Why Medicare Advantage Plans Are Bad (Myths and The Truth)

You may have seen infomercials on television selling Medicare Advantage (also called Medicare Part C) plans. And you may have heard people comment about those ads and how the insurance policies they sell are a bad idea for consumers. You might be asking yourself why Medicare Advantage plans are bad, and whether it is worth looking into. 

But when you consider that more than more than 28 million Medicare beneficiaries (48% of all Medicare-eligible Americans) are enrolled in a Medicare Advantage plan, its worth examining whether or not these plans are actually bad and why people may think they are so. 

Some of the most common criticisms of Medicare Advantage plans include provider limitations, hidden costs, and the need for referrals. 

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1. “Medicare Advantage Plans Are a Rip-Off.” 

Medicare Advantage plans replace your Medicare Part A and Part B coverage. When you’re enrolled in a Medicare Advantage plan, however, you typically still have to pay your Medicare Part B monthly premium in addition to your Medicare Advantage plan premium. For some consumers, this may sound like a double whammy. 

But in reality, many of the best Medicare Advantage plans feature $0 premiums. So if you have a $0 premium Medicare Advantage plan, you aren’t actually paying anything more up front for your plan than you would pay if you were only enrolled in Original Medicare (the common term for Medicare Part A and Part B). 

Many Medicare Advantage plans may also cover benefits that Original Medicare doesn’t cover. Coverage for dental care, vision and eyeglasses, hearing aids and prescription drugs are just some of the things that can be commonly found in Medicare Advantage plans but not included in Original Medicare.

Medicare Advantage plan additional benefits may come with extra costs or premiums, so it's important to look through the plan documents, such as the summary of benefits or evidence of coverage. A licensed insurance agent can also help you compare this deeper level of plan details.

If you’re considering enrolling in a Medicare Advantage plan vs. Original Medicare, you should explore all the additional coverage a Medicare Advantage plan may offer and then determine how you would pay for those services if you only had Original Medicare. 

Lastly, Medicare Advantage plans are required by law to contain an annual maximum out-of-pocket spending limit (MOOP), which can help protect plan members from potentially high health care costs like deductibles and copays. In 2023, no Medicare Advantage plan can have an out-of-pocket spending limit higher than $8,300 for the year. Many plans may have an even lower limit: the average Medicare Advantage plan out-of-pocket spending limit for in-network care is $4,663.80 in 2023.

Original Medicare does not include an out-of-pocket spending limit, so beneficiaries can be left responsible for potentially very high Medicare expenses. When considering the cost of a Medicare Advantage plan (with average premiums around $19.07 per month for plans that include prescription drug coverage in 2023), it’s important to remember the spending protection that comes with the plan.  

2. “Medicare Advantage Plans Only Let You See Certain Doctors.”

Many Medicare Advantage plans may have doctor network restrictions and a list of participating providers that you’re required to use if you want to take advantage of the plan’s full benefits. Depending on the type of plan, you may be able to see a doctor outside of your plan network, but you will likely pay higher out-of-pocket costs than you would if you visit an in-network provider.

Medicare Advantage plans aren’t very different from many traditional health insurance plans in this regard. Two common forms of Medicare Advantage plans are HMO plans and PPO plans which may require you to get a referral before seeing a specialist, much like the health insurance you may have had before.

Before enrolling in a Medicare Advantage plan, check the list of participating providers to ensure your favorite doctor or closest pharmacy accept the plan. When comparing Medicare Advantage plans, you can find out whether your doctor accepts the plan before you sign up. If you don’t take the time to explore the plan network limitations, you could potentially end up having to find a new doctor or face higher copays and coinsurance if you keep your doctor and they’re not part of the plan network.

3. “Medicare Advantage Plans Have Hidden Costs.” 

What most people describe as “hidden costs” are often the deductibles, coinsurance or copayments built into the plan. Original Medicare also has deductibles, coinsurance and copayments for both Part A and Part B coverage. 

Be sure to go over the deductibles and cost-sharing requirements for any plan prior to enrolling so you know what to expect when you use the policy. When you see Medicare Advantage plans marketed as having $0 monthly premiums, keep in mind that you likely still have other costs to pay when using the plan, such as those coinsurance or copay costs.

The average deductible for medical care is $25.44 for Medicare Advantage Prescription Drug plans in 2023, due to plans in many states offering $0 medical deductibles.

4. “Medicare Advantage Plans Change Every Year.”

It’s true that Medicare Advantage plans can change every year. A plan’s costs, provider network, covered benefits and other aspects are all subject to change each year (even if dramatic changes aren’t typical from one year to the next).

You have opportunities to change Medicare Advantage plans every year if you aren’t happy with any of your plan’s changes. You also have annual opportunities to leave Medicare Advantage entirely and return to Original Medicare.

While it’s true that plan costs and network participants can change every year, often those can change in your favor. Medicare Advantage plans are required by law to send a notice – called an Annual Notice of Change (ANOC) – to all plan members prior to the annual fall Medicare Open Enrollment Period (also called AEP). The ANOC details any plan changes going into effect for the upcoming year. This allows members to take enrollment actions during the open enrollment period, such as switching plans or changing back to Original Medicare. 

5. “Medicare Advantage Plans Require Referrals to See Specialists.”

In the case of HMO plans, this is typically true. But it isn’t always the case with PPO plans and some other types of Medicare Advantage plans. 

Requiring a referral to see a specialist is one common aspect of a managed care approach, in which health care providers work as a team to coordinate your care. Studies have shown that Medicare beneficiaries in managed care plans experience better health outcomes and lower costs than their fee-for-service counterparts who are enrolled in Original Medicare. 

In Conclusion

Some of criticisms of Medicare Advantage may be warranted, but they also require the full context to understand the complete picture regarding how these plans compare to Original Medicare. The reasons one beneficiary might believe Medicare Advantage plans are bad may not apply the same way to another beneficiary who has different health care needs.

Before enrolling in a Medicare Advantage plan, be sure to do your homework and research all the costs, benefits, terms and conditions. And it doesn’t hurt to reach out to a licensed insurance agent with any questions or contact your State Health Insurance Assistance Program (SHIP). 

You may also want to explore Medicare Supplement (also called Medigap) plans from some of the top Medicare Supplement insurance companies in the country. Medicare Supplement plans are different from Medicare Advantage plans, and you can't have both at the same time.

Whereas Medicare Advantage plans typically include a network of plan providers who accept the plan, Medicare Supplement plans are accepted by any doctor, provider and facility that accepts Medicare, anywhere in the country. You simply use your Medicare Part A and Part B coverage to pay for the care you need, and your Medicare Supplement plan helps pay for the Medicare deductibles, copays, coinsurance and other costs you're typically responsible for.

Learn more about Medicare Advantage vs. Medicare Supplement plans to better understand your coverage options.