As you approach age 65, you’ll have some decisions to make about medical coverage. On one hand, you can enroll in Medicare. But you may be tempted to choose another option instead: a Medicare Advantage (MA) plan instead. If you’ve seen the advertisements for MA plans, you might think they’re more cost-effective and comprehensive than Medicare. But according to Keith Armbrecht, Founder of Medicare education company, Medicare on Video, that’s not necessarily true.
“I would never choose a Medicare advantage plan,” he says in a YouTube video entitled “Why Medicare Advantage Is The Worst Choice For Seniors.”
Here’s why he’s not a fan of these plans.
What is a Medicare Advantage plan?
Medicare Advantage plans are alternative insurance plans to Medicare, and they’re offered by Medicare-approved private companies. These plans are sometimes called “Part C” or “MA,” and they include Medicare Part A (hospital insurance) and Part B (medical insurance).
Those interested in MA have more than 40 different plans to choose from. The main
reasons to explore them include:
- The potential for lower premiums compared to Medicare. In 2022, the average premium was $58, according to 2022 data from the U.S. Senate Committee on Finance.
- Out-of-pocket costs may be capped. In 2023, the maximum was $8,300 for approved services.
- Most plans include dental, vision, hearing and fitness benefits.
That being said, there are a few downsides to Medicare Advantage plans. Here are some important things to consider before locking into an MA plan.
Limited choice
If you opt for an MA plan, your choice of doctors can be limited and you’re likely to face obstacles in getting approved for procedures or seeing specialists. “The primary reason I would absolutely choose original Medicare and would never choose Medicare Advantage is because I want control over what I do,” says Armbrecht. With an MA plan, he warns, you can face wait times of “weeks, even months,” to get referrals or have procedures authorized.
You’re typically limited to doctors in the plan network and service area, as well,
according to the government’s Medicare website.
Deceptive marketing
The Medicare Advantage plan industry has a history of deceptive practices. In 2022, the Majority Staff of the U.S. Senate Committee on Finance found that Medicare beneficiaries were being inundated with aggressive marketing tactics, false and misleading information and overall predatory marketing from MA providers. According to the report, deceptive Medicare Advantage marketing practices are, “widespread, not isolated events.”
According to a 2022 review from the New York Times, four out of five of the largest MA providers (UnitedHealth, Humana, Elevance and Kaiser) have faced federal lawsuits for fraud and at least eight providers overbilled, according to the U.S. Department of Health and Human Services Office of the Inspector General.
Denied claims
Multiple studies have shown MA plans have a pattern of denying claims that should be covered.
A 2022 review from the Inspector General’s office found that MAs denied 13% of prior authorization requests that met Medicare coverage rules. Essentially, these claims would have been approved under original Medicare. The most commonly denied requests were imaging services, stays in post-acute facilities and injections.
Go to the source
“Medicare is probably the only government program that does exactly what it’s supposed to do and does it very well,” says Armbrecht. In other words, original Medicare is likely your best choice. If you’re nearing 65 and considering your options, you can visit Medicare.Gov for accurate and up-to-date information so you can make the right decision for your health insurance needs.
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.
1. It has a much smaller healthcare provider network
Most — though not all — American healthcare 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 maintain your current doctor then it could eliminate a lot of money 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.
2. 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.
3. 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.
4. It usually requires referrals to see specialists
With Original Medicare, you can schedule a specialist visit even without a referral. With Medicare Advantage, though, you can’t simply call a specialist and schedule an appointment. Instead, you need a referral from a primary healthcare 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.
5. It requires preauthorization for most high-cost services
If you’re enrolled in Medicare Advantage, you’ll likely end up paying for some of the most expensive healthcare services out of pocket unless you get the expense pre-approved.
Those services include inpatient hospital stays, partial hospitalizations, physical therapy, dialysis, hearing exams, psychiatric services, and much more.
If you don’t get the expense approved in advance, you’ll likely end up paying for it out of pocket. For the most part, Original Medicare doesn’t require preauthorization.
6. 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.
7. 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.
8. 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.
9. It can make budgeting for healthcare even harder
Since you can’t always anticipate your health needs in advance, budgeting for healthcare is notoriously tricky. If you’re living on a fixed income, though, you need to carefully track your expenses to make sure you don’t overspend.
Original Medicare makes healthcare expenses easier to anticipate by charging you a recurring monthly premium. As a result, you can then visit a healthcare provider at a lower cost and without rearranging your budget to accommodate the additional expense.
In contrast, most Medicare Advantage plans don’t have a monthly premium. Instead, you pay for medical expenses out of pocket until you hit your out-of-pocket max, which makes it hard to know how much you could be spending on healthcare in a given month.
Bottom line
Medicare Advantage plans can offer crucial benefits that make life easier for some retirees, especially those in good health with relatively few healthcare needs.
But it’s definitely not the right choice for everyone. You should weigh the pros and cons with 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 to prevent the need to make extra money for insurance.
Seniors who opted for private Medicare insurance plans should not be shy about pushing back on denials for pre-authorizations, according to a new study.
Of the 35 million requests by Medicare Advantage enrollees seeking prior authorization for healthcare services or medications in 2021, two million of those requests were fully or partially denied, according to a new analysis from the Kaiser Family Foundation (KFF), a nonprofit organization.
The results raise flags that the approval process may create unnecessary obstacles for patients to receive medical care and underscored that seniors may want to spend more time shopping around for these popular plans to avoid these hassles.
“The high frequency of favorable outcomes upon appeal raises questions about whether a larger share of initial determinations should have been approved,” Jeannie Fuglesten Biniek, KFF’s associate director, program on Medicare Policy, and Nolan Sroczynski, a KFF data analyst, wrote.
“It could reflect initial requests that failed to provide necessary documentation. In either case, medical care that was ordered by a healthcare provider and ultimately deemed necessary was potentially delayed because of the additional step of appealing the initial prior authorization decision, which may have negative effects on beneficiaries’ health,” the authors concluded.
Don’t Take No for an Answer
The pre-authorization hoop primarily impacts people enrolled in Medicare Advantage plans, a privatized, managed-care version of the traditional Medicare program.
In 2022, virtually all Medicare Advantage enrollees (99%) were enrolled in a plan that required prior authorization for some services. Most commonly, higher-cost services, such as chemotherapy or skilled nursing facility stays, require prior authorization, according to KFF’s study, which reviewed data from 515 Medicare Advantage contracts representing 23 million Medicare Advantage enrollees.
