Last Updated on by
You see dozens of commercials for zero dollar premium Medicare Advantage plans that are “all-in-one” coverage. They may include benefits for prescriptions, vision, dental, and maybe even a free gym membership. So, why are Medicare Advantage plans bad? Medicare Advantage plans are not necessarily bad, but they’re certainly not a good fit for everyone. We’ll explain below.
How Can Medicare Advantage Plans Be Free
This biggest misconception is that Medicare Advantage plans are free. Everyone has heard the saying, “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 they are paid by Medicare to take on your health risk. Advantage carriers make their plans look super attractive to entice beneficiaries to enroll. Then, Medicare pays the carrier a fixed amount per month per enrollee to provide coverage, so they don’t have to.
Another reason Advantage plans have low or zero-dollar premiums is due to cost-sharing. Unlike Original Medicare and Medigap, Medicare Advantage plans come with copays. You can expect to pay a copay for every doctor visit, test, and service you receive.
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 enrollees for services covered under Original Medicare. These bids are compared to benchmark amounts and will vary county to county. If the bid is higher than the benchmark amount, the enrollee will pay the difference in the form of monthly premiums. Which is why some Medicare Advantage plans a free and others have a monthly premium.
Is Medicare Advantage a Good Deal
That depends on who you ask. Some additional coverage is better than non. If you’re on a limited budget and cannot afford the monthly premiums for a Medigap plan, then a Medicare Advantage plan is a good deal.
If you would like to use your benefits often, then Medicare Advantage may not be such a good deal. Your cost-sharing will quickly add up and could easily exceed the monthly premium for a Medigap plan.
Coverage Doesn’t Travel With You
If you like to travel, then Medicare Advantage is not a good deal for you. Unlike Original Medicare & Medigap, your coverage will not travel with you.
If you have health problems and are concerned about your health in the future, then a Medicare Advantage plan is not the right choice for you if your goal is to spend less out of pocket annually.
Small Network of Doctors
Medicare Advantage also comes with a much smaller network of doctors compared to Original Medicare and Medigap. Always check your plans 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. You will have to either 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. Usually, this is a good thing. However, the limit is pretty high. High enough to break the bank. If you don’t have a rainy day fund, enrolling in a Medicare Advantage plan could be a financial risk, you don’t want to take.
Medigap plans do not come with an Out-of-Pocket Maximum. That’s because they don’t need one. Your cost-sharing is minimal.
Plan Benefits Change Annually
Unlike Medigap, Medicare Advantage benefits change annually. It’s essential to check your Plans 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
If you ask your doctor if he likes Medicare Advantage plans, you might be surprised by the answer. Medicare Advantage plans put the financial risk of the patient on the doctors. This model is known as “global-risk” or “full-risk.” The Medicare Advantage plan will pay the doctor more money upfront then per service rendered.
Judith Stein, the executive director fo the Center for Medicare Advocacy, stated, “it’s 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 worth of a Medicare 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; these feelings are justifiable.
Worst Medicare Advantage Plans
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.
It could be the endless copayments, the necessary referrals, or the small network of doctors. Either way, doing your research on the policy of interest should be a top priority. Doing your due diligence will help you determine if a Medicare Advantage plan is a bad choice.
Can I Enroll in a Medigap Plan Later if I Enroll in a Medicare Advantage Plan Now
This is the ultimate question. If I enroll in a Medicare Advantage plan now, can I leave the plan and switch to Medigap later? Yes, you can leave the plan and switch to Medigap later. However, you will 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 the only time you can enroll in a Medigap plan without answer 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 go through medical underwriting and may be denied coverage due to pre-existing health conditions.
Get Help Determining if Medicare Advantage is Good or Bad
If reading through details of insurance coverage is confusing, call one of our agents to help identify the best policy for you.
We know that Medicare can be complicating and ever-charging; that’s why we choose to be here for you throughout the process. Plus, we’re still here next year when the plan changes.
No time to call us? Fill out an online rate form and see what supplemental Medicare options are available in your area now.