If you are one of the 63 millions of Americans enrolled in Medicare, you are likely to receive a flood of offers from Medicare Advantage plans, offering managed care with low or no premiums.
Medicare’s Fall Open Enrollment Season begins on 15 October and ends December 7 , when you can change your coverage between Original Medicare and Medicare Advantage , change Medicare Advantage plans, or make changes to your prescription drug plan.
All that hype seems to be working. Recently, the 50% of Medicare beneficiaries enrolled in Advantage plans, compared to 31% on 2016 , according to data from the Kaiser Family Foundation. Those figures include the 50% of African Americans and 54% of Hispanics Enrolled Compared to 36% of whites in 2018. For the 2025, it is expected that half of Americans have Advantage plans.
It’s easy to see the appeal of Advantage. Original Medicare doesn’t cover all medical expenses, while Advantage plans have cost-sharing requirements but limit out-of-pocket costs. Plus, they have low premiums and the simplicity of comprehensive coverage.
But Advantage plans can have hidden risks, especially for those with major health problems.
“Some people on Medicare Advantage end up paying unexpected costs when they get sick or find that their network doesn’t include the medical providers they need,” says Tricia Neuman, Kaiser’s Senior Vice President.
Your alternative is to choose Original Medicare and add a supplemental plan or Medigap, which covers your out-of-pocket costs and offers you a greater selection of providers. But you will have to pay additional monthly premiums for a Medigap policy, and unless you sign up for Medicare for the first time, you could be denied Medigap coverage due to a pre-existing condition.
Clearly, choosing the right option for your needs requires careful research. The following tips can help you choose the best plan for you.
How Medicare Advantage Plans Work
First , It is convenient to review some basic concepts. Medicare is divided into four parts: Part A covers inpatient hospital care and skilled nursing. There is no premium if you or your spouse have earned at least 40 Social Security credits.
Part B covers outpatient hospital care and medical services. You have to pay a monthly premium for this coverage, which in 2022 is $ 170. 10, with a deductible of $ 233. People with higher incomes pay more.
The other parts of Medicare, Part C, also known as Medicare Advantage, and Part D, prescription drug coverage, are optional and offered by insurers
Medicare Advantage is an all-in-one managed care plan, usually by an HMO or PPO. Advantage plans offer the benefits of Parts A and B, and most also include Part D or prescription drug coverage . Some offer additional benefits not available through Original Medicare, such as fitness classes or dental and vision care.
If you choose Medicare Advantage, you will normally continue to pay your Part B premium as usual, but you will pay little or no extra for coverage. You generally have copays or coinsurance, but once you reach the out-of-pocket limit, the plan will pay the 100% of your medical expenses covered by Medicare for the rest of the year. The out-of-pocket limit does not apply to prescription drugs or fringe benefits.
To keep premiums low, Advantage plans generally require you to receive your care from a network of doctors, hospitals and other providers, and you usually need a prior authorization to receive specialty care.
Original Medicare does not have an annual out-of-pocket limit, and for Part B services, you will have to pay the 20% of expenses after deductible. That’s why many seniors with Original Medicare also buy a Medigap plan, which covers those out-of-pocket costs if they don’t get supplemental benefits from a former employer. (You can’t have both an Advantage plan and a Medigap plan.) And most people with Original Medicare also buy a separate Medicare prescription drug plan.
Medigap plans also offer a flexible choice of providers, as coverage is accepted by any doctor or medical service that accepts Medicare: the vast majority do. In most states, you only have guaranteed access to a Medigap plan when you first enroll in Medicare, as explained below.
With Medigap, you’ll pay more in monthly premiums compared to Advantage plans (see chart below). It will also take a bit more work to choose your Part D plan.
| Name of the plan |
Normal monthly premium | What | is better for |
| from $ 0 to $ 20 | Healthy adults who prefer low premiums and are comfortable with managed care | ||
| Medigap, Plan G | from $ 90 to $ 476 | Deductibles and copayments | People who prefer a wide range of providers or who have higher medical expenses |
| Part D | $ 38 | Prescription drug coverage | People with Original Medicare (stand-alone drug plans) and Medicare Advantage prescription drug plans |
Why Medicare Advantage Plans Can Fall Short
For many older Americans, Medicare Advantage plans can work well. A study by JAMA revealed that Advantage members often receive more preventive care than those in Traditional Medicare. Advantage plans compete not only on cost, but also on quality of care, says Dr. Kenton Johnston, associate professor of health policy and management at Saint Louis University and a co-author of the study.
But if you have chronic illnesses or major health care needs, you should think twice before purchasing Medicare Advantage, due to prior authorization requirements and the need to use network providers, says Melinda Caughill, co-founder of 65 Incorporated, a company that offers guidance on Medicare enrollment to financial advisers and people in general.
“If you need to see several specialists and you have to get referrals medical appointments for every appointment or fighting to undo coverage denials, it can really be a challenge, ”says Caughill.
Steven Feld of 65 year old, a retiree in South Pasadena, Florida, struggled to get coverage for an injection to treat his arthritic knee. The treatment, a pre-filled injection given in a doctor’s office, is considered a medical device by the FDA, so the plan denied coverage twice. “When I was on my employer’s group plan, there was no problem covering the injection,” says Feld, who joined his Medicare Advantage plan in May.
After almost three months, the plan approved an alternative brand of injection. And Feld intends to stick with his Advantage plan, which includes the best doctors in his network, as well as a fitness plan. “The premiums are much lower than the group insurance I had,” says Feld.
According to a Recent Kaiser Study, If you get seriously ill, you could end up paying higher expenses in a Medicare Advantage plan than in Original Medicare. Analyzing the plan’s cost data, the researchers found that for five-day hospital admissions for pneumonia, half or more of Advantage beneficiaries would face higher costs than traditional Medicare (assuming that there was no supplemental coverage).
“People with Medicare Advantage often don’t realize they can pay more out of pocket for services until they reach the plan limit,” says David Lipschutz, associate director of the Center for Medicare Advocacy, a nonprofit group.
For those who live in rural areas, where there are fewer doctors and hospitals, the Advantage plan’s limited networks can be a barrier to getting the care they need. need. According to a recent study by Health Affairs, people living in rural areas have almost twice as likely to drop out of an Advantage plan for Original Medicare than those living in urban or suburban areas.
“The results suggest that people may be dissatisfied with their health care due to the difficulty to get to doctors’ offices and make appointments, ”says study co-author and doctor David Meyers, assistant professor of health services, policy, and practices at Brown University.
What to do
Start researching your options several months before you first enroll in Medicare, or before the open enrollment period, says Julie Carter, senior associate at Federal policies at the Medicare Rights Center. Start with these steps:
1. Evaluate your current coverage. If you are enrolled in Medicare, you may have already received a “notification annual change ”, in which you are informed about any change in the benefits of your plan. Call your insurance company or visit the plan’s website if you lost that letter.
With Medicare Advantage plans, you may see changes in doctors and hospitals included in their networks from one year to the next, so call your providers and ask if they will continue to be in the network next year.
There may also be changes to other plan benefits, such as vision coverage and maybe dental coverage , as well as on the plan’s “formulary,” or list of prescription drugs it covers, says Danielle Roberts, co-founder of Boomer Benefits , a Medicare insurance broker.
More than seven of each 10 People with Medicare do not review or compare their coverage options annually , according to a recent study by Kaiser. But not reviewing your plans may mean you end up paying higher costs, unnecessarily.
2. Compare the total of your out-of-pocket expenses. A part of your expenses will be the costs of monthly premiums, where Medicare Avantage may seem cheap. But it’s important to look beyond premium amounts and understand your potential out-of-pocket expenses, says Caughill of i 65. These may include copays and coinsurance or a percentage of your total bill.
“If you have a chronic illness and you have to pay 20% coinsurance for each office visit, you could spend thousands of dollars, which will be much more than you could save on premiums, ”says Caughill.
So look at the statement benefits and medical bills from last year, and then add up what you paid in deductibles and copayments to get your plan’s true costs. Then consider what you could pay the following year, if you have, for example, a knee replacement or an accident.
For many people, opting for a Medigap plan offers more financial security. That’s what Bill Burton concluded from 66 years, a College Park retiree, after doing the math.
“I figured I’d end up paying more in copays and deductible for hospital and doctor bills with an Advantage plan than what you would pay in Medigap premiums, ”says Burton, who will be switching from his wife’s employer plan coverage to Medicare.
3. Consider the consequences of the change. When you initially enroll in Medicare at 65 years, you have a guaranteed issuance right to purchase a Medigap plan. And insurers are required to renew your Medigap coverage every year, as long as you continue to pay your premiums.
But if you try to buy a Medigap policy after the initial enrollment period, insurers may reject you with based on your health or charging you higher prices due to a pre-existing condition, says Roberts of Boomer Benefits.
There are exceptions: Some states offer greater protections, so be sure to check them out. And if you choose a Medicare Advantage plan when you first enroll or for the first time after having had Original Medicare with a Medigap policy since you met the 65 years, you usually have a trial period of 12 months in which you can switch to Original Medicare and have guaranteed access to a Medigap plan.
You may be able to switch Medigap plans later, but the process can be tricky, as you can be turned down due to your medical history, says Roberts. So don’t give up your current policy until a new one is approved.
4. Take advantage of helpful resources. When you’re ready to start reviewing plans, check out the Medicare plan search tool , which will allow you to compare drug plans Medicare Advantage and Part D prescriptions available in your area. (You can also get this information by calling Medicare at 800 – 476 – 4227.)
If you are looking for a Medigap plan, you can also start at Medicare.gov , where you can compare the different types of coverage, as well as find the policies available in your zip code.
Another good resource is the State Health Insurance Assistance Program (SHIP), which offers free telephone counseling. To find your state’s program, visit ShipHelp.org or call 877 – 877 – 2675.
Low-income seniors can get help paying costs through Medicare Savings Programs. To find out if you qualify, search for “help paying costs” on Medicare.gov or call your state SHIP program.
When you’ve made your selection, enroll in your new plan by calling to Medicare at 800 – 800 – 4227, if you want to switch to Original Medicare, or by calling your insurer or an independent Medicare broker that offers products from multiple companies. (Be sure to write down the information from your phone conversation with the representative in detail in case a problem arises later.)
Or, if you determine that your current plan is still the best, do not worry. Enrollment in your plan will automatically renew at the beginning of the year.
Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2021, Consumer Reports, Inc .
Consumer Reports does not have no financial relationship with advertisers on this site. Consumer Reports is an independent nonprofit organization that works with consumers to create a just, safe, and healthy world. CR does not endorse products or services and does not accept advertising. Copyright © 2021, Consumer Reports, Inc .