Medicare eligible Americans have a few options when it comes to their Medicare coverage. The Original Medicare program, consisting of Part A hospital coverage and Medicare Part B medical coverage, is the traditional fee-for-service option provided directly by the federal government.
Alternatively, Medicare Advantage Plans offered by private insurance companies provide an all-in-one alternative to Original Medicare. These plans, also known as Medicare Part C, bundle Original Medicare benefits along with often prescription drug coverage and other additional benefits like vision and dental care. With nearly half of Medicare enrollees choosing Advantage Plans over Original Medicare, many find the benefits appealing. However, Medicare Advantage Plans also come with some potential drawbacks to consider.
Overview of Medicare Plan Options
Before weighing the pros and cons of Medicare Advantage, it helps to understand the landscape of Medicare Plan options available.
Original Medicare consists of:
- Part A: Hospital coverage
- Part B: Medical coverage
With Original Medicare, members can visit any doctor or hospital in the United States that accepts Medicare. There is no network. Members simply pay a portion of the Medicare-approved amount for services under Parts A and B.
To help cover out-of-pocket costs in Original Medicare like deductibles and coinsurance, many enrollees purchase supplemental coverage through Medicare Supplement (Medigap) plans offered by private insurers.
Medicare Advantage Plans are an alternative way to get Original Medicare benefits. Known as Medicare Part C, Medicare Advantage Plans are offered by private insurance companies approved by Medicare.
Popular types of Medicare Advantage Plans include:
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Private Fee-for-Service (PFFS)
Advantage Plans have networks of doctors, hospitals, and other providers. In most cases, members must visit in-network providers to receive coverage, except in emergencies.
Most Advantage Plans include prescription drug coverage (Part D). Some also offer additional benefits not provided by Original Medicare like vision, hearing, dental, and wellness programs.
Monthly premiums, deductibles, copays, and coinsurance vary by plan.
Medicare Part D
Those with Original Medicare can enroll in a standalone Part D prescription drug plan to add coverage. Medicare Advantage Plans typically include Part D coverage already.
Now that the basics are covered, what are some of the key drawbacks of Medicare Advantage Plans to watch out for?
Cons of Medicare Advantage Plans
Disadvantage 1: Limited Provider Choice
One of the biggest disadvantages of Medicare Advantage Plans compared to Original Medicare is the restricted provider network.
Original Medicare allows members to visit any doctor or hospital in the U.S. that accepts Medicare. No referral is needed to see specialists. There is no concept of in-network or out-of-network providers. Medicare pays its share of the Medicare-approved amount no matter which provider is visited.
Medicare Advantage Plans operate more like private insurance. Each plan has a network of participating providers. In many cases, visiting out-of-network providers means paying higher costs or no coverage at all except in emergencies.
For example, a UnitedHealthcare Medicare Advantage HMO may have UnitedHealthcare in-network hospitals, physicians, and pharmacies within a service area. Members enrolled in the plan must use these providers to receive coverage. Going out-of-network for routine services is not allowed except in emergencies.
Some Medicare Advantage Plan types allow visiting out-of-network providers with higher costs:
- PPOs: Allow visiting providers out of network, but pay a higher cost share. Usually there is no referral needed to see in-network specialists.
- PFFS: Some plans may allow routine care from out-of-network providers with potentially higher costs. Providers have the option to accept the plan's terms and conditions, or not treat PFFS members.
However, in all cases, networks still play a key role. Even with out-of-network coverage, provider choices are more limited compared to Original Medicare's open access approach.
Medicare Advantage Plans vary in size of network just like other private insurance plans. A narrow network trades provider choice for lower premiums and out-of-pocket costs. A broader network grants more access but potentially higher costs.
Those who are comfortable with managed care-style plans may not view narrower networks as a disadvantage. But Medicare enrollees shifting from Original Medicare may feel restricted. Some may learn their existing doctors and hospitals they prefer to visit are not included in their Advantage Plan's network.
Disadvantage 2: Plan Benefits and Costs Can Change Year to Year
With Original Medicare, the benefits package remains consistent year to year. Members know what is covered and what they pay. The only changes are to the Part B premiums and deductibles on an annual basis. These tend to be marginal increases.
Medicare Advantage Plans can change year to year during Annual Enrollment Period which runs October 15 to December 7 each fall. Plans can:
- Increase or decrease premiums
- Add or drop benefits like dental, vision, hearing coverage
- Increase deductibles and copays
- Drop providers from the network
And because plans can change each year, benefits and costs must be re-evaluated during open enrollment. What was covered at one cost last year may change for next year.
This also means keeping an eye out for any notices from the plan announcing changes for the coming year. Key notices to review include:
- Annual Notice of Change (ANOC): Details any changes in plan costs, benefits, and provider networks for the next plan year
- Evidence of Coverage (EOC): Provides the full policy outlining coverage details; important to re-read each year as policies change
For those who select a Medicare Advantage Plan and wish to stick with it, the onus is on the member to check the details each year during open enrollment.
Some members may find their chosen Medicare Advantage Plan is no longer a good fit due to cost increases or benefit reductions. Provider network changes also take a toll when a member's primary care doctor or specialist leaves the plan.
When this happens, Medicare Advantage enrollees can switch plans or return to Original Medicare during open enrollment. But this requires an active effort to research and evaluate options for the coming year. Remaining in the same plan year after year is not necessarily the best course.
With Original Medicare, there is less uncertainty from one year to the next. While premiums and deductibles may change slightly annually, the coverage remains stable. Supplemental plans like Medigap policies also tend to have fewer benefit changes compared to Medicare Advantage Plans.
Disadvantage 3: Returning to Original Medicare is Not Seamless
Because Medicare Advantage Plans can change year to year, some members opt to return to Original Medicare instead of finding a new Advantage Plan. But switching from Medicare Advantage back to Original Medicare is not as simple as signing up initially.
Here are some important points on returning to Original Medicare from a Medicare Advantage Plan:
- Can only leave Medicare Advantage during certain times of year (Annual Enrollment Period or special election circumstances)
- Must submit a request to leave plan which takes time for processing
- No guarantee supplemental Medigap policy will be available after leaving Advantage Plan
Let's look at these limitations more closely.
Limited Disenrollment Periods
Those looking to leave a Medicare Advantage Plan and switch back to Original Medicare can generally only do so during the Annual Enrollment Period from October 15 to December 7. The coverage change will take effect January 1 for the coming year.
In limited cases, certain special election periods may allow someone to immediately return to Original Medicare outside of the fall open enrollment:
- Moved out of plan service area
- Loss of Medicaid coverage
- Nursing home residency
- Ineligible Advantage Plan status change
Relying on special election periods can be complex. So in most cases, the fall open enrollment is the time to opt out of Medicare Advantage.
Disenrollment Process Not Immediate
To return to Original Medicare, one must submit a disenrollment request to their Medicare Advantage Plan either in writing or by phone. This starts the process to be switched back into Original Medicare.
The change does not happen immediately. It takes time for the Advantage Plan to submit the member disenrollment request to Medicare. Medicare must approve ending Advantage coverage and restart Original Medicare coverage.
In addition, Advantage Plans can only submit disenrollment requests to Medicare during certain periods each month. The process generally takes up to 6 weeks or more to complete.
Therefore, someone requesting to leave their Advantage Plan in mid-November likely would not actually transition until January 1 when the new plan year starts. Remaining on the Advantage Plan temporarily may mean paying higher costs than anticipated if the plan raised prices for the new year.
Medigap Guarantee Protections Limited
For those leaving a Medicare Advantage Plan with the intent to enroll in a Medicare Supplement (Medigap Plan), there is no guarantee a Medigap policy will be available once the switch takes effect.
When initially enrolling in Medicare at 65, there is a 6-month Medigap Open Enrollment Period when enrollees over 65 can buy a policy from any provider regardless of health status. After this initial period, there are no protections for those older than 65 leaving an Advantage Plan to obtain a Medigap policy down the road.
Insurers can deny coverage, exclude pre-existing conditions, or charge more based on health status. Only 4 states (CT, MA, ME, NY) require Medigap insurers to offer coverage to Advantage members switching back to Original Medicare.
Those under 65 leaving an Advantage Plan may have additional protections when seeking Medigap coverage after returning to Original Medicare. But for the majority over 65, there is uncertainty whether supplemental coverage will be accessible upon leaving Medicare Advantage.
Purchasing a Medigap policy upfront upon initially enrolling in Medicare at 65 preserves future flexibility. Leaving an Advantage Plan later after the Medigap Open Enrollment Period ends puts one's supplemental Medigap coverage at risk.
Disadvantage 4: No Supplemental Plan Option
As mentioned, Original Medicare allows enrollees to purchase separate supplemental coverage through Medigap Plans to help pay for things like deductibles, coinsurance, and copays.
This supplemental policy flexibility is not available to Medicare Advantage members. It is not possible to purchase a Medigap or other secondary insurance plan along with a Medicare Advantage Plan.
The reason is Medicare Advantage Plans are an all-in-one alternative to Original Medicare. These plans integrate the Part A, Part B, and often Part D benefits along with supplemental coverage like reduced cost sharing and additional services.
Purchasing a supplemental product like a Medigap policy would result in overlapping "double coverage" of benefits already included in the Medicare Advantage Plan.
Therefore, purchasing additional supplemental plans is not allowed alongside Medicare Advantage. The only supplemental coverage option for Advantage enrollees is purchasing a standalone Part D Plan if drug coverage is not already included.
Medicare Advantage members must rely solely on the coverage offered through their Medicare Advantage Plan. If they are dissatisfied with the level of supplemental benefits provided, the only option is to switch to a different Advantage Plan during open enrollment.
In contrast, those with Original Medicare dissatisfied with their Medigap policy have more flexibility to switch supplemental plans year-round in many states. The guaranteed issue access if switching policies in the first 6 months also makes obtaining alternate supplemental coverage easier.
Conclusion: Weighing the Pros and Cons of Medicare Advantage
Medicare Advantage Plans offer benefits not available through Original Medicare like capped out-of-pocket costs, prescription drug coverage, dental, vision, and more. But the restricted provider network and uncertainty of changing plan benefits present key disadvantages to consider.
For Medicare eligible Americans willing to accept the narrower network tradeoff to gain additional benefits, Medicare Advantage provides a compelling integrated solution. These plans shifting healthcare decision making to private insurers may also appeal to those preferring managed care plans.
However, enrollees who are uneasy with network restrictions or want stable supplemental coverage through Medigap may be better off sticking with Original Medicare. While Medigap leaves prescription drug coverage to a separate Part D Plan, the freedom to choose providers and continuity of supplemental benefits will suit some Medicare recipients better.
There is no one right answer for everyone. Each enrollee must determine whether the advantages of Medicare Advantage Plans outweigh the drawbacks for their personal situation. Carefully reviewing plan details each year during open enrollment and understanding special election periods for switching coverage allows Medicare beneficiaries to adjust coverage as their healthcare needs evolve.
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What are the disadvantages of a Medicare Advantage Plan?
Some disadvantages of Medicare Advantage Plans include limitations on healthcare providers, potential network restrictions, and the need for referrals to see specialists.
How do Medicare Advantage Plans compare to traditional Medicare and Medicare Supplement Plans?
Medicare Advantage Plans differ from traditional Medicare and Medicare Supplement Plans in that they are offered by private insurance companies and often include additional benefits such as prescription drug coverage and wellness programs.
What are the advantages of a Medicare Advantage Plan?
Medicare Advantage Plans may offer additional benefits such as vision, dental, and hearing coverage, as well as coordination of care services to help manage chronic conditions.
Can I enroll in a Medicare Advantage Plan if I already have Original Medicare?
Yes, you can choose to enroll in a Medicare Advantage Plan while still being eligible for traditional Medicare, but you should carefully consider the coverage and provider networks available.
What should I consider before enrolling in a Medicare Advantage Plan?
Before enrolling in a Medicare Advantage Plan, you should review the plan's network of doctors, anticipated out-of-pocket costs, coverage for prescription drugs, and any additional benefits offered.
What are some reasons why Medicare Advantage Plans may not be suitable for everyone?
Medicare Advantage Plans may not be suitable for everyone due to their network restrictions, limitations on coverage outside the plan's service area, and potential changes to benefits and formularies each year.
How does signing up for a Medicare Advantage Plan affect my existing Medicare coverage?
When you enroll in a Medicare Advantage Plan, you will still be part of the Medicare program, but you will receive your Medicare benefits through the private insurance company offering the plan.
What are the differences between Medicare Advantage Plans and Medicare Supplement Plans (Medigap)?
Medicare Advantage Plans provide Medicare Part A and Part B coverage through a private insurer, while Medicare Supplement Plans (Medigap) are designed to cover costs not paid by traditional Medicare, such as copayments and deductibles.
What is the biggest disadvantage of Medicare Advantage Plans compared to other health insurance options?
One of the biggest disadvantages of Medicare Advantage Plans is the potential restrictions on choosing healthcare providers and facilities outside of the plan's network.
Can I take both Medicare Advantage and Medicare Supplement insurance?
No, individuals cannot enroll in both a Medicare Advantage Plan and a Medicare Supplement Plan simultaneously. It is important to understand the differences between the two options and choose the coverage that best fits your healthcare needs.