Advantages and Disadvantages of Medicare Advantage Plans
- What are the advantages and disadvantages of Medicare Advantage plans? We explore the pros and cons of MA plans (also called Medicare Part C) to help you decide if one may be right for you.
In 2023, nearly half of all Medicare beneficiaries are enrolled in a Medicare Advantage (Part C) plan.1
Medicare Advantage plans are required to provide all the same benefits as Original Medicare (Part A and Part B), the traditional Medicare program administered by the federal government.
Offered by private insurance companies, Medicare Advantage plans can offer additional benefits that Original Medicare doesn't cover, such as prescription drugs, dental, hearing, vision benefits and more.
These plans often include network restrictions, however, and some plans may include out-of-pocket costs when you receive covered services.
In this review, we outline the advantages and disadvantages of Medicare Advantage plans.
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Medicare Advantage Pros and Cons
Medicare Advantage has disadvantages, including strict provider networks, high out-of-pocket costs, and limited coverage outside the plan’s service area.
What Is a Medicare Advantage plan?
Medicare Advantage plans are provided by private insurers and offer the same coverage as Original Medicare (Part A and Part B).
The main difference between Medicare Advantage vs. Original Medicare lies in the fact that while both offer similar coverage for hospital stays (Part A) and medical services like doctor visits or outpatient surgery (Part B), Medicare Advantage plans often come with extra perks such as dental or vision care.
Additional benefits like prescription drugs and out-of-pocket costs may also be included in some Medicare Advantage plans.
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Disadvantages of Medicare Advantage
Despite their advantages, there are a few disadvantages of MA plans, including strict provider networks, high out of pocket costs, and limited coverage.
Strict Provider Networks
One significant disadvantage of Medicare Advantage plans is their strict provider networks.
The most popular type of Medicare Advantage plan is an HMO type of plan. HMO plans usually limit the number of doctors and hospitals you can see within a specific network.
If your preferred healthcare provider isn't in the plan's network, you may need to pay out-of-pocket for their services or switch providers altogether.
In contrast, with Medicare Part A and B, Medicare beneficiaries can visit any doctor or hospital that accepts it without worrying about being out-of-network.
- The upside: Coordinated care between your doctors, ensuring everyone is on the same page regarding your health needs.
- The downside: Limited flexibility when seeking specialist consultations without prior approval.
High Out-Of-Pocket Costs
The second most common complaint we hear about Medicare Advantage plans is regarding high out-of-pocket costs and additional premiums.
Even though these plans often have lower monthly premiums than Medigap policies (also known as Medicare Supplement insurance), they typically come with deductibles and copayments when receiving care from an out-of-network provider.
If you require frequent medical attention or specialized treatments outside your plan's network area or if your health condition requires more comprehensive coverage, opting for traditional Medicare along with a Medicare Supplement plan might be a better option than going for a Medicare Advantage plan.
Limited Coverage Outside Your Plan’s Service Area
If you travel frequently or live between two states during different times throughout the year, it's important to note that some Medicare Advantage policies only provide limited emergency care outside their service areas unless it falls under certain circumstances like dialysis treatment.
In contrast, traditional Medicare provides coverage nationwide without any restrictions.
Benefits of Medicare Advantage Plans
One major perk of choosing a Medicare Advantage plan is the potential for extra benefits that go beyond what's offered by Original Medicare, such as:
- Prescription drug coverage (Part D): Many Medicare Advantage plans include this much-needed benefit, saving you from purchasing a separate Part D plan.
- Dental and vision services: Need glasses or a dental checkup? Some Medicare Advantage plans have got you covered with these essential healthcare services not found in Original Medicare.
- Hearing aids: Some Medicare Advantage plans provide hearing aid coverage.
- Fitness programs & wellness incentives: Stay active and healthy with gym memberships or other wellness perks included in certain Medicare Advantage plans.
Deciding if a Medicare Advantage Plan is Right for You
To make an informed decision about whether to enroll in a Medicare Advantage plan, you'll need to weigh the pros and cons based on your individual healthcare needs, preferences, and financial situation.
Here are some key factors to consider:
- Evaluating personal healthcare needs/preferences: Think about what additional benefits you might value such as dental care or prescription drug coverage. Also, consider whether network restrictions or referral requirements would be problematic for your specific health concerns.
- Assessing financial considerations: Compare out-of-pocket costs between Original Medicare and various Medicare Advantage plans. Don't forget that even with a Medicare Advantage plan, you still have to pay your Part B premium.
In contrast, if you prefer sticking with Original Medicare due to its flexibility when it comes to seeing specialists without referrals or avoiding network restrictions altogether, then consider supplementing it with Medigap policies.
What are the negatives of a Medicare Advantage Plan?
The drawbacks of a Medicare Advantage plan include network restrictions, limited access to specialists without referrals, and potentially higher out-of-pocket costs.
These plans may also require you to pay your Part B premium in addition to other costs associated with the plan.
Why are they pushing Medicare Advantage plans?
Medicare Advantage plans are promoted because they offer additional benefits not covered by Original Medicare, such as prescription drug coverage, dental and vision services.
They also provide annual out-of-pocket limit protection for financial peace of mind.
What percentage of seniors choose Medicare Advantage?
About 48% of eligible seniors have enrolled in a Medicare Advantage plan, according to data from 2023.1
This number has been steadily increasing over time due to the added benefits these plans offer compared to Original Medicare.
Can I drop my Medicare Advantage Plan and go back to Original Medicare?
Yes, you can switch back during specific enrollment periods like the fall Medicare Open Enrollment Period that last from October 15 to December 7 each year, or during a Special Enrollment Period (SEP).
Learn how and when you can make Medicare plan changes between Original Medicare and Medicare Advantage.
Overall, Medicare Advantage plans offer additional benefits and out-of-pocket limit protection compared to Original Medicare. However, there are network restrictions and primary care referrals to consider when choosing a plan.
Freed M, et al. (Nov. 10, 2022). Medicare Advantage 2023 Spotlight: First Look. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/medicare-advantage-2023-spotlight-first-look.