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Medicare Advantage Plans: Are They Good or Bad?

3 minute read

Devon Taylor

By Devon Taylor

A Medicare Advantage Plan, also called “Part C” or an “MA Plan,” combines hospital insurance, medical insurance, and prescription drug coverage into one single plan. Essentially, a Medicare Advantage Plan covers all necessary Medicare services. Some Medicare Advantage Plans include additional coverage for things such as vision, hearing, and dental services. These plans are provided by private health insurance companies that are approved by Medicare. So why do some people think that Medicare Advantage plans are bad?

While rolling all your health insurance into one plan might sound great, there are drawbacks. These plans can sometimes be more complicated and expensive than they seem at first glance. For example, most Medicare Advantage plans entice customers with promises of $0 premiums. In reality, though, they often charge out-of-pocket expenses once people get sick. As always, the devil is in the details. Here we breakdown the positives and negatives of Medicare Advantage plans.

How The Plans Work

All health insurance companies that offer “Medicare Advantage plans” must accept Medicare-eligible enrollees. In this regard, the plans are advantageous because they cannot deny anyone coverage. Additionally, MA Plan customers can simply switch back to “Original Medicare” during an annual enrollment period. Original Medicare plans typically include hospital insurance and medical insurance, but not coverage for prescription drugs, vision, hearing, or dental.

Medicare Advantage plans are sold as an all-in-one alternative to original Medicare Plans that don’t cover all healthcare needs. Most MA plans require patients to go to a pre-determined network of doctors or healthcare providers. Since Medicare Advantage plans can’t pick and choose their customers (they must accept all Medicare-eligible participants), they discourage anyone who is already sick by the way they structure their copays and deductibles. There are also complaints that they don’t allow sick individuals access to their preferred healthcare providers. As you can see, MA plans may not work for everyone.

Costs and Premiums

The premiums paid and costs associated with MA plans can also be more expensive than they first appear. Copays, for example, can cost as much as $300 for an ambulance or $175 per day for a hospital stay. Lab service fees can cost up to $100. Out-of-pocket costs can quickly add up if you become sick (or an existing condition worsens). Medicare Advantage plans may offer a $0 premium, but the out-of-pocket costs may not be worth those initial savings if you fall ill.

While you might be able to save money with a MA plan while you are healthy, things can turn quickly. If you get sick, you might be stuck with hefty out-of-pocket costs. You won’ be able switch plans until the next open season for Medicare. At that time, you could switch back to an original Medicare plan. However, it might be a long (and costly) wait.

Why Medicare Advantage Plans Are Bad

Other problematic issue with MA plans is the fact that care can actually end up costing more than it would under original Medicare. This is particularly true if you suffer from a very serious medical condition. Additionally, some private health insurance companies are not very financially stable. They may suddenly cease coverage without warning.

Since these plans tend to only cover certain doctors or healthcare providers, your network can sometimes change suddenly. That might lead to a break in the continuity of your care. Stringent restrictions around choosing doctors, hospitals, and other healthcare providers can make it difficult to get the medial treatments you need. Plans that include coverage for prescription drugs often ration high-cost medications or force people to purchase the cheaper generic versions.

The Bottom Line

Medicare Advantage plans are not always as wonderful as they are made out to be. While the $0 premium may be enticing, the reality is that the out-of-pocket expenses and restrictions end up making them expensive over time. These plans are best for those who are relatively healthy.

For anyone with pre-existing conditions or who suddenly becomes ill, Medicare Advantage plans can become very costly, very quickly. As always, it pays to shop around and to read the fine print. Be sure to review a list of all co-pays, deductibles, and fees included in a Medicare Advantage plan before signing up. Make sure to find out if any medications you already take are covered. If you find that a plan you’re considering doesn’t cover your current physicians or medications, then you may want to pass. As always, knowledge is power.

Medicare Advantage PlansShutterstock
Devon Taylor

Managing Editor

Devon is an experienced writer and a father of three young children. He's simultaneously trying to build college funds and plan for an eventual retirement. He's been in online publishing since 2013 and has a degree from the University of Guelph. In his free time, he loves fanatically following the Blue Jays and Toronto FC, camping with his family, and playing video games.


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