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Dangers of Medicare Advantage

Medicare Advantage plans, also known as Medicare Part C, were introduced in 1997 to give Medicare enrollees the option to receive their medical coverage through private insurers. Medicare Advantage plans give beneficiaries more freedom of choice and the opportunity to tailor a health plan to their needs. However, there are some potential dangers associated with Medicare Advantage plans.

  1. No Standardization

    • Unlike Medicare Part A and B plans and Medicare Supplement policies that offer standardized coverage, Medicare Advantage plans vary greatly as far as what they actually cover and in what amounts. Unless the policyholder has a thorough understanding of his policy and takes the time to compare it to traditional Medicare, he may not be covered for items that are important to him.

    Higher Out-of-Pocket Maximums

    • According to the U.S. News & World Report Health website, in a 2008 Government Accountability Office (GAO) report, 52 percent of Medicare Advantage plans did not have maximums for out-of-pocket spending as of 2007. This means that in many cases, beneficiaries were spending more out of their own pocket than they would have under Medicare Part B for similar occurrences.

    Higher Costs for Major Items

    • The same GAO report also indicated that beneficiaries in need of certain Medicare services were projected to pay more through Medicare Advantage plans than they would have through traditional Medicare. Nineteen percent face higher out-of-pocket expenses for home health care, 16 percent paid more for in-patient hospitalization, and 9 percent faced higher costs for skilled nursing care.

    Plan Changes

    • Because Medicare Advantage plans are managed care plans, beneficiaries are typically required to see health care providers that are part of a specific network. If the insurance company decides to change networks, beneficiaries could be forced to change doctors. Also, if the company decides to terminate coverage in a specific geographic area or goes out of business, beneficiaries could be left without coverage.

    Limited Coverage Areas

    • Some Medicare Advantage plans may not provide coverage in a specific area. For seniors who like to travel, this could mean they would be without coverage if they are injured or become ill while vacationing in another state or country.

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