Pros and Cons of Medicare Advantage
Key Takeaways
- There are a variety of factors that may determine whether a Medicare Advantage plan is the right choice for your health insurance coverage.
- Many people choose Medicare Advantage for lower costs and additional benefits, but plans have provider networks and may require prior authorization for certain services.
- Costs, provider networks, and coverage all vary by plan, and plan availability depends on where you live.
Medicare Advantage plans from private insurance carriers are alternatives to Original Medicare, the public health insurance program for U.S. adults who are over 65 or have certain disabilities.
There are many factors that may determine whether Medicare Advantage is right for you. Costs, provider networks, and coverage all vary by plan, and plan availability depends on where you live. Many people choose Medicare Advantage for lower premiums and additional benefits, but plans also have restrictions on where and how you receive care.
We’ll break down the pros and cons of Medicare Advantage to help you make the right choice for your healthcare needs.
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Making Sense of Your Medicare Choices
Choosing the “right” Medicare coverage can feel overwhelming. Each of the 68 million Americans enrolled in Medicare have their own healthcare needs and financial situation. Insurance coverage affects how they access services, manage costs, and pick their doctors.
There’s no one-size-fits-all solution, and every option comes with trade-offs.
As of 2024, most people on Medicare have decided to enroll in a Medicare Advantage plan. By weighing the pros and cons, you can make an informed decision when it comes to choosing your own health insurance.
How Medicare Advantage Works
Medicare Advantage, also called Medicare Part C, is an alternative way to receive Medicare coverage.
Original Medicare consists of Medicare Part A, which is hospital insurance, and Part B, which is medical insurance. To access coverage for most prescription drugs, you must enroll in a Medicare Part D plan from a private insurance carrier.
Medicare Advantage plans are required by law to at least match the coverage you would get from Original Medicare. Most plans include Part D prescription drug coverage, plus additional benefits such as dental, vision, hearing, and fitness memberships.
When you enroll in Medicare Advantage, you still pay Medicare Part B monthly premiums, although certain plans help with this cost. Outside of the Part B costs, many Medicare Advantage plans offer low or even $0 monthly premiums and set copays, which protect beneficiaries against unexpected medical bills.
Most Medicare Advantage plans use provider networks, meaning you may need to visit doctors, hospitals, and pharmacies within your plan’s network to receive full coverage. Plan details like costs and networks can change each year, so it’s important to review your coverage annually.
Advantages of Medicare Advantage
The average Medicare beneficiary has access to 34 Medicare Advantage plan options. These plans stand out by providing savings and benefits beyond what you get from Original Medicare.
Additional Benefits
Every Medicare Advantage plan has its own terms, but these are some of the extra benefits that may be available to you:
- Dental: Routine cleanings, fillings, dentures, and more
- Vision: Annual eye exam, glasses, or contacts
- Hearing: Hearing exams and hearing aids
- Fitness programs: Gym memberships and online classes to help you stay active
- Transportation: Rides to and from medical appointments
- Meal delivery: Grocery allowance or meal delivery after a hospital stay
- Flex cards/Over-the-counter (OTC) cards: Allowance to be used for eligible expenses, like first aid items, eye drops, or over-the-counter medications.
- Wellness programs: Support for weight management, smoking cessation, diabetes education, or other health goals
Out-of-Pocket Maximums
One major advantage of Medicare Advantage plans is the annual maximum out-of-pocket limit for covered services. With Original Medicare, there’s no cap on how much you could pay out-of-pocket per year. Ongoing or unexpected medical expenses – like hospital stays or specialized treatments – can become a financial burden.
Medicare Advantage plans ease this burden by capping the total amount you have to pay for deductibles, copayments, and coinsurance in a year. Once you reach the limit, the plan pays 100% of the cost for covered services for the rest of the year. This feature can help you plan your healthcare budget for the year.
Low-Cost Premiums
A premium is the fixed amount you pay each month to keep your coverage. Most Medicare Advantage plans offer low premiums, and many charge you $0 beyond the standard Part B premium.
Prescription Drug Coverage
Most Medicare Advantage plans include prescription drug coverage (Medicare Part D). With Original Medicare, you would need to purchase a separate Part D plan to cover medication costs. Many Medicare Advantage plans combine prescription drug coverage with hospital (Part A) and medical (Part B) insurance.
These plans, called Medicare Advantage Prescription Drug Plans (MAPDs), make managing your care easier and may lower your costs. A single plan also means fewer bills and less paperwork.
Coordinated Care
Coordinated care means that your healthcare providers work together as a team to manage your health. Your primary doctor will collaborate with specialists, hospitals, and other providers to ensure you receive organized and effective care. By integrating your care, a plan can help reduce the chance of duplicated tests, conflicting treatments, or overlooked health issues.
Cons of Medicare Advantage
Medicare Advantage plans have a variety of benefits, but they also come with some limitations. Knowing the potential drawbacks can help you make a well-informed decision.
Plan Availability
Medicare Advantage plans can change each year. Unlike Original Medicare, which offers the same standard coverage nationwide, Medicare Advantage plans have the option of adjusting their provider networks, cost, drug coverage, and additional benefits annually. While not always the case, a doctor or hospital that is covered this year might not be included in-network next year.
Medicare Advantage plan availability varies based on your ZIP code. People in urban areas may have more plans to choose from, while those in rural areas may have fewer options. If you move to a new ZIP code, you may need to switch plans.
Referral Requirements
With some Medicare Advantage plans, like Health Maintenance Organizations (HMOs), you can’t see a specialist without a referral from your primary care doctor. This extra step is meant to help manage care, but it can also slow things down.
If you see specialists often, it’s important to check whether the Medicare plan you’re considering requires referrals. Not all plans do, so reading the fine print before you enroll can help you avoid surprises.
Prior Authorization Requirements
Medicare Advantage plans may sometimes require your doctor to obtain approval from your insurance carrier for a test, treatment, or medication before covering it. This process is called prior authorization. Without the necessary approval, you may have to pay the full cost of the service out-of-pocket.
A prior authorization requirement may prevent unnecessary expenses, but it can also be a frustrating extra hurdle.
Limited Provider Networks
Medicare Advantage plans use networks of doctors, hospitals, pharmacies, and other healthcare providers. You could pay higher out-of-pocket costs if you visit a doctor or hospital outside of your plan’s network. This is a big difference from Original Medicare, which allows you to see any provider that accepts Medicare.
A limited network can be challenging if you travel often or split time between different states. It can also be frustrating if your preferred doctor or specialist isn’t covered. While some Medicare Advantage plans offer partial out-of-network coverage, the costs are often higher than staying within your plan’s network.
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Should You Get Medicare Advantage?
Choosing a Medicare plan isn’t just about comparing benefits – it’s about finding a plan that suits your lifestyle, budget, and care preferences. Do you want a plan that bundles your coverage into one package with lower monthly costs? If so, Medicare Advantage might be a good fit. If having unrestricted access to any doctor who accepts Medicare is more important to you, you might prefer Original Medicare with a Medigap plan to help cover out-of-pocket costs.
Think about how your care needs may change over time. If you have a chronic condition or expect frequent medical visits, you may want lower upfront costs and a maximum out-of-pocket limit with Medicare Advantage. If you travel often, a flexible plan may matter more than added perks like dental and vision. The best choice depends on how you plan to use your healthcare plan.
Other Options to Consider
If Medicare Advantage is not the best fit for you right now, there are other options to consider:
- Original Medicare: Public insurance that covers hospital and medical care and allows you to see any doctor who accepts Medicare. However, it doesn’t include prescription drug coverage and there is no cap for out-of-pocket costs.
- Medicare Part D: Plans from private carriers that add prescription drug coverage for people on Original Medicare.
- Medicare Supplement Insurance: Also known as Medigap, these are plans from private carriers that cover the out-of-pocket costs associated with Original Medicare. You can see any doctor who accepts Medicare, but you will need a separate Part D plan for prescriptions.
Each option offers different advantages, so consider your healthcare needs, budget and provider preferences when choosing the plan that’s right for you.
Putting It All Together
Choosing a Medicare plan is a personal decision that depends on your needs. Medicare Advantage plans can offer convenience, cost-saving features, and extra benefits. However, it’s important to weigh these features against limitations like provider networks and prior authorizations.
The right Medicare plan is the one that gives you confidence in your healthcare today and peace of mind for the future. A licensed insurance agent can help find the best choice for you.