have a pre-existing condition.

Technically, you can easily switch from a Supplement plan to an Advantage plan during the annual enrollment period, but not vice versa. It's worth noting that your initial enrollment period is typically the only period where you can enroll in a Supplement without being denied for pre-existing conditions. It's much easier to go from Supplement -> Advantage than Advantage -> Supplement.

Advantage Plans have Deductibles, Copays and Coinsurance

Although Medicare Advantage Plans have low premiums, there are usually on-the-go expenses for the services you use. These typically come in the form of deductibles, copays, and coinsurance.

Deductibles—The amount you pay before your insurance coverage begins.

Coinsurance— The amount you pay as your share of the cost for services after you pay any deductibles, usually a percentage.

Copays—The amount you pay as your share of the cost for a medical service you use.

For instance, you will likely pay copays for your doctor visits and blood tests. These copays are usually a set amount, say somewhere between a medium and a large pizza.

The deductibles, copays, and coinsurance can add up.

Advantage Plans Usually have Steep Out of Pocket Maximums

The aforementioned Deductibles, Copays, and Coinsurance should not exceed your Maximum Out of Pocket (MOOP) in a given year. Most Medicare Advantage plans cap this spend somewhere around the cost of a used car.

However, with Plan G (a Medicare Supplement), your worst-case scenario for Medicare covered medical services in a year is $233 ($226 starting in 2023).

The Drug and Medical Benefits Can Change Every Year

Medicare Advantage Plans change their benefits, premiums, prescription drugs, and additional benefits every year. They can also change their network providers and pharmacy providers.

So, if you opted for a Medicare Advantage plan due to certain benefits, check each year to see if there are any changes in your plan.

So, is Medicare Advantage Good or Bad?

Medicare Advantage is a sort of all-in-one plan. Enrollees in Medicare Advantage plans may receive more preventive care than those in Original Medicare. While it can benefit some people, it might not be ideal for others. 

Let's look at some possible scenarios.

If you have a chronic condition or severe health needs, the MA plan might not be a good choice. Staying in-network and getting prior authorizations for visiting a specialist may be challenging. Also, due to your frequent hospital visits, you'll probably pay high additional costs such as copays and coinsurance.

In addition, getting approvals for some drugs can be frustrating.

Now suppose you're healthy when you're 65, but can't afford the premiums of Medicare Supplement Plans. Then, Medicare Advantage plans may benefit you.

A counterpoint to this is whether you think getting prior authorization for treatment is a hindrance. Then, an MA plan may not be the best fit. Prior authorization gets in the way when you and your doctor have agreed to a particular mode of treatment, but your Medicare Advantage carriers don't agree to it. 

Although Medicare Advantage Plans have an out-of-pocket limit that protects you against massive hospital expenses, some plans can set this limit very high.

If you enroll in a Medicare Advantage Plan for the additional dental, vision, and hearing benefits, make sure you know the plan. Others might only offer basic services, which might not be worth it. 

Finally, your Medicare Advantage plan can change every year. You need to study the changes in your plan closely each year and possibly switch plans accordingly. Of course, we can help you understand your plan benefits and how they change year to year. If you prefer to avoid this kind of red tape, it may be better not to enroll in a Medicare Advantage plan.

Conclusion

Medicare Advantage plans are not inherently "bad". It's just that some people don't get into the details of each plan, and can end up being disappointed. A misunderstanding of the benefits offered might set your expectations incorrectly. In addition, Medicare is complex to navigate, and Medicare Advantage plans can change yearly (tacking onto beneficiaries' frustrations).

If you would like assistance determining which Medicare plan is right for you, you can speak to one of our licensed advisors by calling us at (888)-376-2028. We're here to help you find the plan that works best for you