Is There an Advantage to Medicare Advantage?

Is There an Advantage to Medicare Advantage?

According to Reader’s Digest, 1 in 4 retirees receive their health insurance coverage from a Medicare Advantage Plan.  And I can certainly understand the attraction.  Premiums as low as $0 a month.  Prescription drug plans often included.  What’s not to like?


But—as it goes for most purchases—you get what you pay for.  And when it comes to Medicare Advantage Plans, they definitely have a dark side.  Allow me to shed some light on the subject.


The Medicare (Dis)Advantage Plan


Medicare Advantage Plans contract with specific hospitals and doctors, usually within a relatively tight-knit geographic area.  If you don’t receive care from the ones with whom they’ve “networked”, you may be subject to higher copays or coinsurance at each visit. Depending on the plan, they may not even cover your expenses at all.


This can be a problem for anyone, but especially for those who travel frequently.  So for you snowbirds out there who fly south for the winter and leave us all to freeze, this serves you right (forgive my jealous outburst).  You may find yourself with less (or even no) coverage at your vacation home.  Although they will still cover you in emergencies, that doesn’t mean it won’t be an expensive hassle.



Because Medicare Advantage Plans are funded by government subsidy, the cost and benefits can change drastically from year to year.  If the government decides to spend your tax dollars elsewhere, your plan may let prices creep (or even leap) up, while benefits wane.  This all depends on politics, which—as you already know—is rarely consistent.


Potentially High Out-of-Pocket Costs

Medicare Advantage Plans have more of a pay-as-you-go approach.  Although the premium is low, deductibles, coinsurance and copays are often much higher.  This is not a problem if you are healthy, but if you are struck with sudden illness, you might be stuck with astronomically high out-of-pockets: 3,500 to 6000 a year or more!  And if the diagnosis is bad enough, you may not qualify to switch to a Supplement plan.


Let’s take a real life example.

A client of ours came in with an Advantage Plan.  He was diagnosed with cancer in fall of 2012 and started chemotherapy immediately.  Since he was in charge of 20% of the costs due to his plan, he very speedily met his $7,500 annual out-of-pocket limit.  Then it was the New Year, and his out-of-pocket limit reset.  He continued chemo-treatments, which lead to another $7,500 expense.  That is $15,000 of spending in less than 6 months!


And since a cancer diagnosis prevented him from switching to a Supplement, he had to stay with his Advantage Plan.  He was stuck, and—needless to say—very unhappy about it.


So Here’s the Bottom Line…

Is there an advantage to a Medicare Advantage Plan?

If your doctors are in your plan’s network, you stay on top of changes, and—here’s a big one—you don’t get horribly ill (leading to high out-of-pocket costs), then yes!  The Medicare Advantage dark side has vanished.  The force is with you, and you’ve saved hundreds or even thousands in premium costs.


But you need to assess your situation.  You need to take the risk into consideration.  1 in 4 people might be on a Medicare Advantage Plan, but that doesn’t mean it is right for you!



If you find yourself still searching for answers, one of our workshops might be for you!  Click here to sign up for one of our next workshops!

Looking to switch to or purchase a Medicare supplement, or Advantage plan? Call Seniormark at 937-492-8800 for a free consultation. We are here to help.

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