9 Surprising Disadvantages to Medicare Advantage Very Few People Know
Depending on your budget, health, and plans for the future, Medicare Advantage might not be the best retirement health care solution for you.
Once you reach age 65, you become eligible for Medicare, the federal government’s health insurance program primarily geared toward seniors and retirees.
Whether you retire early or plan to work for several more years, have already turned 65, or are still a few birthdays away, it’s worth thinking about which Medicare plan you’ll sign up for when the time comes.
Medicare Advantage, or Medicare Part C, is one Medicare plan option, but is it the best choice for you, or should you stick with Original Medicare?
Here we’ll cover nine major reasons Medicare Advantage could conflict with your retirement goals, so you’ll have a better understanding of whether Medicare Advantage could work for you or if you should explore other Medicare coverage options.
It has a much smaller healthcare provider network
Most, though not all, American health care providers accept Original Medicare insurance. The same can’t be said for Medicare Advantage, which has a much smaller provider network.
If you’re trying to keep your current doctor, then it could lower your financial stress if you make sure they are in the network before going for a visit.
If finding a provider you love is important to you, Original Medicare will give you more options. With Medicare Advantage, you’ll have to settle for the best care you can find within the network.
Its service area is much smaller
Since Medicare is administered by the federal government, you can use it at any hospital or medical provider in the United States (as long as that provider accepts Medicare, which most do).
In contrast, Medicare Advantage’s smaller provider network is also extremely localized. Whenever you’re seeking non-emergency care, you’re limited to providers in your immediate area.
Its provider network is especially small for rural communities
No matter where in the country you live, Medicare Advantage’s network is smaller than Original Medicare’s network, but the network is especially limited for rural communities.
According to one study published in 2021, 10.5% of rural retirees who sign up for Medicare Advantage end up switching to original Medicare.
By way of comparison, only 5% of non-rural retirees switch away from Medicare Advantage.
It usually requires referrals to see specialists
With original Medicare, you typically can schedule a specialist visit even without a referral. With Medicare Advantage, you can’t simply call a specialist and schedule an appointment.
Instead, you may need a referral from a primary health care provider before you can speak with a specialist.
Pro tip: You may need to make some extra money if you have a health condition that requires frequent trips to a specialist.
It requires preauthorization for most high-cost services
Medicare Advantage plans often require preapproval for services such as inpatient hospital stays, dialysis, physical therapy, and psychiatric care. If you don’t get prior authorization when required, you may be responsible for the costs. Original Medicare, by contrast, generally doesn’t require preauthorization for these services.
It often requires preauthorization for Part B medications
Medicare Part B is the medical insurance section of Medicare, and it’s included in all Medicare Advantage plans.
However, you’ll need prior approval before your Medicare Advantage plan will help pay for any outpatient drugs prescribed under Part B (rather than Part D, which covers most other prescriptions).
Most Part B drugs that require preauthorization are injectable, including injectable medications for osteoporosis, injectable blood-clotting factors for hemophilia, and some oral and injectable end-stage renal disease medications.
It can require step therapy for Part B drugs
Step therapy refers to the practice of using a cheaper medication to treat a condition before moving to a more expensive medication.
Unlike original Medicare, Medicare Advantage plans can require step therapy for Part B medications, meaning your Medicare Advantage plan can refuse to cover medication prescribed by your doctor if there’s a cheaper alternative.
It might make hospital stays more expensive
Medicare Advantage might be cheaper for some retirees, especially those who mainly see healthcare providers for preventative health.
But if you end up in the hospital for a week, studies show that 50% of seniors using Medicare Advantage will pay more for that stay than seniors using original Medicare.
In other words, if you have poor health and know you’re at a higher risk of hospitalization, Medicare Advantage might cost you more over time than original Medicare.
It can make budgeting for health care even harder
Budgeting for health care can be tricky, especially on a fixed income. Original Medicare charges a predictable monthly premium, though you may still pay deductibles and coinsurance. Medicare Advantage plans often have lower or even $0 premiums, but you pay copays and coinsurance for services until reaching the plan’s out-of-pocket maximum, which can make monthly costs harder to predict.
Bottom line
Medicare Advantage plans can offer crucial benefits that make life easier for some retirees, especially those in good health with relatively few health care needs.
But it’s definitely not the right choice for everyone. You should weigh the pros and cons of your situation before making a final decision.
If you anticipate hospital stays, prefer to pick your own provider, and dislike the idea of getting prior approval for most expenses, original Medicare might be a better choice for you since you won’t need to make extra money to pay for insurance.
Author Details
Michelle Smith, a writer for FinanceBuzz, has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she’s not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.