We publish unbiased product reviews; our opinions are our own and are not influenced by payment we receive from our advertising partners. Learn more about how we review products and read our advertiser disclosure for how we make money.
A Medicare Advantage Plan, also called a Part C or an MA Plan, may sound enticing. It combines Medicare Part A (hospital insurance), Medicare Part B (medical insurance), and usually Medicare Part D (prescription drug coverage) into one plan. These plans cover all Medicare services, and some offer extra coverage for vision, hearing, and dental. They are offered by private companies approved by Medicare.
Still, while many offer $0 premiums, the devil is in the details. You will find that most have unexpected out-of-pocket expenses when you get sick, and what they pay can differ depending upon your overall health. Here's a look at some of the disadvantages of Medicare Advantage Plans.
- A Medicare Advantage (MA) Plan, known as Medicare Part C, provides Part A and B benefits, and sometimes Part D (prescription) and other benefits.
- All Medicare Advantage providers must accept Medicare-eligible enrollees.
- Sick participants may find that medical care costs skyrocket under a Medicare Advantage plan due to copayments and out-of-pocket expenses.
- Medicare Advantage customers can switch back to Original Medicare during an annual enrollment period.
- Prospective Medicare Advantage customers should research plans, copays, out-of-pocket costs, and eligible providers.
Coverage Choices for Medicare
If you're older than 65 (or turning 65 in the next three months) and not already getting benefits from Social Security, you have to sign up for Medicare Part A and Part B. It doesn't happen automatically. However, if you already get Social Security benefits, you'll get Medicare Part A and Part B automatically when you first become eligible (you don't need to sign up).
There are two main ways to get Medicare coverage:
- Original Medicare
- A Medicare Advantage Plan
Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). To help pay for things that aren't covered by Medicare, you can opt to buy supplemental insurance known as Medigap (or Medicare Supplement Insurance). These policies are offered by private insurers and cover things that Medicare doesn't, such as copayments, deductibles, and healthcare when you travel abroad.
Medigap policies vary, and the most comprehensive coverage is offered through Medigap Type F, which covers all copays and deductibles. But as of January 1, 2020, the two plans that cover deductibles—plans C and F—cannot be sold to new Medigap beneficiaries. Be aware that with Original Medicare and Medigap, you will still need Part D prescription drug coverage, and that if you don't buy it when you first become eligible for it—and are not covered by a drug plan through work or a spouse—you will be charged a lifetime penalty if you try to buy it later.
Medicare Advantage Plans
A Medicare Advantage Plan is intended to be an all-in-one alternative to Original Medicare. These plans are offered by private insurance companies that contract with Medicare to provide Part A and Part B benefits, and sometimes Part D (prescriptions). Most plans cover benefits that Original Medicare doesn't offer, such as vision, hearing, and dental. You have to sign up for Medicare Part A and Part B before you can enroll in Medicare Advantage Plan.
Disadvantages of Medicare Advantage Plans
In general, Medicare Advantage Plans do not offer the same level of choice as a Medicare plus Medigap combination. Most plans require you to go to their network of doctors and health providers. Since Medicare Advantage Plans can’t pick their customers (they must accept any Medicare-eligible participant), they discourage people who are sick by the way they structure their copays and deductibles.
Author Wendell Potter explains how many Medicare Advantage enrollees don’t find out about the limitations of their Medicare Advantage plans until they get sick:
“Although Mom saw her MA premiums increase significantly over the years, she didn’t have any real motivation to disenroll until after she broke her hip and required skilled care in a nursing facility. After a few days, the nursing home administrator told her that if she stayed there, she would have to pay for everything out of her own pocket. Why? Because a utilization review nurse at her MA plan, who had never seen or examined her, decided that the care she was receiving was no longer ‘medically necessary.’
Because there are no commonly used criteria as to what constitutes medical necessity, insurers have wide discretion in determining what they will pay for and when they will stop paying for services like skilled nursing care by decreeing it ‘custodial.”
Consider Premiums—and Your Other Costs
To see how a Medicare Advantage Plan cherry-picks its patients, carefully review the copays in the summary of benefits for every plan you are considering. To give you an example of the types of copays you may find, here are some details of in-network services from a popular Humana Medicare Advantage Plan in Florida:
- Hospital stay—$100 per day for the first 4 days
- Emergency Room - $120 copay
- Diagnostic radiology—up to $100 copay
- Lab Services—up to $50 copay
- Outpatient x-rays—up to $50 copay
- Outpatient surgery - up to $100 copay
As this non-exhaustive list of copays demonstrates, out-of-pocket costs will quickly build up over the year if you get sick. The Medicare Advantage Plan may offer a $0 premium, but the out-of-pocket surprises may not be worth those initial savings if you get sick. “The best candidate for Medicare Advantage is someone who's healthy," says Mary Ashkar, senior attorney for the Center for Medicare Advocacy. "We see trouble when someone gets sick."
Switching Back to Original Medicare
While you can save money with a Medicare Advantage Plan when you are healthy, if you get sick in the middle of the year, you are stuck with whatever costs you incur until you can switch plans during the next open season for Medicare. At that time, you can switch to an Original Medicare plan with Medigap. If you do, keep in mind that Medigap may charge you a higher rate than if you had enrolled in a Medigap policy when you first qualified for Medicare.
Most Medigap policies are issue-age rated policies or attained-age rated policies. This means that when you sign up later in life, you will pay more per month than if you had started with the Medigap policy at age 65. You may be able to find a policy that has no age rating, but those are rare.
More Disadvantages of Medicare Advantage Plans
In 2012, Dr. Brent Schillinger, former president of the Palm Beach County Medical Society, pointed out a host of potential problems he encountered with Medicare Advantage Plans as a physician. Here's how he describes them:
- Care can actually end up costing more, to the patient and the federal budget, than it would under original Medicare, particularly if one suffers from a very serious medical problem.
- Some private plans are not financially stable and may suddenly cease coverage. This happened in Florida in 2014 when a popular MA plan called Physicians United Plan was declared insolvent, and doctors canceled appointments.
- One may have difficulty getting emergency or urgent care due to rationing.
- The plans only cover certain doctors, and often drop providers without cause, breaking the continuity of care.
- Members have to follow plan rules to get covered care.
- There are always restrictions when choosing doctors, hospitals, and other providers, which is another form of rationing that keeps profits up for the insurance company but limits patient choice.
- It can be difficult to get care away from home.
- The extra benefits offered can turn out to be less than promised.
- Plans that include coverage for Part D prescription drug costs may ration certain high-cost medications.
The Bottom Line
Shop very carefully if you are thinking of using a Medicare Advantage plan. Be sure to read the fine print, and get a comprehensive list of all co-pays and deductibles before choosing one. Also, be sure to find out if all your doctors accept the plan and that all the medications you take (if it's a plan that also wraps in Part D prescription drug coverage) will be covered. If the plan doesn't cover your current physicians, be sure that its doctors are acceptable to you and are taking new patients covered by the plan.