You probably see dozens of commercials for zero-dollar premium Medicare Advantage plans that claim all-in-one coverage. They may include prescription drug coverage and care for vision, dental, hearing aids, and maybe even a free gym membership. Yet, you may have also heard people complain about or criticize these plans. So, why are Medicare Advantage plans bad?
Firstly, Advantage plans are not necessarily bad. However, they’re certainly not a good fit for everyone. We’re here to clear up your confusion about how these seemingly ubiquitous plans got a less-than-stellar reputation.
Why Are Medicare Advantage Plans Bad?
There are many reasons why people may feel Medicare Advantage plans are bad. Some individuals say it’s due to their smaller networks while others aren’t fans of the annual changes. The answer to this question really depends on who you ask.
If you ask a doctor, they’ll likely tell you they don’t accept Medicare Advantage because the private insurance companies make it a hassle for them to get paid. Ask your neighbor why Medicare Advantage plans are bad and they may say they were unhappy with how much they had to pay out-of-pocket when using the benefits. If you ask your friend why they didn’t like Medicare Advantage, they might say it’s because their plan wouldn’t travel with them. Yet, a very common answer is “because I thought the plan was free.”
Why Are Some Medicare Advantage Plans Free?
This biggest misconception is that Medicare Advantage plans are free. Everyone has heard the saying that there’s no such thing as a free lunch. Well, there is also no such thing as a free Medicare plan. One of the reasons Medicare Advantage carriers can offer low to zero-dollar premium plans is because Medicare pays them to take on your health risk. Advantage carriers make their plans look attractive to entice beneficiaries to enroll. Then, Medicare pays the carrier a fixed amount per month to provide coverage to each enrollee, so Medicare doesn’t have to.
So, the Advantage plan essentially replaces Parts A and B. Another reason Advantage plans have low or zero-dollar premiums is due to cost-sharing. Unlike when you pair Original Medicare with a Medigap policy, Advantage plans come with copayments. You can expect to pay a copay for every doctor visit, test, and service you receive.
Don’t confuse zero-dollar premiums with getting out of paying your Part B premium. You still have to pay the monthly premium for Part B while enrolled in Medicare Advantage. Although, there are plans that include a Part B premium reduction feature.
How Do Medicare Advantage Plans Make Money?
Medicare pays Advantage carriers based on a bidding process. The carriers submit their bid based on costs per enrollee for medical services Original Medicare covers. These bids are compared to benchmark amounts and will vary from county to county. If the bid is higher than the benchmark amount, the enrollee will pay the difference in the form of monthly premiums. This is why some Advantage plans are free and others come with a monthly premium.
Is Medicare Advantage a Good Deal?
Whether Medicare Advantage is a good deal depends on who you ask. Some additional coverage is better than none. If you’re on a limited budget and can’t afford the monthly premiums for a Medigap plan, then an Advantage plan with sufficient coverage for your health needs is a good deal. If you need to use your benefits often, then it may not be such a good deal. Your cost-sharing will quickly add up and could easily exceed a year’s worth of Medigap premiums.
Holes in Medicare Advantage
Although Advantage plans come with extra coverage that you won’t find from Medigap plans – such as for dental, vision, and hearing care – those who sign up may soon perceive cracks in their coverage. Beneficiaries face this disappointment when they find themselves paying more than they budgeted for, in situations that they previously thought their plan would cover.
Additionally, you can’t just set and forget an Advantage plan. In contrast to Medigap plans, benefits on Advantage plans change. Not staying abreast of these changes can have financial consequences and affect your access to affordable health care in the following year.
Coverage Doesn’t Travel With You
If you like to travel, an Advantage plan is not a good deal for you. Unlike a Medicare Supplement insurance policy, your coverage will not travel with you.
An Advantage plan is likely not the right choice for someone with multiple and/or chronic health problems. Signing up for an Advantage plan when you have several or serious health problems could result in you paying for a lot out-of-pocket.
Small Networks of Doctors
Medicare Advantage plans also come with much smaller networks of doctors compared to Medigap plans. Medigap will pay for all providers across the United States who accept Medicare assignment. Always check an Advantage plan’s provider directory before you enroll to confirm ALL your doctors are in the plan’s network.
Also, be aware that your doctor is free to leave the plan’s network at any time of the year. Unfortunately, you will still be stuck in that plan until the next Annual Enrollment Period. So, you’ll either need to pay 100% of your medical costs or find a new doctor in your plan’s network.
Out-of-Pocket Maximums Can Break the Bank
Medicare Advantage comes with an out-of-pocket maximum amount. Usually, this is a good thing. However, the limit for Advantage plans is pretty high; for some beneficiaries, high enough to break the bank. If you don’t have a rainy day fund, enrolling in an Advantage plan could be a financial risk you don’t want to take.
Medigap plans do not involve out-of-pocket maximums. That’s because they don’t need one; Medicare Supplement plans keep your cost-sharing to a minimum.
Plan Benefits Change Annually
Unlike Medigap, Medicare Advantage benefits change annually. It’s essential to check your plan’s Annual Notice of Change each September to ensure your plan will still have the same benefits the following year.
Why Do Doctors Not Like Medicare Advantage Plans?
Ask your doctor if they like Medicare Advantage plans and the answer might surprise you. The average physician isn’t a fan, because Advantage plans put the patients’ financial risk on the doctors. This model is known as global risk or full risk. The Advantage plan will pay the doctor more money upfront than per service rendered.
Judith Stein, the executive director of the Center for Medicare Advocacy says this is a way to keep costs down and provide less care. The only way the physician will make a profit is if they stay under budget. If they don’t say under budget, they end up losing money.
Are Medicare Advantage Plans Worth It?
Medicare Advantage plans are certainly worth the zero-dollar premium; however, it’s your choice to decide if the coverage is right. The value of an Advantage plan depends on your location, healthcare needs, budget, and preferences. Some healthy people live in prime Medicare Advantage areas, and they prefer to pay as they go. But at the same time, people do leave Medicare Advantage plans for good reasons.
Worst Medicare Advantage Plans
However, star ratings for Advantage plans can give you a general idea of which plans to avoid. Those who choose to enroll in Medicare Advantage shouldn’t pick a plan with a rating of fewer than three stars.
Still, the worst plan for you is the plan you don’t analyze. When it comes to Medicare Advantage, there are many different ways you could become disappointed in your choice.
Your dissatisfaction could stem from the seemingly endless copayments, the need for referrals, or the small network of doctors. Whatever the case, weighing the pros and cons of the policy of interest should be a top priority. Doing your due diligence will help you determine if an Advantage plan is a bad choice for you.
Can I Enroll in a Medigap Plan Later if I Enroll in a Medicare Advantage Plan Now?
If you enroll in an Advantage plan now, you may leave the plan and switch to Medigap later. However, you’ll have to wait until either the Annual Enrollment Period or the Medicare Advantage Open Enrollment Period to make changes.
It’s important to know that most beneficiaries will only get a one-time Medigap Open Enrollment Period. This is your only opportunity to enroll in a Medigap plan without answering health questions.
If you miss this one-time opportunity to enroll, and you choose to enroll in a Medicare Advantage plan instead, you will have to answer the health questions, go through medical underwriting, and the carrier could deny your application due to pre-existing conditions.
How To Get Help With Decisions About Medicare Advantage
If you're considering Medicare Advantage coverage but are hesitant to enroll, we're here to help you make the right decision. The key to obtaining the best coverage for you is thorough researching and becoming educated on your plan options.
We'll help guide you toward your ideal coverage configuration. To speak to an agent about the options in your area, call the number above. You also have the option to fill out out an online rate form. We'll show you which Medicare plans are available to you and help you determine which best fits your current and future needs.