Close close icon

Advantages and Disadvantages of Medicare Advantage Plans


There are advantages and disadvantages to Medicare Advantage plans. If you want more coverage than Medicare, you may consider an Advantage plan. But will the low premium outweigh all the other costs? We’ve got the answers to help you understand the advantages and disadvantages of Medicare Advantage plans. 

What are the Advantages and Disadvantages of Medicare Advantage Plans?

There are positives and negatives to everything, and Medicare Advantage is no exception. Let’s start with the good news first!

Advantage plans have low premiums, and they include services Medicare doesn’t. Medicare Advantage has your back if you need routine dental or vision. Some Advantage plans include Part D.

Some policies also include gym memberships, chiropractic care, and Long-Term Care. Further, there are plans that include over the counter drug cards. These are all fantastic things, but the fine print is the real kicker.

Top 3 disadvantages of Medicare Advantage plans:

  1. Hassle of doctor networks
  2. High co-payments
  3. Constant benefit changes

As if that’s not bad enough, Advantage plans can drop doctors without cause, and members MUST follow plan rules. Also, the benefits they promise can turn out to be less than you were lead to believe.

What would happen if your plan suddenly dropped one of your doctors? Sure, the low premium is enticing, but is it worth it?

Before we decide, let’s take a look at why premiums are low and how Medicare Advantage plans make money while offering such “cheap” coverage.

Why Are Some Medicare Advantage Plans Free?

Part C policies start as low as $0 a month. While browsing options, you may notice the promotion of some Advantage plans as “free.”That’s because they offer a $0 premium. A zero-dollar premium cost makes plans appear more attractive. Who wouldn’t like the sound of a $0 premium? Especially if you’re looking to lower your Medicare costs.

Why would a company offer a zero-dollar premium plan? Are “free Advantage plans” really free?

Private insurances contract with Medicare. Then, Medicare pays a set amount to cover claims. Sometimes companies save money by using in-network providers.

Insurance companies often pass those extra savings to enrollees. A $0 plan still has costs.

How Much Does an Advantage Plan Cost?

After talking about Advantage plans with a $0 premium, you may wonder what other plans charge. In some areas, Advantage plans carry a higher premium.

Location is the determining factor for which plans are available to you. Some locations don’t even have Medicare Advantage plan options.

How Do Advantage Plans Make Money?

The government pays Advantage companies a fixed amount for each person. The fixed amount is to provide coverage at least as good as Medicare.

Medicare makes separate payments for plans offering Part D. Depending on the health conditions, subsidies to these plans can change.

Advantage plans get paid by Medicare through a bidding procedure. Health care plans submit their bids depending on the costs for each member. Requests that meet all qualifications obtain approval.

Benchmark amounts vary depending on the region; they range from 95% to 115% of Medicare costs.

What Happens if Bids are Higher Than Benchmark Amounts?

Enrollees must pay a premium for the cost difference.

What Happens When Bids are Lower Than Benchmark Amounts?

Medicare and the health plan split the difference in cost. Then, they provide a rebate to enrollees. A new bonus system works to pay for health plans with high-quality ratings.

For example, an Advantage plan may have four or more stars due to quality ratings. When an Advantage policy has a high-quality score, they get bonus payments.

How Much Does the Government Pay Medicare Advantage Carriers?

The government pays more than $1,000 monthly for each beneficiary. Between the number of enrollees and bonus payments, $1,000 is a considerable amount.

Advantage plans also receive over $9,000 to handle high-risk patient claims. High-risk patients are those with heart disease, diabetes, or other chronic conditions.

Possible Advantages to Medicare Advantage Plans

Some benefits to Medicare Advantage plans include additional ancillary benefits; such as dental, hearing, and vision. Also, some Part C plans have a Part B premium reduction option which lowers the cost of Part B for you. Further, some Part C plans have telehealth benefits or a gym membership. These benefits aren’t available with all plans, but many plans offer at least one of these benefits.

FAQs

What are the disadvantages of Medicare Advantage plans?
In your research, it’s likely you’ll discover complaints of doctor networks, restrictions, prior authorizations, and more. Some people find the out-of-pocket costs to nickel and dime them.
Are Medicare Advantage plans going away?
Some people may have heard that some Medicare plans are going away. This is only relevant to a few Medigap plans, not Medicare Advantage plans. Medicare Advantage is NOT going away.
Is a Medicare Advantage plan worth it?
That depends on the healthcare you need. If you’re healthy with no risks, a Medicare Advantage plan could save you a little bit in premiums. But, if you become unhealthy, will you be able to uphold the co-payment costs. The primary cost concern would be the hospital co-payments or a chronic condition.
Why do doctors dislike Medicare Advantage plans?
You may have heard a doctor say, “Medicare Advantage plans are bad.” Now, it could be they had a poor experience with one company, or it could be the in-network hassle for patients. While Medicare Advantage isn’t superior insurance, it’s not bad. More accurately, I think these plans are complex because no two policies are the same.
Does Part C cover the medical cost when traveling?
If you travel, Advantage plans may be more of a burden. Advantage plans usually have a specific network of doctors you may visit. The level of provider freedom depends on where you live. But, it’s best to always check with your plan for specific benefit details and how much they cost.

Discover Your Medicare Options Today!

After weighing out the advantages and disadvantages of Medicare Advantage plans, would you get one? We understand how messy things get when choosing an Advantage plan. Not to worry, we’ll be here to make it easier.

Our company compares rates from best Medigap companies. Call us at the number above to find coverage with the help of an agent.

Can’t call now? Fill out an online rate form and let us personalize your policy.

Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

2 thoughts on “Advantages and Disadvantages of Medicare Advantage Plans

  1. Hi…my wife & I have Anthem Blue Cross as our Supplement Plan to basic Medicare Part A & B for 15 yrs. We’re thinking of adding Part C during this open enrollment until Dec 7th. Would Part C take the place of our Anthem Blue Cross Supplement? Is this advisable? We’re both in good health. Thanks.

    1. Hi Tom! You cannot have both a Medigap plan and Medicare Advantage plan at the same time. You would not be adding Part C to your supplement plan, you would have to drop your supplement plan. I would take a look at our article on Medigap vs Medicare Advantage, there is a video we recently did that explains the differences between the two that will help you choose.

Comment

Your email address will not be published. Required fields are marked *