Medicare is a federal government health insurance program for those age 65 and older and people with specific disabilities. The program is made of four main parts: Part A, Part B, Part C, and Part D. Medicare Supplement plans help cover the gaps in coverage after Medicare pays. Part A helps cover your inpatient care, including a hospital stay, skilled-nursing facility stays, and more. Medicare Part B helps cover your outpatient care, including surgeries, lab work, and more. Part C is another name for the Medicare Advantage plan program. Part D is your prescription drug coverage. Medicare’s coverage can be substantial for many people.

Advantage plans often carry a negative reputation in the Medicare world compared to Medigap plans. The debate of whether Medigap plans are better than Advantage plans is ongoing. So, are Medicare Advantage plans bad? Not necessarily, Advantage plans can be a good fit for some people, but there can be some downsides

However, there are a variety of factors to consider. You’ll want to ensure that you understand how Advantage plans work before you enroll in one. If you don’t, you may regret it later. Here are five facts about Medicare Advantage plans to get you started.

1. Advantage plans can be “all in one” plans.

When you enroll in a Medicare Advantage (MA) plan, you agree to receive your Part A, and Part B benefits from a private insurance company instead of Medicare. These plans are required to offer you the same Part A, and Part B benefits Medicare does.

In addition, most Advantage plans include built-in Part D coverage for medications. Having a built-in Part D plan can be a convenient way to have drug coverage. You will want to make sure the plan you choose covers all the medications you take. You can do this by looking at a plan’s drug formulary (list of covered medications).

Unlike Medicare Supplement insurance, Advantage plans can also offer additional benefits, including dental, vision, hearing, and gym memberships. However, it’s not recommended you choose a plan based on these benefits. If you only focus on these benefits, you may select the wrong Medicare Advantage plan for your needs.

2. They have low premiums but higher out-of-pocket costs.

Many Advantage plans have low premiums, and some may even be $0 per month. This can be a great way to save money. However, the downside is these plans tend to have higher out-of-pocket costs.

When you enroll in a MA plan, you are responsible for the cost-sharing expenses for your specific plan. Each plan has a summary of benefits that tells you in detail what copay or coinsurance you’ll pay for different approved services.

A plan with a structure like this may be okay if you don’t have a lot of health issues and don’t receive healthcare services often. However, if you were to contract an illness or develop a severe health condition, these copays could add up fast. There is a maximum-out-of-pocket (MOOP) limit to keep you from spending too much in the year, but that cap can be as high as $7,550 in 2022. You will want to consider if you are financially prepared to pay a large sum of out-of-pocket bills if it comes to that.

3. Advantage plans have network restrictions.

Another thing to note about Advantage programs is they operate within specific local or regional networks. Having a plan with network restrictions means you won’t have access to see any doctor or specialist like you would with a Supplement plan. If you want to enroll in an Advantage plan, you should pay attention to whether your preferred health care providers are included in your plan’s network area.

The two most popular plan types are HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations). A Health Maintenance Organization usually requires you to receive medical care within their network, not including emergency care. With this type of plan, you typically need to pick a primary care doctor who can provide a referral if necessary.

A Preferred Provider Organization (PPO) plan can allow you to go outside of their network. However, with PPO plans you will pay more money than you would have if you stayed in-network.

These network restrictions may not be an issue for some, but if you like the flexibility to pick which medical providers you’d like to see without restrictions, an Advantage plan may not be for you. An Advantage plan is also not good if you want to travel a lot.

4. Referrals and Prior Authorizations can be required.

As mentioned above, HMO plans can require you to receive referrals before seeing a specialist. Additionally, Advantage plans can require prior authorization. Prior authorization is when a healthcare provider must get approval from Medicare that a service is medically necessary. You usually would need to receive this referral or prior authorization from your primary care physician. This process is meant to help Medicare and the insurance companies save money.

Sometimes you may have to wait for a period before the authorization is approved, which can be a disadvantage if you’re trying to get a specific medication or service done. It’s also possible for these authorizations to be denied, which can be a hassle.

5. Advantage plan benefits can change every year.

You may not realize that Advantage plans can change their benefits each year. The changes can include changes in premiums, deductibles, copays, networks, coinsurance, medications, and more. This is why you don’t want to choose an Advantage plan based on its extra benefits because plan carriers can take those benefits away.

However, carriers are required to notify you each year of the changes to your plan sometime in September. This is known as your Annual Notice of Change (ANOC) letter, and it outlines all the different changes to your plan for the new year. Once you receive this letter, you should review it very carefully to make sure none of the changes will negatively affect you.

If you don’t like the changes to your plan, you have the opportunity to change plans during the Annual Election Period (AEP). This enrollment period takes place each year from October 15th to December 7th. During this time, you can enroll in a new Advantage plan or return to Original Medicare and enroll in a Supplement plan instead. However, if you want to go back to Original Medicare and enroll in a Medigap plan, you will most likely have to answer health questions and pass underwriting to be accepted.

Final Thoughts

Overall, there are no bad Medicare Advantage plans. However, you need to check that you understand the rules surrounding Advantage plans before signing up for one. It would be a poor choice to enroll in one if you don’t know what you’re getting into, as you may regret it later down the road. Research and do your homework to understand your Medicare coverage options fully. In doing so, you can find the right health insurance plan.