Are Medicare Advantage Plans Worth the Risk?


Medicare Advantage plans offer extra coverage, usually at no cost, but you may pay more if you get sick.

Medicare Advantage is a private alternative to traditional Medicare that covers about 1 in 3 Americans 65 years and older. It’s easy to understand why. Medicare Advantage plans often cover things that Medicare does not, and most people do not pay additional for it.

But Medicare Advantage can be more expensive if you get sick because copays and other costs can be higher, says Katy Votava, president of, a health care consultant for financial advisors and consumers.

Customers who are unhappy with their current Medicare plan may not be eligible for supplemental insurance to pay their medical bills. They could also face prohibitive premiums.

Votava, the author of “Making The Most of Medicare,” said that these are complex products. They are unlike any other insurance, and no other insurance people will encounter until they become Medicare.

Medicare’s alphabet soup

When deciding on Medicare coverage, the first obstacle many people face is understanding how each part fits together. Two parts make up traditional Medicare (also known as original Medicare).

  • Part A covers hospitalization and is typically premium-free.
  • Part B covers outpatient care, including doctor visits, and has a standard monthly premium of $144.60 for 2020, although higher-income people pay more.
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Any doctor that accepts Medicare can be chosen. The government directly pays for health care providers.

Private insurers provide Part D, which covers prescription drug coverage. There are many options for drugs covered, and you can pay out-of-pocket. The average monthly premium in 2020 was $32.74, but it varies widely.

Traditional Medicare can quickly add up with copays, deductibles, and coinsurance. Private insurers offer Medigap supplemental plans to help cover these gaps. According to, the average Medigap monthly premium for 2019 was $152, but this can vary depending on which plan you choose, what insurer you use, and where you live. You can choose any doctor that accepts Medicare.

When you first become eligible for Medicare, you must apply for Medigap policies. The insurer cannot charge you more for preexisting conditions.

What Medicare Advantage is Different

Medicare Part C is Medicare Advantage. Medicare Advantage plans are designed to replace the Medicare Parts A and B, but not add to them. Medicare Advantage plans must provide all benefits of Part A, Part B and most plans also include Part D drug coverage. The plans often cover expenses not covered by Medicare, such as hearing, vision, and dental care.

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According to the Kaiser Family Foundation, an independent health research organization, most Medicare Advantage enrollees paid no additional premiums for their coverage in 2020, except their regular Part B premiums.

How Medicare Advantage manages cost

Medicare Advantage plans work in the same way as employer-provided group insurance. You must select health care providers within the insurance company’s network to be covered. If the plan is a HMO (health maintenance organization), it may be quite narrow or more extensive if it is a PPO (preferential provider organization). Preapproval may be required for certain types or referrals to specialists. You may have to pay extra if you are out of your network. You might not be notified even if your doctor is currently in-network.

Medicare Advantage plans are usually regional. You may not be covered if you move outside the region or to another state.

The devil is in the details. Medicare Advantage plans are full of details. According to the Kaiser Family Foundation, an average Medicare beneficiary can choose from 28 Medicare Advantage options. These include varying networks, coverages, copays, and coinsurance. Medicare Advantage is generally cheaper upfront, and may cost more if you require a lot of medical care. While Medigap plans can have higher upfront costs, they will cover the majority of your care when you are in need.

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You can switch between Medicare Advantage plans during annual enrollment periods. You won’t always have access to Medigap coverage if you switch from Medicare Advantage to regular Medicare. This means that the insurer could charge you more, exclude you from coverage for a longer period of time, or refuse to issue you a policy.

This doesn’t necessarily mean that Medicare Advantage plans are bad choices. It is just a more complicated choice, according to Tatiana Fassieux (a California advocacy non-profit). She suggests that people contact their state’s health insurance assistance program for free, impartial one-on-one counseling. Links to these programs can be found by visiting the SHIP National Technical Assistance Center.

Fassieux states, “People shouldn’t rely solely on television commercials.” “That’s where people get stuck and make mistakes.