Is It Wise to Have a Medicare Advantage Plan?

Published In Blog

Most seniors are automatically enrolled in Medicare Part A when they turn 65 if they apply for or are already receiving Social Security benefits. Medicare Part A provides coverage for treatment after hospitalization.

Seniors need to take the initiative to enroll in Medicare Part B. That coverage pays a large chunk of most medical treatment that is not provided during a hospitalization. Taken together, Medicare Parts A and B are known as Original Medicare.

Unlike Medicare Part A, seniors pay a monthly premium for Part B coverage. If they don’t enroll shortly after turning 65, they will likely pay a late enrollment penalty unless they are covered by an employer-provided health insurance plan.

Medicare Part D offers drug coverage. Seniors sign up for Medicare Part D by purchasing a plan from the private market. Again, the cost increases if seniors do not acquire the coverage within a short time after they turn 65.

Medicare Advantage

After enrolling in Part B, seniors have the option to enroll in a Medicare Advantage plan (also known as Medicare Part C). Those plans typically combine the coverage that is offered by Parts B and D, although it is possible to buy a Medicare Advantage plan that does not include drug coverage.

Medicare Advantage plans may also offer extra coverage, such as vision, hearing, and dental care. Those benefits are often advertised as features of a “zero cost” plan, meaning the cost of the Medicare Advantage plan is no greater than the cost of Original Medicare. In most cases, the additional benefits that the plan offers are quite limited— dental coverage, for example, may include only one set of x-rays and two cleanings per year — but free dental care, even if limited, may be better than none.

To cover the extra cost of added benefits at “zero cost,” private insurers limit patients to a network of healthcare providers. Yet experts warn that enrollees in Medicare Advantage plans may pay more in deductibles and co-pays if they develop a serious illness than they would have paid with Original Medicare.

A bewildering variety of plans are offered by multiple insurers, although the number of available plans varies from state to state. The federal government offers a comparison tool that allows seniors to learn about plans that are available in their zip code.

Enrolling in a Medicare Advantage Plan

Seniors who want a Medicare Advantage Plan can enroll during the Initial Enrollment Period. That period usually expires three months after the senior signs up for Medicare Part B.

Seniors who have enrolled in Medicare Part B but do not choose a Medicare Advantage Plan within three months must wait for an Open Enrollment Period to join a plan. In 2024, the Open Enrollment Period began on October 15 and lasts until December 7. During that period, seniors can:

  • Enroll in a Medicare Advantage Plan (if they already have Medicare Parts A and B).
  • Add drug coverage to an existing Medicare Advantage Plan.
  • Change from an existing Medicare Advantage Plan to a different one.
  • Drop their existing Medicare Advantage Plan and switch to Original Medicare.

The choices they make will take effect on January 1, 2025.

Seniors who already have a Medicare Advantage Plan can also take advantage of a Medicare Advantage Open Enrollment Period from January 1 to March 31, 2025. During that period, seniors can change to a different Medicare Advantage Plan, add drug coverage to their existing plan, or drop their plan and return to Original Medicare. Changes generally take effect on the first of the month following the day on which the change is made.

Pitfalls of Medicare Advantage

Not all Medicare Advantage plans are created equal. Choosing from available options can be a daunting task. The task is made more daunting this year for the 1.8 million seniors enrolled in Medicare Advantage plans that won’t be offered in 2025. That represents about a 6.5% reduction in plan offerings from 2024.

Insurers are reducing the availability of Medicare Advantage plans in counties where they are deemed unprofitable. Some rural counties won’t have any plan coverage at all in 2025.

While the cost of plans in 2025 plans is comparable to 2024, some plans are trying to maintain profitability by reducing benefits. Painful benefit reductions may include:

  • In-home support services (reduced from 9% of plans to 6% in 2024).
  • Nutrition services (reduced from 40% to 29%).
  • Transportation services (reduced from 36% to 29%).
  • Meal services (reduced from 72% to 66%).

Insurers blame a small reduction in Medicare reimbursement rates for their decision to cut benefits or eliminate plans. Industry experts suggest that insurers created the problem by underestimating the number of patients who would use the benefits and services that the plans offer.

Even when plans are available, healthcare providers are increasingly choosing not to accept patients who plan to pay with Medicare Advantage. Onerous requirements to obtain pre-approval of expensive procedures, high rates of denials of payment, and slow payment of medical bills has persuaded some hospitals and clinics to do business only with seniors who have Original Medicare.

Research Is Important

Changing plans can be disruptive for seniors. Original Medicare allows seniors to see any doctor who accepts Medicare (and most do). Most Medicare Advantage plans require members to see a doctor within a network. Changing plans may mean changing networks, endangering continuity of care and delaying necessary care as patients search for new doctors.

The right Medicare Advantage plan may nevertheless be the right choice for many seniors. Still, it is worth noting that a Florida insurance agent who is now receiving hospice care for cancer is encouraging his clients not to sign up for a Medicare Advantage plan. He is advising clients who want to save money that they should sign up for a high-deductible Medigap plan to supplement their Original Medicare. In the end, seniors will need to conduct careful research before deciding whether to enroll in (or revert to) Original Medicare or a Medicare Advantage plan.

Leave a Reply