Advantages and Disadvantages of Medicare Advantage Plans

It’s called “Medicare Advantage,” but that’s not to say everything about it is advantageous. There are several advantages and disadvantages to Medicare Advantage plans, otherwise known as Medicare Part C.

In this review, we highlight the pros and cons of Medicare Advantage plans, including their costs, benefits, coverage and why they may or may not be a good fit for your needs.

You can also compare Medicare Advantage plans that are available where you live to get a more specific view of each plan’s advantages and disadvantages.

What Does a Medicare Advantage Plan Cover?

Medicare Advantage plans are sold by private insurance companies and are required by law to provide all of the same coverage included in Original Medicare (Medicare Part A and Medicare Part B).

In addition to those mandatory coverage requirements, Medicare Advantage plans may then provide some other benefits that are not covered by Original Medicare.

Coverage for prescription drugs, dental and vision care and free gym memberships are among the most attractive extra benefits found in Medicare Advantage plans, and these extra benefits are one reason why nearly half of all Medicare beneficiaries are enrolled in a Medicare Advantage plan.¹

What Are the Pros of a Medicare Advantage Plan?

Some of the pros of Medicare Advantage include:

Additional Benefits

As mentioned above, Medicare Advantage plans can provide additional benefits that are not found in Original Medicare. With most Medicare Advantage plans, you don’t have to take out separate insurance policies for dental, vision or prescription drug coverage, and all of your benefits can be bundled under one plan with one card.

Not only does this bundled coverage save you hassle, but it can also save you quite a bit of money.

Out-Of-Pocket Protection

Original Medicare has no annual out-of-pocket limit, which means beneficiaries can end up paying potentially very high amounts for Medicare deductibles, copays, coinsurance and other costs if they suffer a serious illness or injury. But one of the advantages of having a Medicare Advantage plan is that they are required by law to include an annual out-of-pocket spending limit.

Once you have reached your plan’s out-of-pocket spending limit on costs for covered care – such as deductibles, coinsurance and copayments – the plan pays for 100% of your covered care for the remainder of the year. This can help protect you from potential financial hardship and surprise medical bills.

In 2023, no Medicare Advantage plan may have an out-of-pocket spending limit of more than $8,300, and many plans may have limits less than that.

Coordinated Care

Many Medicare Advantage plans operate as HMO (Health Maintenance Organization) plans, where a member’s care is coordinated within a team of participating providers, often starting with a designated primary care physician that the beneficiary chooses from the plan network. Many beneficiaries may come to appreciate this team approach to their care.

Plan Selection

Medicare Advantage plan availability can vary based on where you live. The average Medicare Advantage beneficiary has their choice of 43 different plans from an average of 9 different insurance companies, with varying options for coverage and costs in most areas of the country.¹

Customized Coverage

Certain types of Medicare Advantage plans known as Special Needs Plans are tailored to the specific health care needs of people with particular conditions like diabetes, heart disease, kidney failure and more. There are also Special Needs Plans specifically designed for people who are eligible for Medicare and Medicaid, known as dual eligible beneficiaries.

Medicare Advantage SNPs provide a more personalized approach to care rather than the one-size-fits-all design of Original Medicare.

What Are the Cons of a Medicare Advantage Plan?

Some of the cons of Medicare Advantage plans can include:

More Limited Provider Choice

Original Medicare is widely accepted by doctors, hospitals and clinics all over the U.S., but Medicare Advantage plans may typically be more restricted on where they are accepted. Some plans may limit members to providers, doctors and hospitals in a particular state or region, which could potentially limit your ability to use your health insurance while traveling (except for cases of emergency medical care).

Referrals For Specialist Care

Some Medicare Advantage plans may require you to obtain a referral from your primary care doctor before being able to make an appointment with a specialist.

Additional Premiums

Medicare Advantage beneficiaries must continue to pay their Medicare Part B premium in addition to their Medicare Advantage plan premium, which can feel like a double blow to the pocketbook for some beneficiaries. The standard Medicare Part B premium in 2023 is $164.90, while the average Medicare Advantage premium is around $17 per month.

However, more than half the Medicare Advantage plans on the market today feature a $0 monthly premium, so this is not a disadvantage for everyone.¹ Some Medicare Advantage plans may also feature a buy back option, which means they partially or fully refund your Part B monthly premiums each month.

Is a Medicare Advantage Plan Worth It?

A Medicare Advantage plan may be worth it to some beneficiaries and perhaps not worth it to others. A Medicare Advantage plan may be worth it if:

• You have a health condition and may benefit from a more customized benefit package.
  
  
• You want coverage for benefits like prescription drugs, dental, hearing, vision and other services, all under one single plan.
  
  
• You want a better sense of how much money you may have to spend on health care over the course of a year and value the peace of mind that an out-of-pocket limit can provide.
  
  
• You prefer the coordinated care strategy used by many Medicare Advantage plans.

How Do You Choose a Medicare Advantage Plan?

One way to shop for a Medicare Advantage plan is to work with a licensed insurance agent. This is also a great way to learn more about the advantages and disadvantages of these plans and determine if one may be worth it for you. You can also compare plans online for free to get a better idea of the advantages and disadvantages of each plan.

If you ultimately decide that a Medicare Advantage plan is not for you, you may want to consider a Medicare Supplement Insurance (Medigap) plan instead. Note that you can’t have a Medicare Advantage plan and a Medicare Supplement plan at the same time, so it’s important to compare each type of coverage to decide which is right for you.