Why Medicare Advantage Plans are Bad

Understand why Medicare Advantage plans don’t fit everyone, but they are still worth considering for certain individuals.

When it’s time to retire, most beneficiaries turn to Medicare Part A and Medicare Part B for their health insurance coverage. But Original Medicare can be confusing. So many seniors choose a Medicare Advantage plan to reduce this confusion because it combines coverage for hospitalization, outpatient services, and prescriptions into one policy.

But there are disadvantages of Medicare Advantage plans, and you need to consider them carefully to see if an MA plan fits your needs.

How Medicare Advantage Works

Most seniors become eligible for the federal Medicare program when they turn 65. There are two ways you can receive your Medicare benefits:

Original Medicare includes Medicare Part A (inpatient hospitalization) and Medicare Part B (doctor and outpatient services). In addition, you must buy a separate policy for prescription drug coverage (Medicare Part D). You also can buy a Medicare Supplement plan to cover out-of-pocket expenses such as deductibles and coinsurance.

Medicare Advantage plans combine Medicare Parts A and B, and usually Part D, into one policy. Private insurance companies sign up with Medicare to provide benefits through these MA plans.

Most Medicare Advantage plans include additional benefits that Original Medicare does not cover.

Extra benefits can include:

  • Vision
  • Dental
  • Hearing
  • Fitness memberships

Whether you choose Original Medicare or a Medicare Advantage plan, you must be enrolled in Medicare Parts A and B. Part A is free for most Medicare beneficiaries, but you will pay a monthly Medicare Part B premium.

If you receive Social Security benefits when you turn 65, you will automatically be enrolled in Medicare.

Five Disadvantages of Medicare Advantage

The federal government pays private insurance companies a set amount each month to provide your Medicare coverage through Medicare Advantage.

Medicare Advantage plans can take several forms:

  • PPO (preferred provider organizations)
  • HMO (health maintenance organization)
  • Fee-for-service
  • SNPs (special needs plans)

The insurance companies can set rules regarding your care. Here are a few reasons why Medicare Advantage plans are not the best choice for many Medicare beneficiaries.

#1 Out-of-Pocket Costs

An attractive feature that insurance companies promote with many MA plans is that you will pay either no or very low premiums. However, you will pay copayments and coinsurance for many services.

Those services can include:

  • Doctor visits
  • Emergency room visits
  • Lab work
  • CT or MRI scans
  • Outpatient surgery
  • Chemotherapy
  • Prescription drugs
  • Dialysis
  • 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 nearly $8,000. In 2022, the cap is $7,550.

If you’re considering a Medicare Advantage plan, you need to pay attention to your cost share and the plan’s maximum out-of-pocket cap. You might find that Original Medicare and a Medicare Supplement insurance plan are less expensive in the long run.

#2 Network Limits

One of the disadvantages of Medicare Advantage plans is that many plans use local or regional provider networks or preferred provider organizations. As a result, PPO plans have fewer providers compared to the number of providers you can see under Original Medicare. In addition, network restrictions might require you to change health care providers.

PPO plans also might limit your access to specialty care. For example, if you go out of 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.

#3 Referrals

If your Advantage plan is an HMO, you will likely need a referral from your primary care physician to see a specialist. SNPs also typically require referrals. If you don’t get a referral, you’ll be 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 if the insurance carrier denies your request, you have to decide whether to pay the out-of-pocket expense or forego the care.

#4 Annual Plan Changes

Under guidelines from the Centers for Medicare and Medicaid Services, insurance providers can change their rules about networks and costs. Additionally, hospitals and doctors can leave the provider network, or the insurer might change its drug formulary. You also might have a change in your health condition that requires more services or specialized care.

While the plan you initially enroll 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 unpleasant surprises and ensure you’re getting the coverage you need.

#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. But there are several other reasons why you might lose your Medicare Advantage coverage through no fault of your own:

  • The insurer drops the plan from its program.
  • The Centers for Medicare and Medicaid Services discontinues a low-performing plan.
  • The insurance carrier goes out of business.

Switching Back to Original Medicare

If your health condition changes or your Medicare Advantage plan isn’t providing the coverage you need, all is not lost. Medicare Advantage enrollees can switch to Original Medicare under certain conditions.

  • Within 12 months of when you first bought your Advantage plan
  • During the annual open enrollment period
  • If you qualify for a special enrollment period

If you switch to traditional Medicare during the first 12 months of buying your MA policy, you can still buy Medicare Supplement insurance (Medigap policy) without undergoing medical underwriting.

Are Advantage Plans Worth Considering?

For Medicare beneficiaries who are healthy, the answer is yes. Premiums are generally lower for Advantage plans than Medicare Supplement plans. However, you’ll pay a copayment or coinsurance for almost every medical service you receive.

One of the reasons why Medicare Advantage plans aren’t a good fit for everyone is because these 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. Additionally, not all hospitals and doctors accept Medicare Advantage plans, and you might have to change providers or facilities.

Medicare assigns star ratings to MA plans to help beneficiaries evaluate the quality of the different Advantage plan options. Plans with a four- or five-star rating are the best.


  • Do Doctors Like Medicare Advantage Plans?

    One of the reasons why Medicare Advantage plans are not popular with doctors is because they want to focus on patient care, not paperwork. Restrictions such as who they can refer to and making sure they get prior authorization for medical care hinder doctors’ ability to deliver timely, quality care. They also don’t like the possibility that a patient won’t receive optimal care because of an insurance carrier’s financial decision.

  • Are Medicare Advantage Plans Free?

    Although many insurance companies promote their $0-premium plans, Medicare Advantage plans are not free. You still must pay your Part B premium as well as coinsurance and copays as you go along.

  • 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 restrict care to within the network. If you go outside of the network, the insurer can deny your claim. On the other hand, PPO plans and fee-for-service plans frequently allow you to seek care outside the network, but you’ll pay more than if you stayed inside the network.