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8 Reasons We Don’t Sell or Recommend Medicare “Advantage” Plans

You can’t drive down the highway or watch a program on TV without seeing advertisements about how great Medicare Advantage plans—some for $0 premium per month, with dental!—are, and with celebrities like Joe Namath promoting them, certainly they must be good, right? Well, our answer is no, and these articles from Forbes, NBC News and Newsweek seem to agree, and to touch on why.

Advantage Plans (under Medicare Part C) are not the right or best option for individuals turning or already age 65 or older, for many reasons the advertisers are not mentioning. We’re willing to bet Joe himself is not actually enrolled on an Advantage plan, either. The many reasons why Mr. Namath would not be on one of the plans he promotes, and why all beneficiaries should consider staying away from such plans and instead consider Supplemental “Medigap” plans F or G and a separate Prescription Drug Plan (PDP), are explained below:

  1. Network Restrictions: Advantage plans restrict you to using a specific network attached to the insurer and plan you purchase. Even if your providers and hospitals are part of the network today, at any time they can drop out; or, if you move or travel and need care elsewhere, or a new medical issue arises prompting you to need care with new providers, you’ll have to hope that your plan’s network can accommodate you. By contrast, Supplemental “Medigap” plans pay the gaps or balances Original Medicare leaves behind and thus have no network restrictions—providers nationwide only have to accept federal Medicare (not an insurer network) for you to access care.
  2. Advantage Plans Renew (and thus change) annually: when you purchase an Advantage plan, you are buying that plan for the calendar year only. The benefits (copays, deductibles, coinsurance, out of pocket limitations, Rx formularies, etc.), network and premium are likely to change each year, and some plans are eliminated altogether. Because of this, each year you are forced to go through an exhaustive process of trying to compare all your plan options, confirm network participation for all your providers and facilities, and try to estimate and plan for your total out-of-pocket costs. This is difficult to do with any level of accuracy because of the many factors involved in such analyses and calculations. By contrast, Supplemental “Medigap” plans are guaranteed renewable for life, the plan benefits are set and do not change, and, benefits are the same regardless of the insurer you purchase the plan from.
  3. Advantage Plans make it difficult to budget or estimate your total annual costs: as stated above, since Advantage plans include member copays, deductibles, and coinsurance responsibilities, they make it difficult for enrollees to properly budget and plan ahead for. If you wind up needing to go to physical therapy just one time per week at a $50 copay per visit (for example) you will spend an extra $200 per month on what was supposed to be a lower cost plan option. If the need for surgery, hospitalization, treatment or medical equipment arise—then what will you owe? By contrast, you can budget and plan for your annual costs regardless of your medical needs and utilization each year under Supplemental “Medigap” Plans F and G (the only plans we recommend) as these plans cover your Part A (hospitalization) at 100% and your Part B (outpatient) at 100% too. Plan G only requires that you pay the Part B deductible each year–$226 in 2023 before coverage is 100% for outpatient; on Plan F, the B deductible is paid by the plan for you.
  4. Advantage Plans include prescription drug plan coverage with the medical benefits: which means the medical plan/insurer dictates the formulary under which you can fill Rxs, which may mean the brand Rx you need or wish to take may not be covered. By contrast, if you have a Supplemental plan, you can purchase a separate Prescription Drug Plan (PDP) from the 20+ available PDPs in your state each year, and thus choose a plan whose formulary, benefits and pharmacy network will best meet your needs.
  5. Advantage Plans can require referrals, pre-certifications and prior authorizations before you are able to access care. By contrast, Supplemental plans do not have these barriers or restrictions to accessing care.
  6. Advantage Plans do not travel or move with you: if you travel, move, or temporarily reside elsewhere, you have to hope your plan’s network has providers you wish to use where you are. By contrast, Supplemental plans travel and move with you as there are no network restrictions (providers nationwide only have to accept Federal Medicare—not an insurer plan or network—for you to access care) and if you move, you can keep your coverage by simply updating your address only with your insurer.
  7. Advantage Plans generally do not provide coverage outside of the USBy contrast, Supplemental plans provide 80% coverage after the first $250 to a lifetime max benefit of $50,000 for medically necessary emergency care during the first 60 days of foreign travel. Even so, we always recommend purchasing a travel policy when heading outside of the US, for additional and potentially necessary protection and benefits.
  8. Finally, once you buy an Advantage Plan, you may not later be able to purchase or change to a Supplemental Plan: When you are turning 65 or are over 65 but you or your spouse are retiring from working full-time at a company with 20 or more employees (under which you’ve had credible medical and prescription drug coverage and have deferred Medicare Part B as a result) picture that you are standing at a crossroad: in one direction are Advantage Plans and in the other is a Supplemental Plan. At this moment, you have a magic wand where you can buy a Supplemental Plan without answering medical questions or going through medical underwriting, and you can keep that plan for the rest of your life if premiums are paid timely. By contrast, if you buy an Advantage plan, and later decide you want to switch to a Supplemental plan, you will need to pass medical underwriting to do so. Many Medicare Beneficiaries do not realize this and simply think they can later change to Supplemental, and while some individuals can pass underwriting later in life, many cannot. The point of confusion comes from the fact that Advantage plans and PDPs have an Annual Election Period (AEP) each year where you can change to another Advantage plan or PDP for the following year, but Supplemental plans do not have an AEP. This is why understanding all of your options when you are first eligible is so important, in addition to understanding the later potential consequences of that choice. Supplemental plans are guaranteed renewable for life if premiums are paid timely, but since there is no AEP for Supplemental coverage, if you first elect an Advantage plan and later wish to switch to a Supplemental plan, you may not be able to do if you cannot pass medical underwriting.

There are some positives to Advantage Plans, such as that enrollees have only one ID card for all coverage (as Advantage plans replace Medicare and usually include Rx coverage) which is convenient and less confusing for enrollees. They also often include a dental and vision benefit, which is only available in a discount or wellness platform (vs insurance benefit) on Supplemental plans or only available if purchased separately. The lower monthly premium Advantage plans offer is often attractive to members but is often offset (and any savings negated) as the coverage is used—think of the adage: ‘penny-wise pound-foolish’ when plans promote their low or $0 monthly premiums. That being said, the only time we would recommend Advantage plans (yes, there is one time we would!) is if someone is considering having only Original Medicare (Parts A and B) with no additional coverage (Advantage or Supplemental). Since Parts A and B require deductibles, hospital copays and generally 20% outpatient responsibility without a max limit, Original Medicare only is insufficient, unwise and can have costly consequences. If premium is the only consideration, then a $0 or low cost Advantage plan is better than having just Original Medicare only, as at minimum, the plan will provide a maximum out-of-pocket limit.

Additionally, that Agents are paid higher commissions on Advantage plans than on Supplemental, and that insurers make more on Advantage plans (as Medicare pays the insurer per enrollee to take over the administration of coverage along with enrollees paying more as they use coverage), should also be considered when you or someone you love are making a decision about what Medicare coverage is best to elect and what expert you decide to get advice from or work with. 

For more information, on Advantage Plans, Supplemental Plans and Prescription Drug Plan coverage under Part D of Medicare, see here:

https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf

https://www.medicare.gov/medigap-supplemental-insurance-plans/#/m?lang=en&year=2022

https://www.medicare.gov/drug-coverage-part-d/how-to-get-prescription-drug-coverage