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.
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.
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 than per service rendered.
Judith Stein, the executive director of 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. But at the same time, people do leave Medicare Advantage plans for good reasons.
Worst Medicare Advantage Plans
The worst plan for you depends on your needs. Those with a grocery list of doctors may find an HMO policy is a nightmare; however, someone with one doctor could overpay on a PPO policy.
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.
How to 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.
Hi Lindsay,
My husband turns 65 at the end of February. He is a veteran and has 100% medical coverage through the VA. We haven’t paid anything for medical care in quite some time. He will be enrolling in Medicare, people at the VAtold us he should? and we have been advised he should enroll in the Part B for $148.50 per month (2021 rate). We don’t think he will ever use the Part B coverage, but we are worried if anything changes and he wanted to sign up down the road, then we would have to pay the “ penalty” for the rest of his life. Don’t think we want to pay for “Medigap” either that he may never use. Have been told that once we enroll in a “free” Medicare Advantage plan, that there could be issues getting back into regular Medicare with Medigap on down the road too, because of pre-exsisting conditions. So we are really confused what the best route is? Any help or advice would be appreciated!
Hi Jan! This is a VERY common question we get. Those with VA benefits enroll in Part A since it’s premium-free anyway. The main reason it’s recommended you get Part B is so that you have the option to get outpatient care outside of a VA facility if ever needed. Mostly, I see this issue come around when a retired veteran moves somewhere that does not have a VA facility close to them. They decide to enroll in Part B at that time and find they have a hefty penalty to pay. Since VA benefits are not considered creditable coverage, Medicare will penalize you for delaying enrollment if you choose to enroll at a later time. There are risks that come along with Medicare Advantage plans, which is why it’s important to weigh out the pros and cons of them. Keep in mind, you still have to enroll in Part B to get a Medicare Advantage plan. So regardless if you go with Medicare Advantage or Medigap, you still have to have Part B and pay the Part B monthly premium. Medicare Advantage is good for those who are healthy, the issues arise if and when you get sick. For those who don’t want to pay a high premium for Medigap, but find an Advantage plan too risky, the high-deductible Plan G is always a good alternative. The premium is usually somewhere between $50-$80 per month. So if you went that route, you would pay the Part B premium of $148.50 and the Medigap premium of around $50, putting you in the ballpark range of $200 a month. You mentioned, “don’t think we want to pay for “Medigap” either that he may never use” that I wanted to touch on. If you ever have to go to a non-VA facility and use your Part B benefits, you will use your Medigap benefits at that time since it will cover the 20% coinsurance Part B leaves up to you to pay. There are a lot of factors that come into play here. It really depends on your specific situation including health, budget, and long-term goals. If you need help deciding, just give us a call!
Lindsay, I believe it’s not just about comparing premiums of F versus G when signing up. Is a Medicare Supplement plan is to be a purchase decision for the long-term then one should consider which plans have more stable rate increases. Plan F, due to it being a closed plan, only available for people age 65 before 1/1/20, covering more out-of-pocket costs, and a required plan (actually either C or F) along with A for someone who qualifies for guaranteed-issue rights, is expected to have the highest, more unstable rate increases. This is followed by Plan G with Plan N supposedly being the most stable. Although it’s important to evaluate the immediate costs, it’s also critical to consider long-term costs. Of course, we can’t predict the future and anything is possible but we can study trends and data and make informed, educated decisions.
Hi Noah! Thank you so much for your feedback. You’re 100% correct on all points you mentioned. Unfortunately, it’s impossible to predict the long-term costs of a Medicare Advantage plan since they change annually. At least with the right data, you can mostly predict your long-term costs with a Medigap plan since you only have to take your monthly premium into account and not copays or coinsurance.
Someone was complaining about proposed medicare rule changes to Medicare Advantage plans, but they could not tell me what these changes are, nor could I find them online. Are there proposed changes and what are they ? Thank you
Hi Dave! The only changes to Medicare Advantage plans recently were they are now accepting those diagnosed with ESRD.
If plan g is the same as plan f except for the deductible that u have to pay yourself why would that be better? How much is the deductible?
Hi Edith! You are correct, the only difference between Plan F and Plan G is the Part B deductible. The Part B deductible is $203 in 2021. Since Medigap premiums are dependent on the state you live in, for some individuals, it makes more sense to go with Plan F, while for others it makes more sense to go with Plan G. You just have to compare the premiums side by side to see which one comes out more cost-effective for you.
My husband is retired and disabled. He has been on Medicare and also a medigap plan (Aetna) through his former employer. He has an auto immune disease and has had several joint replacements. He has been hospitalized 4 times this year. His company is pushing to change to a Medicare Advantage plan but I am concerned about the co-pays for hospitalization ($200 per Day). the problem we are having is that the hospital that he has been using to get his IVIG infusions through is ending their relationship with Aetna. They say they will continue with Medicare Advantage plans through Aetna, but not regular Aetna insurance. I am leaning on staying with his current insurance and just finding a different location to get his monthly (and VERY costly) treatments. Which would be better?
Hi Elaine. If the hospital takes Medicare they are required to take a supplement. It’s extremely rare that a hospital would accept Medicare but only Medicare Advantage plan. Given your husband’s health issues, I would not recommend he switches to Medicare Advantage. I agree that your best option is to find a different location for him to receive his monthly treatments. I hope this helps!
If you live in an ISSUE AGE state and buy a Medigap plan, your current age wii never be a factor in your monthly premium. So as at age 65 I purchased plan J (which has since been replaced by plan F), though I am now 79, the premium has not increased very much……But regardless, it is clear to me that if you can possibly afford it, get a Medigap plan as early as possible and stay with it, even if means no more tattoos, no more hot wheels, no more knee jerk travel, no more designer jeans, no more gold jewelry, nor other gottahaves.
Lindsay, how refreshing to read your responses with compassion and knowledge. Quick question: I am 64 and my wife will be 65 this coming Feb. I am currently employed and have group health coverage as long as i am employed which could be many years in the future. i have contacted SS and they are telling me that we do not have to come in and apply for Medicare as long as we are under a group. Here is the kicker: I have found out that if you bypass the Medigap initial offering and develop some serious medical conditions, then the next open enrollment you could be denied and then up a creek. Would we be waiving that initial offering by staying with our existing group coverage? Many thanks…….
Hi Gordon! Thank you for the positive feedback! As long as your employer has more than 20 employees, the coverage is considered creditable under Medicare and you can delay enrolling in Part B. Your Medigap Open Enrollment Period does not begin until your Part B is in effect. If you develop serious health conditions and leave your employer group insurance, you will have an 8-month Special Enrollment Period to enroll in Part B. Once you know when your Part B starts, you can apply for Medigap without your health conditions impacting your enrollment.
I will be turning 65 in April, 2021, and live in the state of Tennessee. I am currently paying for insurance through my employer, but will not be able to keep this policy after 2021 (due to loss of required hours). The cost of the premium is $530 per month for my husband and myself. My plan is to enroll in Medicare Part A and B, and probably a Medigap policy. My question is this. . . should I (or more importantly, CAN I) enroll with my employer during our current Open Enrollment, so that I have coverage for January, February and March; and then cancel the employer insurance once the Medicare goes into affect in April? Is this the proper way to handle this situation? And can I apply for Medigap coverage if I am already insured? If I re-enroll during Open Enrollment, will I be required to pay the $530 per month for the whole of 2021? Any help/advice/suggestions you might have are welcome!!
Hi Becky! Yes, under normal circumstances you can cancel employer group coverage at any time. Your Initial Enrollment Period will begin in January. This is when you can start the enrollment process into Medicare Part A and Part B. Your benefits will become active on the 1st of your birthday month if you enroll before your birthday month. Then, once your Part B is in effect, you have a 6-month Open Enrollment Period to enroll in a Medigap plan. So yes, you can enroll in employer coverage now and cancel once your Part A and Part B become effective in April.
Hello — I will retire on jan 1 of 2021 and will re-enroll in Medicare Part B. I have been covered by my employer health insurance plan but cannot take this same plan with me into retirement. My employer offers a medicare coordinating plan called Advantage 65 with medical and dental and vision for a monthly premium of 408.00 for my wife and I. This does not include prescription drug coverage. The 408.00 premium does not include the Part B medicare premium of 288.00 so the total monthly cost will be 696.00 month. This seems like a large sum to 2 people. This Advantage 65 plan is not a medicare advantage–it is a medigap policy. Any advice is appreciated.
Hi Robert. Medigap plans do not include coverage for dental and vision, Medicare Advantage plans do. Advantage 65 sounds like it is in fact a Medicare Advantage plan through your employer. Without seeing the plans summary of benefits, it’s hard to say if the premium sounds high or not. It may include lower copays, a larger network of doctors, or travel coverage which is why the premium could be higher. I would compare the cost of what your employer is offering to a Medigap plan with a dental, vision, hearing plan and stand-alone Part D prescription drug plan. That could very easily cost you less in monthly premiums than the Advantage 65 plan and provide you better benefits. Give us a call and we can help.
Hello My father is 84 years old and in the hospital. He will likely need 24/7 care. I learned that he has Medi-Care Advantage HMO and I know he also has Medi-Cal ( California) . At one point I was told he had Medi- Medi. I am told that the Medicare HMO is making it difficult. He needs to go to a skilled Nursing for rehab and I am not able to provide 24/7 care for him after rehab. Should I be looking to get him out of the HMO???Can you please help me with some information or refer me to someone that might be able to help me? Thank you
Hi Christine. I’m sorry to hear about your father. If he has Medi-Cal, which is Medicaid, they should cover the expenses at the Skilled Nursing Facility. With your Medicare Advantage HMO, you’ll need to stay in that plan’s network, which could make care coordination more challenging. If he is eligible for an Institutional Special Needs Plan, you may want to look into that and get him out of his current HMO. CMS has information on I-SNPs as well. I hope this helps!
Hello —I have skin psoriasis and a condition call spondylosis of the spine as well as bones spurs of the spine should I purchase medigap insurance instead of MA plan ?
Hi Terry! You will always have better coverage with a Medigap plan than a Medicare Advantage plan. You have to decide if you rather pay more in monthly premiums to pay very little to nothing out of pocket as you use the benefits, or if you rather pay a low premium to pay more out of pocket as you use the benefits. If these conditions require doctors’ visits, with multiple doctors, as well as testing and treatments, it would be best to enroll in a Medigap plan. If you give us a call we can help you compare Medigap vs Advantage side by side to see which option will be the better choice for you. I hope this helps!
Our employer-sponsored retiree health insurance is planning on a possible change to a UHC Medicare Advantage PPO from a regular UHC PPO. We are in discussions. What would be some of the questions and issues we should address before voting?
Hi Holly! This question is difficult to answer without knowing more information about what type of employer coverage you have with the UHC PPO plan currently. UHC PPO may or may not work similarly to a UHC Medicare Advantage PPO. I recently updated our FAQ article on Medicare Advantage vs. Medicare Supplements that should help guide you on what questions to address before voting. For example, I would be asking questions like “what copays can you expect to pay out of pocket when you visit your providers now vs. Medicare Advantage PPO”, “what providers are in your current network vs. the Medicare Advantage PPO”, “what is the out-of-pocket maximum spend limit currently compared to the Medicare Advantage PPO”, etc. I would think the questions would be similar to the same questions you would ask when comparing Medigap with Medicare Advantage. I hope this helps!
I have a niece that I have became her guardian through the courts . She has disability due from mental retardation from birth. Her father worked and kept her on his Insurance with his job. Now her Father got cancer in 2012 loss his job his home and filed for Medicare for his daughter then, how ever part D was not a law to have then as he continue to fight for his life while he took care of his daughter and 4 young grandsons they never made them selves guardians of their daughter as they did not know they needed to nor did he understand he ever needed to get a part D coverage for her she is 40 yrs now and he has passed a way . I am now playing catch up trying to get her a supplement plan or advantage plan to go with her Medicare . Now they are telling me she will have a Life time late enrollment penalty . Really she is like a 3 or 4 yr old who needs lots of daily help and her dad fought for his life every day he could. She isn’t 65 yrs she is healthy and takes no medicine at now . I am trying to do my best but this means she will pay a pentacle from 2015 to 2019 1% a month .this seems unfair since she could not help her self and her father was fighting every day for his life. Is this really true or is there any thing I can do to avoid this penalty for her .
Hi June. I’m so sorry about your current situation regarding your niece. Unfortunately yes, she will have a penalty for the rest of her life. If her income is low and she qualifies for Medicaid or Extra Help, her penalty would be waived. You could sign her up for a Medicare Advantage Plan that covers prescription medications and only have to pay the penalty she has incurred over the last four years. The 2020 Part D premium is $32.7, so if she went that route she would only have to pay somewhere around $16 per month. ($32.74 x .48 {4 years} = $15.71) The sooner you sign her up, the better. That way she will stop increasing her penalty and it will stay where it’s currently at. If she were to get a supplement plan & pick up Part D now, the monthly premium would be around $48.50. ($32.74 + $15.71 = $48.45) I would recommend looking into getting her Extra Help to see if she can get her penalty waived. I hope this helps!
My husband is 79 and underwent chemo/radiation in 2018; cancer is now gone. however he is undergoing speech and swallowing therapy. We have a medicare advantage thru humana. Everytime there is a procedure or scans, xray we pay a co-pay of $325 or 220 or 180. Amaximum out of pocket of $10,000 for medical and meds together. Is there a better plan? he also has afib and kidney disease and copd. I have the same plan as him, my ailments are not as devastating but I do have a few. Suggestions?
Hi Ruthie! Unfortunately, your husband would not be approved for a Medigap plan. I would recommend two things in your situation. First, work with an agent during each AEP, which is right now, to find a lower cost advantage HMO if possible or PPO with all doctors in-network so his maximum out of pocket costs are lower. Second, since you’re a little healthier, you may be eligible for a Medigap plan. That would lower the total out of pocket costs between both of you.
What would you suggest for a 59 year old female with malignant ascites, I have ssdi and they are putting me on medicare but no information on what my options are. I live in Washington state.
Hi Peggy! Unfortunately, not all states require carriers to offer Medigap plans to those on disability. Washington is one of those states that don’t require it, but some carriers may still offer it. However, the monthly premiums are usually higher for those on disability when compared to those that aged into Medicare.
What most beneficiaries do in your situation is they enroll in a Medicare Advantage plan until they turn 65. Once they turn 65, those on disability will get another Open Enrollment Period that allows them to sign up for a Medigap plan. During this six-month window, you cannot be turned down due to your disability or charged higher premiums.