The Pros and Cons of Medicare Advantage Plans: What You Need To Know

The Pros and Cons of Medicare Advantage Plans - Image

Understanding the Pros and Cons of Medicare Advantage Plans

There are many decisions to make when you’re a Medicare beneficiary, with one of the most significant being the type of plan you choose. As you explore your plan options, you’ll likely come across Medicare Advantage plans. Also known as Medicare Part C, Medicare Advantage plans offer the same coverage as Original Medicare (Parts A and B) but may include possible additional routine benefits. In this article, we’ll help you understand the features of Medicare Advantage plans, including the potential advantages and disadvantages of this type of coverage, so you can feel more confident in your decisions about Medicare Advantage plan enrollment. 

We represent MA, MAPD and PDP Plans For Humana, UnitedHealthcare®, Aetna, Cigna Healthcare, Wellcare, Anthem BCBS, Devoted, Blue Cross Blue Shield of Michigan, and Kaiser Permanente.

Types of Medicare Advantage Plans

When reviewing Medicare Advantage plans, it may be beneficial to familiarize yourself with the common Medicare Advantage plan types. These include Health Maintenance (HMO) plans, Preferred Provider Organization (PPO) plans, Private Fee-for-Service (PFFS) plans, and Special Needs Plans (SNPs).

  • HMO Plans: A type of plan to receive care and services from a specific network of doctors, hospitals, or other healthcare facilities. You must also choose a primary care physician (PCP) when on an HMO plan. 

  • PPO Plans: Like HMO plans, PPO plans have an approved network of healthcare providers that are contracted to provide care to plan members at a specific rate. However, PPO plans often offer more flexibility, as you can see out-of-network providers at an additional cost, and you do not need to choose a PCP.

  • PFFS Plans: The plan determines how much it will pay providers and how much you must pay, and providers can choose whether to accept the plan’s payment terms for each visit. 

  • SNPs: SNPs are tailored for specific groups of people with particular diseases or characteristics. SNPs may require you to have a primary care physician or care coordinator.

Medicare Advantage Plans vs. Original Medicare

While Medicare Advantage plans are legally required to have the same coverage as Original Medicare (Medicare Parts A and B), there are key differences. 

Medicare Advantage

Original Medicare

Enrollment

Sold as individual plans from private Medicare-approved insurance companies. To enroll in a Medicare Advantage plan, you must live in the service area of your chosen Medicare Advantage plan and already be enrolled in Original Medicare.

If you receive Social Security or RRB benefits at least 4 months before being eligible for Medicare and you reside in the United States (except residents of Puerto Rico), you are automatically enrolled in Original Medicare (Part A and Part B). People who are automatically enrolled have the choice of whether they want to keep or refuse Part B coverage

Premiums

You pay both the Part B premium and your Medicare Advantage plan’s premium

You pay the monthly premium for Part B 

Prior Authorization

May require you to get prior authorization from your plan before it covers certain supplies or services

Typically does not require you to get prior authorization for Original Medicare-covered services

Out-of-Pocket Cost

Out-of-pocket costs vary by plan

You typically pay 20% of the Original Medicare-approved amount for Part B-covered services after you meet your deductible

Medicare Advantage Plans vs. Medicare Supplement Insurance Plans (Medigap)

Another Medicare plan type is the Medicare Supplement insurance plan, also known as Medigap. Like Medicare Advantage plans, Medigap plans are approved by Medicare and sold by private insurance companies. However, these plans are designed to provide supplemental coverage for out-of-pocket costs not covered by Original Medicare. You must be enrolled in Original Medicare to purchase a Medigap plan. It’s also important to know that you cannot be enrolled in both a Medicare Advantage plan and a Medigap policy at the same time. If you are enrolled in a Medicare Advantage plan and want to enroll in Medigap coverage, you must first switch to Original Medicare during one of the designated Medicare enrollment periods

Potential Key Benefits of Medicare Advantage Plans

Whether or not a Medicare Advantage plan is right for you will depend on your unique coverage needs. Potential benefits of a Medicare Advantage plan may include:

Routine Dental, Vision, or Hearing Coverage

Medicare Advantage plans may include one or more of the following possible additional routine benefits: dental, vision, or hearing. 

Out-of-Pocket Maximum

All Medicare Advantage plans must set an annual limit on out-of-pocket costs, known as the maximum out-of-pocket (MOOP). After you reach your MOOP, your plan is responsible for the costs you incur for Original Medicare-covered services for the remainder of the year. 

Prescription Drug Coverage

Medicare Advantage plans may include prescription drug coverage through Medicare Part D. These plans are typically referred to as Medicare Advantage Prescription Drug (MAPD) plans. MAPD plans each have a formulary or a list of name-brand and generic drugs that the plan will cover. The formulary contains the following information.

  • If your current individual prescriptions are covered

  • Whether a drug is classified as lower-tier or higher-tier

  • How much a drug will cost under that specific MAPD plan  

MAPD plan formularies are subject to change, so it’s important to review your plan information periodically for up-to-date information about the prescription drug coverage that may be available to you. 

Potential Disadvantages of Medicare Advantage Plans

When considering Medicare Advantage plans, it’s important to be aware of potential ways in which this type of coverage may not suit your needs. Possible disadvantages of Medicare Advantage plans may include:

Prior Authorization

Medicare Advantage plans may require prior authorization and referrals for specialist care. When deciding whether to enroll in a Medicare Advantage plan, it’s important to consider how any requirements for prior authorization and specialist referrals will impact your healthcare planning.

Limited to In-Network Coverage

Medicare Advantage plans are typically restricted to a network of approved providers. You may be able to seek out-of-network care at an additional cost. 

Potential Changes to Preferred Networks or Providers

It’s possible for Medicare Advantage plans to be dropped by their preferred network or provider. If your plan is dropped from a provider or network, you will be notified in advance, and you’ll be eligible to switch to another Medicare Advantage plan or return to Original Medicare under the terms of a Special Enrollment Period. 

Is Medicare Advantage right for you?

Whether or not a Medicare Advantage plan is right for you will depend on your unique needs. It can help to consider the following:

  • Whether your current physician, hospital, and pharmacy within an existing Medicare Advantage plan network

  • If you’re financially able to cover premiums and out-of-pocket maximums

  • Your anticipated healthcare needs, including care for chronic health conditions

If you’re wondering if a Medicare Advantage plan is right for you, our licensed insurance agents can help you review available plans in your area. 

FAQs

Doctors may choose not to accept Medicare Advantage plans for various reasons. Whether or not a doctor chooses to accept Medicare Advantage plans may depend on financial constraints, lack of administrative resources, or anticipated challenges with prior authorization or specialist referral.

There are circumstances in which your enrollment in a certain Medicare Advantage plan may not be approved. A Medicare Advantage plan may deny your enrollment if you miss the enrollment period, are dishonest or fraudulent on your application, or if you live outside the plan’s service area.

Hospitals may choose not to accept Medicare Advantage plans. This can be for a variety of reasons, including administrative challenges related to prior authorizations or insurer reimbursement. If you are on a Medicare Advantage plan, you should confirm that your preferred hospital accepts your plan before you seek care at that facility.

Yes, you can switch from a Medicare Advantage plan to a Medigap plan. To do so, you will need to disenroll from your Medicare Advantage plan, and you must enroll or already be enrolled in Original Medicare. In most cases, you can only make these changes during the Medicare Advantage Open Enrollment Period (OEP), which runs from January 1 to March 31 each year, or during the Medicare Advantage and Prescription Drug Annual Enrollment Period (AEP), which runs October 15 to December 7 each year.

You can switch from your Medicare Advantage plan back to Original Medicare during the Medicare Advantage Open Enrollment Period (OEP), which runs annually from January 1 to March 31, or during the Medicare Advantage Open Enrollment Period, which runs annually from October 15 to December 7.

Review Medicare Advantage plans and Medicare Supplement plans by speaking to a Medicare Helpline licensed insurance agent.

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