Is the Risk of Medicare Advantage Plans Worth It?

However, if you get sick, Medicare Advantage can be more expensive because co-pays and other costs are higher, according to Katy Votava, president of Goodcare.com, a health care consultant for financial advisors and consumers.

Customers who want to return to traditional Medicare may find that they no longer qualify for the supplemental policies that help pay their medical bills, or that the premiums are prohibitively high.

"These are complicated products," says Votava, author of "How to Get the Most Out of Medicare." "They're unlike any other insurance that people encounter until they get to Medicare."

The Alphabet Soup Of Medicare

Many people's first challenge when deciding on Medicare coverage is simply understanding how the various parts fit together. Traditional Medicare, also known as original Medicare, is divided into two components:

• Part A, which covers hospitalisation, is usually premium-free.

•Part B covers outpatient care, including doctor visits, and has a standard monthly premium of $144.60 in 2020, with higher-income individuals paying more.

You can see any doctor who accepts Medicare, and the vast majority do. The government directly pays healthcare providers.

Prescription drug coverage is provided by private insurers under Part D. The drugs covered and the amounts you must pay out of pocket vary greatly. Monthly premiums vary as well, but in 2020, they average $32.74.

Deductibles, copays, and coinsurance in traditional Medicare can quickly add up. Private insurers also provide supplemental plans known as Medigap to fill these gaps. According to the health insurance marketplace eHealth.com, the average monthly Medigap premium in 2019 was $152, but it can be much lower or much higher depending on the plan, the insurer, and the area where you live. The plans are designated by the letters A through N. You can choose any doctor who accepts Medicare, just like with traditional Medicare.

If you apply for a Medigap policy when you first become eligible for Medicare, the insurer is required to accept you and cannot charge you more because of pre-existing conditions.

What Makes Medicare Advantage Unique

Medicare Part C is also known as Medicare Advantage. Medicare Advantage plans, on the other hand, replace rather than supplement the other parts of Medicare. Medicare Advantage insurers are required to provide all Part A and Part B benefits, and most plans also include Part D drug coverage. Furthermore, the plans typically cover expenses that Medicare does not cover, such as hearing, vision, and dental care.

According to the Kaiser Family Foundation, a health research organization, most Medicare Advantage enrollees in 2020 paid no additional premiums for their coverage in addition to their regular Part B premiums.

Cost Management In Medicare Advantage

Medicare Advantage plans are similar to group health insurance provided by employers: To be covered, you must usually select health care providers from the insurance company's network. If the plan is a health maintenance organization (HMO), the network may be relatively narrow; if it is a preferred provider organization, the network may be somewhat broader (PPO). Certain types of care may necessitate preapproval or referrals to specialists. If you go out of network, your costs may not be covered or applied to your out-of-pocket maximums. Even if your doctor is currently in-network, this could change without notice.

Furthermore, Medicare Advantage plans are typically regional in nature. You may not be covered if you move out of the area or visit other states.

The devil is in the details, and Medicare Advantage plans have a lot of them. According to the Kaiser Family Foundation, the average Medicare beneficiary has 28 Medicare Advantage options with varying networks, coverage, deductibles, co-pays, and co-insurance. In general, Medicare Advantage costs less upfront but may cost more overall if you require a lot of medical care. Many Medigap plans have higher upfront costs, but they cover the majority, if not all, of your medical expenses when you need them.

You can switch from one Medicare Advantage plan to another during annual enrollment periods. However, if you want to switch from Medicare Advantage to traditional Medicare, you may not be able to get a Medigap policy. As a result, the insurer may charge you more, exclude pre-existing conditions for a period of time, or refuse to issue you a policy at all.

That's not to say Medicare Advantage plans are a bad option; they're just complicated, according to Tatiana Fassieux, a training specialist with California Health Advocates, a Medicare advocacy non-profit. She advises people to contact their state's health insurance assistance program, which can provide them with free, unbiased one-on-one counseling. Visit the SHIP National Technical Assistance Center to find links to these programs.

"People should not rely solely on television commercials," says Fassieux. "That's when people get stuck and occasionally make the wrong decision."