Medicare Advantage is a massively popular way to participate in Medicare – 4 in 10 enrollees now use Medicare Advantage, up from 25 percent a decade ago. But is it worth it?

Medicare Advantage Plan: Is it Right for You?
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Compared to original Medicare, lower premium costs for the advantage plan are simply alluring, however, experts point out advantage coinsurance can add up.

Everything’s all fun and dandy until you get sick, and then start looking for answers about your big bills. In other words, when applying for the Medicare Advantage Plan, there are mistakes you can’t afford to make.

What is Medicare Advantage?

Let’s start with the basics. Medicare Advantage is the name of a group of insurance plans provided by private companies that “replace” Original Medicare.

MA benefits are slightly different from those provided by the Original Medicare, but they must offer equal benefits by law. That means that if you choose the Medicare Advantage, all the services traditionally covered by Medicare Part A and B will now enter your MA plan (except for hospice care, still covered by Original Medicare). However, these plans cover all Medicare services, and some offer additional coverage for vision, hearing, and dental. They’re given by private companies authorized by Medicare.

Yet, while many offer a $0 premium, the devil is in the details, as the new Medicare Advantage book explains. You will find that most have unanticipated out-of-pocket expenses when you get sick, and what they pay can vary depending upon your overall health.

Common Pitfalls of Medicare Advantage Plans

A Medicare Advantage Plan is meant to be an all-in-one alternative to Original Medicare. These plans are provided by private insurance firms that contract with Medicare to offer Part A and Part B advantages, and sometimes Part D (drug prescriptions). Most plans cover advantages that Original Medicare doesn’t offer, like hearing, dental, and vision. Before you can enroll in the Medicare Advantage Plan, you have to sign up for Medicare Part A and Part B.

Normally, Medicare Advantage Plans do not offer the same freedom of choice as a Medicare plus Medigap combination and that’s because different plants require different doctors and health providers. Since Medicare Advantage Plans can’t choose their customers (they accept any Medicare-eligible participant). They discourage sick customers by the way they structure their co-pays and deductibles. While some may feel the MA plans are bad, others say it’s due to their smaller networks, while others aren’t fans of the annual changes.

Some MA Plans are Free but Not Really

The biggest misconception is that MA plans are free. We’ve all heard the saying that there’s no such thing as a free lunch. Well, nor is there such a thing as a free Medicare plan. One of the reasons MA providers can offer low to zero-dollar is because Medicare pays these carriers to take on your health risk. Advantage providers obtain a fixed, monthly amount to provide coverage to each enrollee, so Medicare doesn’t have to.

In large, the Advantage plans basically replace Parts A and B. Another reason MA plans have low or zero-dollar premiums is because of the cost-sharing. Unlike when you pair the Medigap policy with the Original Medicare, Advantage plans come with co-payments. You can then expect to pay a copay for every test, every doctor visit, and service you receive.

Don’t mistake zero-dollar premiums with getting out of paying your Part B premium. You may still have to pay the Part B premiums while enrolled in Medicare Advantage. Although, some plans include a Part B premium reduction feature.

Original Medicare VS Medicare Advantage

A zero premium for Medicare Advantage certainly sounds enticing, but that’s where healthy 65-year-olds need to pay attention. Seniors need to make sure they understand key differences between Original Medicare and Medicare Advantage once they actually need care.

Medicare starters with original Medicare have the freedom to access any doctor at any medical facility in the country that accepts Medicare. Most doctors accept Medicare, not to mention there’s no need for preauthorization to see one.

But if you’re out and about to enroll in a Medicare Advantage Plan, make sure you understand the rules for receiving care outside of your coverage area. Emergency care will be covered, but you may not be able to see specialists for less serious issues.

The Medicare platform has a free tool that will show your options for Medicare Advantage and Original Medicare based on where you live. If you’re looking for Original Medicare, the tool can show you Medigap supplement plans and Medicare Part D, the drug plan feature that is important if you decide to go with original Medicare.

Which is better?

Beyond freedom of choice, there’s a coinsurance to take into account. Typically, MA plans require you to pay for a portion of your care. The good news is that there’s an annual out-of-pocket maximum for all your combined Medicare Part B copays and coinsurance.

The bad news? In 2021, the MA out-of-pocket maximum reaches $7,550, though some plans can set a lower ceiling. Let’s just say you could easily incur $15,000 in coinsurance within six months. An amount that would likely be more than you would owe if you had Original Medicare.

For instance, if you paid $350 in combined premiums for Part D plan and Medigap, Original Medicare could end up costing less than if you ended up being hit with the maximum out-of-pocket for Part A and Part B coverage in a MA plan.

That said, if you do enroll in a MA plan, you will need some financial advantage against an expensive emergency calamity. Even so, switching over to Original Medicare is no easy job. In most states, you may be unable to qualify for a Medigap policy, making it impossible to join Original Medicare.

That said, from the perspective of peace of mind, Original Medicare + Medigap + Medicare Plan D Drug plan can be a smarter investment if you get sick.