If you’ve been checking with some of your doctors about what plans they take, chances are that you may have heard some of your providers tell you why Medicare Advantage plans are bad. Over the years we’ve heard from many providers that do not like them because, they say, their payments come slower than they do for Original Medicare.
Likewise, if you’ve been asking your friends about Medicare plans, you may also have had a few friends tell you the reasons why Medicare Advantage plans are bad.
So, are Medicare Advantage plans bad?
Not really, they are just misunderstood. All too often Medicare beneficiaries try to enroll in coverage on their own without the free help from a Medicare insurance broker like Boomer Benefits. They often miss some really important details when they do this. Then they are later unhappy with the plan, but it’s not the fault of the plan. It’s simply that they didn’t know the rules before they enrolled.
So, let’s dive in on some of the reasons why Medicare Advantage plans are bad for certain individuals. We’ll go over some of the most common things that Medicare beneficiaries have reported to us that they don’t like about these plans. Then you can decide for yourself if you wish to enroll in one or not.
They Feel Nickle-and-Dimed
When you enroll in a traditional Medicare supplement like Plan F, you pay a higher premium up front. However, you have very little out of pocket on the back end. No copays for doctor visits or lab work. No daily hospital copays.
When you enroll in a Medicare Advantage plan, on the other hand, you pay a much lower premium for the plan. Instead, you will pay copays and coinsurance for services as you go along. You might pay $10 or $20 for a primary care doctor or $40 or $50 to see a specialist. Then that doctor sends you down the street for bloodwork and you pay another copay for that. Maybe he schedules an MRI and you must pay $100 or $200 copay for that.
Each plan has a Summary of Benefits that your agent will give you up front. This Summary lists all the costs in detail. If you carefully review the summary up front, then these expenses as you go along should come as no surprise to you.
Unfortunately, people fail to read the fine print and then they end up thinking that their Medicare Advantage plan is bad. This is not the fault of the plan but rather a failure by the enrollee to do his due diligence up front.
They Mistakenly Thought their Plan Would be Free
Medicare Advantage plans are paid by Medicare itself. When you enroll in a plan, Medicare pays the insurance company to take on your health risk. The insurance company can then also charge you whatever it wants for the plan.
Many Medicare Advantage plans will set very low premiums or even a $0 premium for the plan itself. They do this, of course, to attract you to the plan so that they can get paid by Medicare for your membership in the plan. However, the zero premium is confusing to beneficiaries. Many of them think that a $0 premium means they don’t have to pay for Part B. This is false. You will still pay for Part B the entire time that you are enrolled in a Medicare Advantage plan.
Smaller Networks and Referrals
Most Medicare Advantage plans have networks. So, if you stay with Original Medicare and get a Medigap plan, you have access to nearly a million providers nationwide. However, Medicare Advantage plans are often local or regional, so the plan’s entire network might only have a few thousand providers.
Many people enroll in a Medicare Advantage plan without realizing this. They fail to check with their favorite doctors and hospitals to confirm they participate in the plan’s network. Then they go to use their coverage and their doctor turns them away because they don’t’ accept that coverage.
This one is really easy to avoid by checking the plan’s provider directory online before you enroll in the plan. Be sure that you confirm the doctor’s participating in the EXACT plan name of the plan that you are thinking about. Some insurance companies operate multiple networks.
You may also want to double check by contacting your provider’s billing office. Tell them you are thinking about enrolling in ABC Medicare Advantage HMO plan and you want to confirm that they are in the network for the plan. Notice that I included the full plan name there – you should do the same when confirming participation with your providers.
Getting a referral
If you enroll in a Medicare Advantage with an HMO network, then you will usually have to choose a primary care provider. That doctor will need to issue you a referral before you can see a specialist. Many people feel this is a hassle and don’t like it. If you think you would be annoyed by this, then you may want to stay away from HMO plans and consider either a PPO plan or a Medigap plan, both of which have more flexibility.
Annual Plan Changes
In our new-to-Medicare webinars, one of the things I always go over is the fact that Medicare Advantage plans change their benefits every year. In fact, they can change the plan’s premiums, provider network, pharmacy network, copays, coinsurance, and deductibles. They can also change the medications that appear on the plan’s formulary.
This means that you must do your due diligence every year. Sit down in September to review the Annual Notice of Change letter that your plan mails out to you. Look to see what’s changing. If you don’t like the changes, you can use the fall Medicare Annual Election Period to choose a different plan.
You want to pay particular attention to some of the ancillary benefits. Many Medicare Advantage plans offer built-in ancillary benefits for things like dental, vision, and hearing. If you read the fine print though, these benefits are usually quite limited. For example, your plan may only cover preventive services only, leaving you on the hook for more expensive dental work. Or your plan may give you a $100 credit toward eyeglasses every two years. This is nowhere near enough to cover the cost of glasses.
These benefits can also change from year to year. So if you join a plan simply because you wanted the built-in eye exam, and then that plan eliminates that benefit for the next year, you won’t know that unless you took the time to review your Annual Notice of Change in September.
If you aren’t likely to sit down and do your homework each year, you may end up feeling disappointed with your Medicare Advantage plan when really it was simply that the plan exercised its annual right to drop a certain benefit.
High Out-of-Pocket Maximums
Medicare Advantage plans all have an Out-of-Pocket Maximum limit to protect you. This is a good thing! It protects you from spending beyond a certain dollar amount each year on Part A and B services.
The downside is that plans can set that OOP as high as $6700. For people on fixed incomes, coming up with $6700 in a calendar year is a lot. Now you would be paying copays and coinsurance as you go along so it wouldn’t usually be all at once. However, many plans change a 20% coinsurance for chemotherapy, radiation, and dialysis. These are very expensive services. You could rack up a lot of charges in a short time.
Over the years, here is something I’ve seen happen several times. Joe is diagnosed with cancer in September. He starts chemo in October and his charges for the next three months are high enough that he spends his full $6700 out of pocket maximum. Then in January, the plan resets but he is still undergoing treatment, or he undergoes a second round of treatment later that year.
This means he hits his out of pocket maximum again. This could result in $13,400 out of pocket over a period of just a few months.
If this worries you and/or you don’t have money set aside for a rainy day, then you may want to consider a Medigap plan instead. Medigap plans have more limited predictable back-end spending.
Insurance companies are in business to make money. This means that when a Medicare Advantage plan is reviewing your claims, they are always looking to make sure something is reasonable and necessary. These plans typically involve a greater requirement for your provider to get pre-authorizations before approving services.
Sometimes that authorization request might get denied. We see this a lot on medications. The drug is listed in the plan’s formulary but in the fine print, it requires a prior authorization or quantity limit. You might be upset if this causes you to wait a few days before you can get your medication. This could end up in you telling all your friends why Medicare Advantage plans are bad.
In reality, the plan just followed its normal processes.
Here are some common questions that we get about Medicare Advantage plans:
Is Original Medicare better than an Advantage Plan?
Medicare Advantage plans are required to cover all the same Part A and B services as Original Medicare. It’s just that your cost-sharing may be different. Read more here.
What are the advantages and disadvantages of Medicare Advantage plans?
Is it better to have Medicare Advantage or Medigap? For a great guide on the differences between Medicare Advantage plans and Medigap plans, visit this post where you can download our free guide.
While I understand why some Medicare Advantage plans disappoint people, I also know that here at Boomer Benefits, our own clients who enroll in them generally seems fairly satisfied with them. However, that is likely because our team goes into exhaustive detail about how the plan works whenever we enroll someone so that there are no surprises later on.
So, if you are concerned about whether a Medicare Advantage plan is right for you, be sure to speak with one of our knowledgeable licensed experts. We’ll walk you through the pros and cons of both Medicare Advantage plans and Medigap plans and help you decide which route may be the best fit for you.