Approximately 28 million Americans, or around 48 percent of the Medicare population, enrolled in Medicare Advantage (MA) plans in 2023. While Medicare Advantage plans have many tempting features, it is still advisable to evaluate the pros and cons of these plans before making your decision.
To help, we’ve prepared a comparison of Medicare Advantage plans’ pros and cons and how they compare with Original Medicare’s supplementary plan Medigap.
What are the pros of Medicare Advantage plans?
First, you receive comprehensive health care with Medicare Advantage plans, also known as Part C plans.
Aside from getting Part A (hospitalization) and Part B (medical), like you do in traditional Medicare, Part C plans offer additional bundled benefits.
Here are some examples:
- Dental
- Eye exams
- Hearing
- Fitness memberships like SilverSneakers
- Chiropractic care
- Home health care
- Hospice care
- Prescription drug coverage
- Telehealth services
Many Medicare Advantage plans also combine prescription drug coverage.
Second, Medicare Advantage plans have fixed plan structures. Part C plans are categorized as follows:
- Health Maintenance Organization (HMO) plans have a network of doctors and require referrals to see specialists.
- Preferred Provider Organization (PPO) plans allow in-network and out-of-network consultations at different rates.
- Private Fee-for-Service (PFFS) plans are for those who need maximum flexibility with health providers.
- Special Needs Plans (SNP) help people who meet special criteria, such as having both Medicare and Medicaid, living in an institution (like a nursing home), or have chronic conditions.
- Medical Savings Accounts (MSA) are ideal for those who prefer savings accounts with high deductible health plans.
A third benefit of Medicare Advantage plans is that you can generate long-term savings. For example, many plans are zero-dollar premium plans. Therefore, you pay nothing for these plans on top of your Part B premium each month. There are also Medicare Advantage plans with inexpensive (or even zero dollar) deductibles. Some plans also charge lower fees for laboratory services and medical equipment.
Part C plans also have a maximum annual limit on out-of-pocket expenses. This means you stop spending out-of-pocket after your costs have reached the maximum limit each year. When this happens, your Medicare Advantage plan pays the rest of the cost of covered services.
Lastly, you may have coordinated and personalized health care with Part C plans. Under the plan’s network, you may have access to a team of medical experts who can coordinate your treatment in the event that you require medical services.
Now that we’ve covered the pros of Medicare Advantage plans, let’s discuss some of the downsides of these plans.
What are the cons of Medicare Advantage plans?
Knowing the limitations of these plans will help to give you a better understanding of whether Medicare Advantage is right for you.
The first downside are the restrictions imposed by Medicare Advantage plans. Here are some examples:
- You can only visit doctors and treatment facilities within your plan’s network, under certain plan types.
- Going outside the network, when available, typically means facing higher premiums, copayments, and deductibles.
- You may have to change doctors in case of plan network changes.
- Part C plans require pre-authorization or referrals before you can visit specialists.
The second disadvantage of Part C is that there may not be any plans offered in your location.
- You can only join Part C plans within your service area or state. Therefore, you need to check the plans offered near your location or residence.
- Many who live in rural areas often opt for Original Medicare because it is difficult to reach doctors within the network.
Another disadvantage of Part C plans are the extra costs. Although there are long-term savings with MA plans, specialist and hospital copayments and and costs for other services can add up to large sums across a year. Plus, the annual out-of-pocket limit does not apply to prescription drugs and other perks.
Therefore, depending on your case, a Medicare Advantage plan may turn out to be more expensive for these reasons.
How does Medicare Advantage compare with Medicare Supplement (Medigap)?
Now that you understand the pros and cons of Medicare Advantage, you may consider staying enrolled in Original Medicare instead.
Unfortunately, traditional Medicare does not have an out-of-pocket limit. So, you will need a supplementary plan like Medigap to cover your out-of-pocket costs.
Here is a comparison of Medicare Advantage vs. Medicare supplement (Medigap):
| Feature | Medicare Advantage | Medicare Supplement (Medigap) |
|---|---|---|
| Out-of-pocket costs | You pay for out-of-pocket expenses until you reach the annual maximum limit | Medicare Supplement pays for all of your out-of-pocket costs in exchange for a fixed monthly premium |
| Doctor networks | Limited to a network, or you need to pay more to access a more extensive network. | You can consult any doctor or hospital that accepts Medicare. |
| Enrolling in a plan | You can enroll in a plan any time you have an election period. | Medicare Supplement plans may deny coverage because of pre-existing conditions, however there are “guaranteed issue rights” for some enrollees |
| Prescription drug coverage | Prescription drug coverage bundled with your plan | Must buy a separate standalone prescription drug plan (PDP) |
| Referrals | Need referral from a GP to consult a specialist | Referrals are not required |
How do you know if a Medicare Advantage is right for you?
Knowing the pros and cons of Medicare Advantage is only the first step. You should also consider other personal factors like:
- Budget
- Prescription drug needs
- Current health condition
- Possibility of chronic or long-term medical needs
- Status of current health provider, whether they accept Medicare or included in an HMO network
- CMS star ratings
Tip: Read common mistakes in selecting Medicare Advantage plans.
When is the best time to enroll in a Medicare Advantage plan?
The best time to enroll in a Medicare Advantage plan is during these periods:
- Initial Enrollment Period (IEP) upon reaching eligibility
- Annual Enrollment Period (AEP) – from October 15 to December 7
- Medicare Advantage Open Enrollment Period (MA-OEP) – from January 1 to March 31
During AEP, you can both switch from Original Medicare to a Part C plan (and vice versa). During MA-OEP, you can only switch Part C plans.
In summary
Remember that all Part C plans’ features and benefits change yearly. You should re-evaluation the pros and cons of Medicare Advantage plans every time you’re considering making a switch. Reach out to a CoverRight licensed insurance agent, who can help guide you through the pros and cons, and explain different features of the plans available so you can make sure you’re finding a plan that’s right for you.
