Untangling Medicare Advantage Plans

on April 5, 2022

If you’ve been watching TV recently, you’ve seen ads often featuring older celebrities. “You may be missing out on available benefits. Call this number to see if Medicare Advantage is right for you.” The disclaimers are in a font so small you couldn’t read them with a magnifying glass.

What is Medicare Advantage? Medicare Advantage, also called Medicare Part C, is private insurance that promises to pay for everything covered by regular Medicare A (focusing on hospitalization) and B (focusing on physicians). Some Advantage plans also cover Part D (prescriptions). To sweeten the pot, Advantage plans may also cover items that traditional Medicare excludes, like hearing aids and glasses. A few even offer minimal long-term care benefits. And on top of all of that, the premiums may be lower than B, D, and Medicare Supplements (Medigap).

So what’s not to love? Unfortunately, there are also some shortcomings to Medicare Advantage plans. First, they are sold by private insurance companies and are not part of the traditional Medicare system. As a result, they are subject to insurance risks, including the provider’s viability.

However, that’s not my biggest concern. Medicare C requires that you use a doctor within the network of the policy. If you already have an established group of physicians, your first question should be whether or not you can continue to use them. Further, treatments must be pre-approved with more rigorous standards than traditional Medicare typically uses. As a result, a particular therapy may not be available to you, and the insurance can deny it outright or require that you use an alternate protocol.

Additionally, the co-pays may be higher than what you would pay using traditional Medicare. The policy will have a maximum out-of-pocket expense, but it may be costly, and you might be more likely to reach it using a Medicare Advantage plan.

Finally, if you enroll in traditional Medicare A, B, D, and a Supplement plan when you are first eligible, there is no underwriting for the Supplement. In other words, they can’t deny you coverage for pre-existing conditions. However, if you delay enrollment, you may not qualify to purchase the Supplement plan later, depending on your medical situation. If you sign up for Medicare Advantage but find it doesn’t meet your needs, you can move back to traditional Medicare; however, you may have trouble enrolling in a Medicare Supplement plan.

I don’t know if Medicare Advantage would work well for you. Indeed, for some people, the plans are fantastic. I would advise you to learn about your options, but don’t sign anything until you’ve done some research. Can you keep your doctors? What’s your out-of-pocket expense? Do the additional benefits offset the difference in the cost of your care? A good insurance agent will give you time to answer these questions and possibly complete more analysis without pressuring you to enroll quickly. You want to work with someone more interested in helping you understand the policy than in earning a commission.

I know the ads are appealing, but remember, you’re listening to a sales pitch. You don’t want to make a decision about your healthcare based on the words of a celebrity.

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