The Disadvantages of Medicare Advantage Plans

The Disadvantages of Medicare Advantage Plans
••• Stockbyte/Stockbyte/Getty Images

Private insurance companies offer Medicare Advantage as an alternative to original Medicare hospital and medical coverage. MA plans usually pay for prescriptions, unlike original Medicare. In addition, these plans generally charge a lower premium than original Medicare, or none at all. Nonetheless, Medicare Advantage plans aren't necessarily the best for everyone because they restrict your choices and have other disadvantages.

You Have Fewer Choices

Medicare Advantage plans must offer at least as much coverage as Medicare A and B for hospital and medical insurance. After that, the insurance companies make the rules. These plans operate as health maintenance and preferred provider organizations, so they use a network of approved of health care providers.

If you want to go outside the network, you may pay more or have no coverage at all. The company also decides when you must have a referral to see a specialist, and what care is medically necessary and therefore covered by insurance.

You Can't Join or Change at Will

You can only join a Medicare Advantage plan or change from one Medicare Advantage plan to another during the open enrollment period, which is between October 15 and December 7 of each year. You can switch from Medicare Advantage to original Medicare both during this open enrollment period and from January 1 to February 14.

Outside the enrollment periods, you can't change plans, even if the insurance company has dropped your doctors from its network. You also can't enroll in an MA plan if you have end-stage kidney disease.

You May Pay Higher Costs

Medicare Advantage plans limit your annual out-of-pocket costs for covered products and services, but the limit depends on the particular plan. Your costs typically include a deductible, which is the amount you must cover before insurance pays. Most plans also charge you a percentage of the cost for certain services, called coinsurance, and a fixed amount for other goods or services, called a copayment. The insurance company decides what's medically necessary, so you may end up paying the entire cost of services it denies, such as nursing care.

If you need many services, you can incur higher costs with MA than with original Medicare plus supplemental insurance, or Medigap, which helps cover out-of-pocket costs. Medigap isn't available with Medicare Advantage.

You Live With Uncertainty

Health insurance companies offer Medicare Advantage on yearly contracts with Medicare. Each year, any company can decide to stop offering Medicare Advantage, leaving you to find new coverage. Each year, the company can completely change the rules, such as increasing your monthly premium, copayments and coinsurance and reducing your benefits.

At any time, the company can drop health care providers from its network. Doctors and other providers also can leave the network whenever they want.