What Are the Disadvantages of Medicare Advantage?
Key takeaways:
Medicare Advantage (MA) plans are private insurance alternatives to original Medicare. They cover more than half of Medicare enrollees, but this type of plan may not be right for you.
MA plans are promoted as a way to reduce your out-of-pocket costs. But they may not improve your healthcare affordability or serve your healthcare needs.
Depending on the MA plan you choose, the provider network may not include the healthcare specialists that you prefer. You also may face prior authorization denials that prevent or delay necessary care.
Table of contents
Medicare Advantage (MA) is a private alternative to traditional Medicare. This type of plan must equal the coverage provided by original Medicare, but it typically provides more benefits — particularly vision, dental, and hearing services. Most MA plans include prescription medication coverage. People enrolled in original Medicare are covered by Part A for hospital services and Part B for outpatient care, but they must buy stand-alone Part D plans for prescription coverage.
The tipping point for private Medicare coverage came in 2023, when more than half of Medicare enrollees were covered by MA plans for the first time. But MA may not be right for you. Some people are better off with traditional Medicare. Keep reading to find out some of the disadvantages of MA.
What is a Medicare Advantage plan?
An MA plan is a private alternative to traditional Medicare. Original Medicare includes Part A, which covers inpatient hospital care, and Part B, which covers outpatient and preventive care.
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Part C, or MA, is private coverage that replaces Part A and Part B. It often includes vision, dental, and hearing benefits. Most MA plans also have Part D, which covers prescription medications. People with original Medicare who want prescription coverage can buy a Part D plan. People with MA plans that don’t cover medications also can buy a stand-alone Part D plan.
How is Medicare Advantage different from original Medicare?
MA plans must meet or exceed the benefits provided by original Medicare. But these insurance options differ in several ways, including:
What you pay for your monthly premiums
Where your insurance is accepted
What you may spend out of pocket
Additional benefits offered by MA not included in original Medicare
Availability of Medigap supplement insurance (only for original Medicare)
Original Medicare
Original Medicare covers most health services and supplies. Most enrollees have no premium for Part A, but there is a Part B premium. Most people have their Part B premium deducted from their monthly Social Security benefit.
You can have Part A without Part B. You can have Part B without Part A. But if you change your mind about having only one, there’s a late enrollment penalty.
If you want prescription coverage, you must buy a stand-alone Part D plan. Depending on your income or circumstances, you may pay premiums for Part A, Part B, and Part D. Most people don’t have a premium for Part A. But if you, your spouse, or ex-spouse don’t qualify for premium-free Part A, you may pay for coverage. And if you have a high income, you may pay more for Part B and Part D. This is known as an Income-Related Monthly Adjustment Amount (IRMAA).
Two Medicare Advantage open enrollment periods: If you have Medicare Advantage, you can make changes to your plan during the first 3 months of the year and during Medicare open enrollment in the fall.
Getting Medigap after switching from Medicare Advantage to original Medicare: Outside your 6-month Medigap open enrollment period, you may be subject to medical underwriting. This can cause you to be denied the supplement plan or charged more.
“Premium free” isn’t as advertised: Medicare Advantage plans touted as “premium free” or “zero premium” are more accurately no additional premium because you still have to pay your Part B premium.
You may want to buy Medigap. This is an insurance supplement plan that may cover all or part of your out-of-pocket costs. But it’s available only with original Medicare. You will also pay a Medigap premium.
Medicare Advantage
MA bundles Medicare Part A and Part B. Coverage usually includes Part D. But plans advertised as “no premium” or “zero premium” can be misleading. If you’re enrolled in MA, you still must pay your Part B premium. Most people with MA plans that include prescription coverage — 75% of enrollees in 2024 — don’t pay an additional monthly premium. (But if you have a high income, having an MA plan won’t save you from the IRMAA. You can pay more for Part B and stand-alone Part D, and you may have an adjustment for Part D if it’s included in your MA plan.)
Unlike original Medicare, MA plans have provider networks. This list of covered healthcare professionals and facilities can change substantially from year to year. MA plans have an out-of-pocket maximum on what you’ll spend every year, but they cannot be combined with Medigap supplement plans. Traditional Medicare has no limit on out-of-pocket costs, but it can be supplemented by Medigap.
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MA plans are attractive to many people because they offer more benefits. They often cover some dental, vision, and hearing services. Increasingly, MA plans cover transportation, fitness, and other benefits not included in original Medicare. If your MA plan doesn’t cover prescriptions, you will pay a premium to buy stand-alone Part D coverage. You can use the Medicare plan finder tool to explore MA and Part D plans.
What are the disadvantages of Medicare Advantage?
Depending on your needs, MA has potential disadvantages compared with original Medicare.
Provider networks
Original Medicare is widely accepted by healthcare professionals nationwide. But MA plans require you to access care within their networks.
Your MA network is typically limited to physicians and hospitals near you, so you may not be covered when you travel. Your MA plan can change its provider network anytime. Also, networks in rural areas are narrower. This can make it harder to find care and get appointments.
Some MA plans, such as health maintenance organizations, offer no out-of-network coverage. This means you will be responsible for the full cost if you need care that’s not included in your plan’s network.
Annual benefit changes
Original Medicare benefits remain fairly consistent from year to year. But if you change MA plans, you can lose additional benefits. But staying with your MA plan doesn’t mean consistent coverage. MA plans can drop benefits that were offered previously, such as transportation to medical appointments or coverage of certain prescription medications.
Medigap
Medigap is not available to help cover out-of-pocket costs for people who enroll in MA plans. And you may not be able to buy one of these supplement plans if you switch back to original Medicare. That’s because if you buy a Medigap plan during your one-time, 6-month Medigap open enrollment period, there is no medical underwriting. In other words, you can’t be denied a policy or charged more because of preexisting conditions.
If you want to buy a supplement plan after your Medigap open enrollment period, you are subject to medical underwriting and could be denied coverage. Even if you are accepted, you can be charged more in some states.
Plans not appropriate for your needs
During open enrollment, you’ll likely see ads on TV from insurance companies offering MA plans. They promote extra benefits. It all sounds good. But sometimes people select plans that do not include the physicians and medications they need. Choosing a plan that’s right for you is particularly important if you have chronic conditions.
High out-of-pocket costs
With MA, you can end up paying more — especially if you spend a lot of time in the hospital. Also, costs can escalate as you get older. (We will discuss this later.) Some MA plans have an additional premium beyond what you pay for Medicare Part B.
Once you reach your out-of-pocket maximum for Parts A and B, the MA plan pays 100% of your covered health services for the rest of the year. But some people with MA plans don’t spend enough to reach the annual out-of-pocket limit. (CMS, the Centers for Medicare & Medicaid Services, collects but doesn’t report that information.)
Prior authorization
If you have to get something approved in advance, that process can delay or prevent necessary care. Prior authorization applies to a limited list of covered services for people enrolled in original Medicare.
But prior authorization is much more widely used by MA plans. In 2022, 3.4 million prior authorization requests were fully or partially denied by MA plans. That means more than 7% of the 35.2 million MA coverage determination requests reviewed were turned down. And the share of denials annually has been growing since at least 2019.
And MA enrollees rarely fight back. In 2022, less than 10% of denials were appealed. CMS found that more than 83% of those appeals were fully or partially overturned. Still, care was delayed.
High end-of-life costs
Medicare Advantage has weakened end-of-life coverage for some of the sickest people through coverage denials. Many of these enrollees are switching to original Medicare in their final 12 months of life, according to a Wall Street Journal analysis. This shifts the high costs of their healthcare to taxpayers.
Changing Medicare coverage at the end of life causes upheaval in care and uncertainty for enrollees. When you switch from MA to original Medicare, you may have to wait for coverage to begin. As a result, you or your loved ones might have to pay thousands of dollars for nursing home care or other help during this gap.
Why do some people think Medicare Advantage plans are bad?
Some people point out that MA plans limit access to care and affordability. These plans may not be the right fit if you have chronic conditions that could require extended hospital stays. Also, many people don’t consider whether MA plans have the provider networks and prescription coverage they need.
What can I do if my Medicare Advantage plan isn’t working for me?
You can switch your coverage. MA enrollees have two open enrollment periods each year:
Medicare open enrollment in the fall: From October 15 to December 7, people with MA can switch to another MA plan, change stand-alone Part D coverage, or move to original Medicare.
MA open enrollment: From January 1 to March 31, people with MA can also make changes. If you join another prescription plan during this period, you’ll automatically go back to original Medicare.
Outside open enrollment, you may be able to switch plans during a special enrollment period. This can be triggered by many factors. Examples include if you move outside your MA plan’s coverage area or if you believe you were misled into making a bad decision about your MA plan.
Always consult your Evidence of Coverage (EOC) and Annual Notice of Change (ANOC) to see what your current MA plan will cover in the next year. These documents arrive in the fall, usually in September.
Comparing information in your EOC and ANOC with your needs can guide you in choosing to:
Stay with your MA plan.
Switch to another MA plan.
Move to original Medicare.
Switch your Part D coverage if you have a stand-alone plan.
You can use the Medicare plan finder tool to explore MA, Part D, and Medigap options available to you.
The bottom line
Medicare Advantage (MA) is a private alternative to original Medicare, which is Part A and Part B. MA plans usually include Part D prescription medication coverage, but some don’t. If you need prescription coverage and your MA plan doesn’t include this benefit, you’ll need to buy a separate Part D plan. This will have its own premium.
Many people choose MA plans for their extra benefits and out-of-pocket limits. But MA plans have some potential disadvantages. They have smaller provider networks and often require prior authorization. And with an MA plan, you won’t have access to Medigap supplement insurance to cover your out-of-pocket costs. Those drawbacks can limit access and affordability for enrollees.
People with MA plans have two open enrollment periods each year: January 1 to March 31 and October 15 to December 7. During these times, you can switch MA plans or move to original Medicare. If you choose a different stand-alone Part D plan during the first-of-the-year enrollment period, you’ll be switched back to original Medicare.
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References
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