Advantages and Disadvantages of Medicare Advantage Plans


Medicare beneficiaries are increasingly drawn to Medicare Advantage plans due to the perception of cost savings and added benefits compared to Original Medicare. The pivotal choice when navigating annual Medicare decisions revolves around opting for Original Medicare or embracing a Medicare Advantage plan (also referred to as Medicare Part C) provided by private health insurers.

The suitability of either option varies individually. However, it’s essential to evaluate the pros and cons of Medicare Advantage plans, which are often spotlighted in celebrity-endorsed TV advertisements, before making a decision to enroll. One significant distinction between Part C plans and Original Medicare (also known as fee-for-service) lies in the limited networks of doctors and hospitals associated with Medicare Advantage, along with higher charges for out-of-network providers, if they are covered at all.

The time to make the choice between Medicare Advantage and Original Medicare is swiftly approaching, with Medicare’s Open Enrollment period for 2024 spanning from October 15 to December 7. From January to March 2024, adjustments can be made to Medicare Advantage plans or a return to Original Medicare is possible.

Medicare beneficiaries’ increasing preference for Medicare Advantage plans is largely rooted in the anticipation of reduced healthcare expenses compared to Original Medicare, coupled with supplementary benefits. This year marks a milestone as 50% of Medicare beneficiaries will be enrolled in Medicare Advantage plans, a notable increase from the 37% in 2018. The array of options is extensive, with the average Medicare beneficiary having a selection of 43 Medicare Advantage plans, and a total of nearly 4,000 plans available nationwide, according to a research report by KFF.

Before enrolling in a Medicare Advantage plan, the prerequisite is to sign up for Original Medicare Part A (hospital insurance) and Part B (medical insurance). While most plans include Medicare Part D prescription drug coverage, it’s important to note that obtaining a supplemental Medigap policy, commonly available with Original Medicare, is not possible for those enrolled in a Medicare Advantage plan.

Here’s a rundown of the pros and cons of Medicare Advantage plans.

Advantages of Opting for Medicare Advantage Plans

Potential Reduction in Out-of-Pocket Expenses Compared to Original Medicare

To illustrate, certain Medicare Advantage plans come with no premiums, potentially covering your entire Part B premium (which stands at $164.90 per month in 2023 and is anticipated to rise by approximately 3% next year). However, high-income Medicare beneficiaries encounter an additional fee, leading to Part B monthly premiums as high as $560.50 in 2023.

Nevertheless, as pointed out by the author of the book “Medicare for You,” these plans with $0 premiums might involve significant out-of-pocket expenses, necessitating payments for diagnostic procedures, hospital stays, consultations with specialists, and outpatient care. Hence, it’s important not to be misled by the allure of a $0 premium offer.

Certain Medicare Advantage plans impose extra premiums, potentially reaching $200 per month, with an average of around $18. Unlike Original Medicare, which entails a 20% coinsurance for Part B services such as doctor’s visits, most Medicare Advantage plans employ fixed co-payments that tend to be lower. Nonetheless, these plans frequently involve higher co-payments and co-insurance when receiving services from out-of-network providers.

Medicare Advantage plans establish annual caps on out-of-pocket expenses for Part A and Part B services, a feature absent in Original Medicare. In 2023, these caps are set at $8,300 for in-network services and $12,450 for out-of-network services.

While certain Medicare Advantage plans skip annual deductibles altogether, others usually necessitate covering the Part B and Part D deductibles, in accordance with the National Council on Aging.

Exclusive Advantages Not Provided by Original Medicare

Medicare Advantage plans are obligated to offer the same fundamental coverage as Original Medicare, with many also presenting supplementary benefits. These often encompass dental care, routine vision care, and hearing care, although these provisions might have limitations. For example, dental care might only extend to an annual cleaning or have a capped dollar amount, often hovering around $1,000 or less. Similarly, vision coverage comes with financial constraints, with an average yearly limit of approximately $160.

Certain Medicare Advantage plans even supply prepaid cards for medications, health-related supplies, bathroom safety equipment, and assistance for caregivers. Furthermore, non-medical perks like gym memberships, discounts, subsidized meals or groceries, trips to essential establishments like supermarkets or banks, and initiatives to combat isolation are frequently included.

Enrollment is not declined based on pre-existing conditions

Your health status cannot result in being denied by Medicare Advantage plans.

Enhanced satisfaction levels and more coordinated care compared to Original Medicare

These outcomes were identified in two separate health research studies.

The initial analysis, conducted by the Commonwealth Fund in 2021, indicated that “Medicare Advantage enrollees exhibit no significant disparities from beneficiaries in traditional Medicare in terms of their satisfaction with care or access to care.” The researchers further observed that “Medicare Advantage enrollees surpass those in traditional Medicare in terms of having a treatment plan, a prescription review, and a consistent healthcare provider or facility.”

This study revealed a higher proportion of Medicare Advantage enrollees reporting access to healthcare professionals for easy communication between medical appointments. Remarkably, over 90% of Medicare Advantage enrollees expressed contentment with the caliber of care they received, which aligned closely with the satisfaction levels seen in Traditional Medicare.

The subsequent report, a comprehensive 2022 evaluation of 62 studies by KFF, underscored minimal disparities between Medicare Advantage and traditional Medicare. Individuals across both groups reported comparable levels of satisfaction with their care and care coordination. Medicare Advantage exhibited superior performance over Original Medicare in the realm of preventive services, encompassing annual wellness visits, routine checkups, screenings, and flu vaccinations. Moreover, it showcased lower rates of hospital readmissions.

In addition, the study highlighted that Medicare Advantage beneficiaries with diabetes demonstrated a greater likelihood of receiving guideline-recommended therapy and achieving higher scores in diabetic eye exam screenings compared to Original Medicare recipients with diabetes. However, there were no discernible differences between the two Medicare types regarding diabetic blood sugar control.

Disadvantage of Medicare Advantage plans

Restricted Networks of Doctors and Hospitals

The extent of limitations and their implications for your medical care hinges on the specific Medicare Advantage plan you select. Each plan establishes its distinct network of healthcare providers, and these network compositions undergo annual modifications.

Locating a psychiatrist within a Medicare Advantage plan you’re evaluating might pose a challenge. A recent study in Health Affairs disclosed that nearly half of the counties scrutinized lacked any Medicare Advantage-participating psychiatrist.

Furthermore, if your circumstances involve travel or a secondary residence in a different region of the country, accessing medical services would entail additional costs—assuming the plan permits out-of-network visits and you can locate a willing physician.

Among the most favored plan types is the Medicare Advantage HMO (Health Maintenance Organization), necessitating visits to network providers for routine medical needs. Seeking a specialist typically mandates prior authorization, a potential hurdle we’ll delve into shortly.

Another variant is the PPO (Preferred Provider Organization), which affords the liberty to consult physicians and utilize hospitals outside its network. While a PPO might entail a higher plan premium compared to an HMO and involve supplementary charges for out-of-network providers, you’re not constrained by referral requirements when seeking a specialist.

PPOs often entail increased cost-sharing and maximum out-of-pocket expenses compared to HMOs.

Author Philip Moeller, in his book “Get What’s Yours for Medicare,” advises prospective Medicare Advantage plan seekers to communicate with the plans they are considering. This inquiry aims to illuminate potential pathways in case of intricate surgical interventions or prolonged hospital stays.

Navigating Prior Authorization Requirements

Medicare Advantage plans that stipulate prior authorization for specialist consultations often term this requirement a “utilization management tool.” Nonetheless, individuals enrolled in such plans occasionally express frustration over this prerequisite, as prior authorization can result in care delays or denials.

When outlining the rules concerning prior authorization in Medicare Advantage plans, reports from the U.S. Health and Human Services Inspector General have revealed consistent and pervasive issues linked to care and payment denials. In 2021 alone, approximately 2 million prior authorization determinations within the realm of Medicare Advantage were denied, as documented by KFF.

In a move to aid Medicare Advantage beneficiaries, the Biden administration has introduced more stringent regulations on prior authorization, slated to become effective in 2024. Some states have also begun to tighten the reins on prior authorization requisites, and select health insurers are even opting to eliminate them for what are referred to as “gold-card” doctors and hospitals.

Appointment Delays, Similar to Those in Traditional Medicare

According to findings from the Commonwealth Fund study, individuals enrolled in both Medicare Advantage and Traditional Medicare plans experienced waiting periods exceeding one month for appointments with healthcare providers, along with approximately three weeks of waiting time for visits to hospital outpatient departments.

Reduced Probability of Receiving Exceptional Care

As indicated by the 2022 KFF study, “traditional Medicare” demonstrated superior performance compared to Medicare Advantage when it came to receiving care at the top-rated hospitals specializing in cancer care, as well as in the realm of the highest-quality skilled nursing facilities and home health agencies.

Possible Complication for Those with Employer or Union Health Coverage

On occasion, enrolling in a Medicare Advantage plan could necessitate relinquishing coverage provided by an employer or a union. This situation could potentially result in the loss of coverage not only for yourself but also for your spouse and dependents, with the possibility of being unable to reinstate the coverage afterward.

A Hurdle When Transitioning Between Traditional Medicare and Medicare Advantage

Transitioning from Traditional Medicare to a Part C plan entails forfeiting the option to acquire a Medigap plan. What’s more, should you decide to switch back from Medicare Advantage to Original Medicare and subsequently attempt to secure a Medigap policy, it’s important to note that in many states, you could potentially face rejection based on a pre-existing condition

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