Consider Your Options: Medicare Vs. Medicare Advantage

MEDICARE ADVANTAGE PLANS: Disadvantages

Disadvantage 1: High Maximum Out-of-Pocket Limits

This is true.

For 2023 Medicare Advantage enrollees, the average out-of-pocket limit is $5,070 for in-network services. For PPOs, the average is nearly $9,000 for both in-network and out-of-network services. These figures are expected to continue to increase. The current maximum is $7,550, up from $6,700 just a couple of years ago.

NOTE: High-deductible Medicare Supplements and shared-cost plans, like Medigap Plan K, may also have high out-of-pocket limits. However, no Medicare supplements are as high as the current limit with Medicare Advantage. However, Medigap plans have their own disadvantages.

Disadvantage 2: Hospitalization Costs More, Not Less

In many cases and with many plans, this is true.

A recent Kaiser Family Foundation study shows that half of all Medicare Advantage enrollees would incur higher costs than beneficiaries in traditional Medicare for a 5-day hospital stay. That’s shocking, but given the rising cost of hospitalization, it’s also understandable.

This fact also underscores the need to carefully scrutinize Medicare Advantage plans annually so you are not surprised by the bills. Ambulance, emergency room, diagnostic, hospitalization, and inpatient medication copays add up very fast.

IMPORTANT: If you are getting your Medicare benefits for the first time and have a chronic health condition requiring frequent care, pay careful attention to health plan hospitalization costs. If you can get a Medicare supplement during your Medicare supplement guaranteed-issue rights period, your hospitalization costs over time will generally be lower.

Disadvantage 3: They Make You Pay Multiple Copays For The Same Issue

This is true, but it is also true with Original Medicare. However, this complaint highlights the chief difference between Medicare Advantage and Original Medicare plus a Medicare supplement.

Medicare Advantage is a pay-as-you-go system. You pay your monthly Medicare Part B premium and an additional premium for the plan (if any), but most of your costs come when you use healthcare services.

For instance, you pay a copay if you see your primary care doctor for an issue. If your doctor refers you to a specialist, you pay another copay. And if your specialist orders lab tests or diagnostic tests, you pay a copay for each of those.

If you have Original Medicare and a Medigap Plan G supplement, you pay your monthly Medicare Part B and supplement premiums but pay virtually nothing when you use healthcare services once the annual Part B premium is paid. This includes Medicare Part B Excess Charges if your doctor does not accept Medicare’s standard rates.

Understanding this fundamental financial difference is the key to getting the best insurance for your situation.

Disadvantage 4: You Are More Likely To See A Nurse Practitioner Than A Doctor

In many cases, this is true.

HMO and PPO health plans use a method called capitation to pay providers. A capitated contract pays a provider in the plan’s network a flat fee for each patient it covers. Under a capitated contract, an HMO or managed care organization pays the health care provider a fixed amount of money.

For this reason, many primary care group practices use nurse practitioners and aides to reduce their costs so they can see as many patients as possible. These healthcare workers are supervised by a physician.

Disadvantage 5: They Only Let You See Certain Doctors

With HMO plans, this is true.

Provider networks are a feature of all HMO and PPO plans. With an HMO plan, you are restricted to the plan’s network (except in an emergency). You pay all costs if you go outside your plan’s network.

PPO plans also have networks. However, they offer the flexibility to use certain non-network providers. When you do, you pay a higher co-payment.

Disadvantage 6: They Make You Get A Referral

This is true in the case of HMO plans and many PPO plans.

According to the Kaiser Family Foundation, nearly all Medicare Advantage plan enrollees are in plans that require prior authorization for some services. Prior authorization is one of the tools health plans use to control their costs.

By the way, Congress implemented a similar cost-saving measure with Medicare supplement insurance. As of 1 January 2020, new Medicare beneficiaries cannot buy a Medigap plan that covers the Part B deductible. The hope is that this change will reduce unnecessary doctor visits.

Disadvantage 7: Plan Benefits, Costs, and Providers Change Every Year

This is true.

Under the rules set out by the Centers for Medicare and Medicaid Services (CMS), insurers may change the benefits and costs in their plans annually. They are also allowed to change their provider networks.

This is the primary reason Medicare Advantage members should compare plans every year. Unfortunately, most enrollees don’t, which often leads to an unpleasant surprise.

Disadvantage 8: Free Plans Are Not Really Free

This is true.

The real issue here is a general misunderstanding of the point of Medicare Advantage plans and how they work.

If you wonder, “How can Medicare Advantage plans be free?” They aren’t.

Just like Original Medicare (Part A and Part B), Medicare Advantage is a cost-sharing system. With Original Medicare, beneficiaries pay about 20 percent of the cost for all Medicare-approved services, and Medicare pays 80 percent.
With a Medicare Advantage plan, you also pay about 20 percent of your costs. However, an annual cap limits how much you will pay in a calendar year.

This solves one of the biggest problems with Medicare Parts A and B. There’s no annual limit. However, that’s just one component of Medicare Advantage insurance costs.

NOTE: The annual maximum out-of-pocket (MOOP) limit that’s built into all Medicare Advantage plans is a major advantage. For those beneficiaries with chronic health conditions, who cannot get a Medicare supplement, the annual MOOP keeps them out of bankruptcy from excessive medical bills.

ALSO: Some zero-dollar premium Advantage health plans can rebate all or a portion of your $164.90 Medicare Part B premium back to members as part of their monthly Social Security check. In other words, the Medicare Advantage plan pays your Part B premium for you.

Disadvantage 9: They Don’t Travel

In most cases, this is true.

Medicare Advantage plans have regional provider networks, their coverage is also regional. As a result, unless you need emergency care, you are restricted to providers in your local area.

That said, some nationwide carriers, including United Healthcare, allow plan members in one of their plans to receive care anywhere the plan is offered. However, no plans cover you outside of the USA or its territories.

Disadvantage 10: Plans May Shorten Skilled Nursing Benefits

At a minimum, plans must cover the same benefits as Original Medicare, including up to 100 days of skilled nursing home care annually. However, the Kaiser Family Foundation recently reported that plans may shorten skilled nursing facility stays to less than what’s covered under Medicare Part A.

In Original Medicare, a patient’s doctor at the skilled nursing facility decides when it is safe to go home. In Medicare Advantage, the plan decides.

For More Information visit Medicare Plan Compare