7 Reasons Why Seniors Don’t Like Medicare Advantage Plans

7 Reasons Why Seniors Don’t Like Medicare Advantage Plans

The biggest complaint about Medicare Advantage plans is their high out-of-pocket costs and restrictions.

Two of the most common questions we get are, “Are Medicare Advantage plans bad?”, and “What are the advantages and disadvantages of Medicare Advantage plans?” If you’re trying to figure out if the private health plan option is right for you, read on.

In this article, we’ll explore this exceptionally important question by contrasting Medicare Advantage plans with Original Medicare and Medigap coverage. Only then can you understand the potential downside to Medicare Advantage plans.

What are the Advantages and Disadvantages of Medicare Advantage Plans?

In our experience, the question about Medicare Advantage plans comes up because people ask their friends, neighbors, and healthcare providers about them. That brings up the Medicare Advantage nightmares and a litany of reasons why people dislike their current or former plan.

But, is it true?

Over the years, we’ve heard from many people, healthcare providers in particular, that they dislike Medicare Advantage plans, but that does not mean they are bad.

These are the 7 most common reasons we’ve documented that make people feel Medicare Advantage plans are terrible:

  1. Free plans are not really free
  2. Hospitalization costs more, not less
  3. They make you pay multiple copays for the same issue
  4. You are more likely to see a nurse practitioner than a doctor
  5. They make you get a referral
  6. Plan benefits, costs, and providers change every year
  7. High maximum out-of-pocket limits

A Review of Medicare Advantage vs. Original Medicare and Medigap

One of the best ways we’ve discovered to figure out if a Medicare Advantage plan is right for you is to compare them directly with Original Medicare and a Medigap plan. So, let’s do that by digging into the pros and cons of Medicare Advantage plans so we can figure out what is real and what isn’t, and help you find the best Medicare plan for your personal situation.

The Top 7 Disadvantages of Medicare Advantage Plans

Reason 1: Free Plans Are Not Really Free

This is true.

The real issue here is people’s misunderstanding of how Medicare Advantage plans (aka, MA plans or Medicare Part C) work. Specifically, many people don’t understand copayments (copays) and coinsurance. So, if you are wondering, “how can Medicare Advantage plans be free?”, they aren’t. Far from it.  In this life, you never get something-for-nothing, and you always get what you pay for.

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. By adding a Medicare Supplement plan to Original Medicare, beneficiaries can cover 100 percent of their medical and hospital costs.

With a Medicare Advantage plan, the average annual out-of-pocket cost for a beneficiary on these plans is over $9,200 per year.

Reason 2: Hospitalization Costs More, Not Less

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

In fact, 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 you have a chronic health condition that necessitates frequent care, pay careful attention to Medicare Advantage 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.

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

Seniors Don’t Like Medicare Advantage Plans

This is true, and 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 the majority of your costs come when you use healthcare services. So, if you see your primary care doctor for an issue you pay a copay. 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, as well.

If you have Original Medicare and a Medigap Plan G supplement, you pay your monthly Medicare Part B and supplement premiums, but pay 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 personal situation.

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

In many cases this is true. HMO and PPO health plans (most Medicare Advantage plans are HMOs) 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 a fixed amount of money for its members to the health care provider.

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.

Reason 5: They Make You Get A Referral

In the case of HMO plans and some PPO plans, this is true. According to the Kaiser Family Foundation, nearly all Medicare Advantage plan enrollees are in plans that require prior authorization for some services. Health plans are in the business of making money and this is one of the primary ways they have to control 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.

Reason 6: 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. 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.

Reason 7: High Maximum Out-of-Pocket Limits

This is true. For 2022 Medicare Advantage enrollees, the average out-of-pocket limit was $4,972 for in-network services. For PPOs, the average is $9,245 for both in-network and out-of-network services (PPOs). These figures are expected to increase for 2023 and beyond. The future increase is reflected in the new maximum out-of-pocket limit set by CMS, which increased.

The Real Disadvantage of Medicare Advantage Plans

We suggest that there’s a single fundamental difference that helps most people make the right choice. That’s because the extra benefits offered by Medicare Advantage plans take a back seat to this one issue.

The difference is this. With Original Medicare and supplemental Medicare insurance, you pay the bulk of your major medical costs upfront through monthly insurance premiums. Doing so lets you budget your health care costs.

When you have Medicare Advantage, you pay most of your health care costs when you use services. For this reason, it is very difficult to budget your health care costs. And this is one of the primary disadvantages of Medicare Advantage plans. If you fit into one of the five categories above, this won’t be much of an issue. If not, it could put you in a world of hurt.

Now that you’ve learned about the pros and cons of a Medicare Advantage, find out how much you could save with a Medicare Supplement Insurance Plan: How Much Can a Medicare Supplement (Medigap) Plan Save Me?

By David Lasman – “Ask Medicare Dave” | President – Senior Healthcare Team

wwww.SeniorHealthcareTeam.com | 866-333-7340

Selecting the right healthcare plan through Medicare can be overwhelming and downright stressful. Senior Healthcare Team is a nationwide resource that provides guidance and support about Medicare to seniors at no cost to them and helps them to choose the most suitable insurance plan tailored to their specific needs and budget.  Our goal is to educate and empower our clients to make the best decisions regarding their healthcare and clear up the confusion of Medicare.  At Senior Healthcare Team, we aren’t partial to any one insurance company.  Our loyalty is to our clients and our mission is to provide them with the best healthcare options at the very lowest cost.