Why Medicare Advantage Plans Are Bad (5 Reasons)
Medicare Advantage plans are often viewed as bad because out-of-pocket expenses can add up to a significant amount, especially if you have frequent doctor visits, take a lot of prescription medications, or travel often. Medicare Advantage plans may not fit everyone’s needs, but this does not make them subjectively bad – they are still worth considering for certain individuals.
Here are a few reasons why Medicare Advantage plans are a bad choice for some Medicare beneficiaries:
Five Disadvantages of Medicare Advantage
#1. Out-of-Pocket Costs
An attractive feature that health insurance companies promote with many Advantage plans is that you will pay either no or very low premiums; these are often referred to as a “free Medicare Advantage plan,” even though, in reality, you must continue to pay your Medicare Part B premium in addition to copayments, coinsurance, and deductibles for many services.
Those services can include:
- Doctor visits
- Emergency room visits
- Lab work
- CT or MRI scans
- Outpatient surgery
- Prescription drug coverage
- Skilled nursing care
These out-of-pocket expenses can add up quickly. Although Medicare Advantage plans cap how much you have to pay out-of-pocket each year before the plan covers 100% of your costs, that limit can range from $3,000 to over $8,000. In 2024, the out-of-pocket limit is $8,850.
If you’re considering a Medicare Advantage plan, you must pay attention to your cost share and the maximum out-of-pocket cap, especially if you have health problems. You might find that Original Medicare paired with a Medicare Supplement insurance plan is less expensive in the long run.
#2. Network Limits
Another disadvantage of Medicare Advantage plans is that many use local networks, regional provider networks, or preferred provider organizations (PPOs). As a result, some of these plans have fewer providers than the number of providers you can use under Original Medicare, meaning network restrictions might require you to change healthcare providers.
PPO plans, in particular, might also limit your access to specialty care. For example, if you leave the plan’s network, the insurer can charge you a higher out-of-pocket fee or reject your claim entirely. This can be extremely costly if you need medical care while traveling.
If your Advantage plan is a Health Maintenance Organization (HMO), you will likely need a referral from your primary care physician to see a specialist for medical services. Special Needs Plans (SNPs) also typically require referrals. If you don’t receive a referral, you’ll be out of network and responsible for the cost of the visit.
In addition to referrals, many Medicare Advantage plans require prior authorization for care in a skilled nursing facility, home health care, hospital stays, and other services. If you don’t get prior approval or the insurance carrier denies your request, you must decide whether to pay the out-of-pocket expense or forego the care.
#4. Annual Plan Changes
Under the Centers for Medicare and Medicaid Services guidelines, insurance providers can change their rules about networks and costs. Hospitals and doctors can leave the provider network, or the insurer may change its drug formulary. You also might have a change in your health condition that requires more services or specialized care.
While the health plan you initially enrolled in might work well for you today, plan changes might make it significantly more expensive or inadequate for your health care needs in a year. A careful review with an insurance agent can prevent surprises and ensure you get the necessary coverage.
#5. Plan Termination
To maintain your Medicare coverage, you must continue paying your Part B monthly premium and your Medicare Advantage plan premium (if there is one). However, there are several instances in which your Medicare Advantage plan may be terminated through no fault of your own:
- The insurer drops the plan from its program.
- The Centers for Medicare & Medicaid Services discontinues a low-performing plan.
- The insurance carrier goes out of business.
Are Advantage Plans Worth Considering?
The answer is yes for healthy Medicare beneficiaries who want an all-in-one plan. Premiums are generally lower for Advantage plans than Medicare Supplement plans, and most Medicare Advantage plans also include additional benefits that Original Medicare does not cover.
Extra benefits can include:
- Fitness memberships
In the end, the main reason why Medicare Advantage plans are often viewed as bad is because out-of-pocket expenses can add up to a significant amount. If you have frequent doctor visits, take lots of prescriptions, or need specialty care, these cost-sharing expenses will quickly offset any premium savings you might collect.
Switching Back to Original Medicare
If your health condition changes or your Medicare Advantage plan isn’t providing the coverage options you need, all is not lost. Medicare Advantage enrollees can switch to Original Medicare if one of the following applies:
- You are within 12 months of when you first bought your Advantage plan
- You are in the annual open enrollment period
- You qualify for a special enrollment period
Suppose you switch to traditional Medicare during the first 12 months of buying your MA policy. In that case, you can still buy a supplement plan (Medigap) along with a Medicare Part D prescription plan without undergoing medical underwriting.
Do doctors like Medicare Advantage plans?
Medicare Advantage plans are not often popular with doctors because they want to focus on patient care, not paperwork. Restrictions such as referrals and prior authorization for medical care hinder doctors’ ability to deliver timely quality care. They also don’t like the possibility of a patient being forced to neglect optimal care because of an insurance carrier’s financial decision.
Are Medicare Advantage plans free?
Although many insurance companies promote $0-premium plans, Medicare Advantage plans are not free. You still must pay your Part B premium, coinsurance, and copays.
Can I choose any doctor with Medicare Advantage?
Most Advantage plans use provider networks, but there are different rules depending on your plan. For example, HMO plans and SNPs require you to be within the network. If you go outside the network, the insurer can deny your claim. On the other hand, PPO and fee-for-service plans frequently allow you to seek care outside the network, but you’ll usually pay more than if you stay inside the network.
Ready to Learn More?
Choosing the right Medicare Plan is not a decision that should be taken lightly. With Policy Guide’s assistance, you will have access to the knowledge and expertise of professional agents who can help you compare different health plans, prices, and policies to ensure that you make an informed decision. Let us guide you through this process so your chosen plan best suits your needs.