Disadvantages Of Advantage Plans

Advantage Plans are offered by private companies, such as UnitedHealthcare and Humana, approved by Medicare. They are all-in-one programs that may appear to provide advantages over original Medicare, such as reduced or nonexistent premiums. But it is a balancing act, as they may require higher copays and out-of-pocket costs and may have a more limited number of providers.

You must research carefully to match plans with your individual needs. The catch is that nobody knows the future; you will have to guess the amount of health care you will need. Will you become unhealthy? Have an accident? Might you suddenly require expensive treatments? Your long-term health affects your Medicare decision.

Limited choice of services

Many Medicare recipients find their more limited choice of physicians and medical facilities is the chief shortcoming of Advantage Plans, which require patients to use a doctor within a prescribed network. Some Advantage Plans charge higher fees for out-of-network care or refuse coverage outright. The most restricted Advantage Plans work like HMOs; Advantage PPO plans allow more flexibility but cost more.

Original Medicare, however, allows you to see any doctor who accepts Medicare, which would include over 90% of U.S. primary care physicians.

Network limitations might give pause to customers with specific needs, as the ideal specialists, or even a particular doctor to whom you may already be committed, might not be in network. Furthermore, patients who live in rural areas may be frustrated by more limited networks. (They are most likely to switch to original Medicare.) In any case, if you are considering an Advantage Plan, start by checking with all your regular health providers as to their network status. And keep checking, as networks change their doctors from year to year.

Another key distinction is that Advantage Plan networks, particularly the HMOs, are usually connected to certain geographic areas. If you are outside that area, you may not be covered for nonurgent, nonemergency care. However, some Advantage Plans might offer extra benefits (at a price) for international travel. Again, check with your plan to avoid nasty surprises.

Authorizations and denials

Other main drawbacks of Advantage Plans are requirements for referrals from PCPs, as well as the potential denial of benefits for care deemed not medically necessary. About 80% of the plans insist on prior authorization for services, such as those involving more expensive equipment, certain drugs and in-patient hospitalizations. Preventive services also may not qualify. Other types of services requiring prior authorization might include X-rays, CT scans, MRIs and stress tests. (Some rural hospitals, out of overall concern for patients’ health, actually absorb the costs of such services themselves.)

Denials and delays may prove disastrous if patients become unexpectedly ill midyear. After the open enrollment period is over, it is probably too late to change plans or add Medigap (extra insurance coverage). Furthermore, waiting through the prolonged process resulting from denials of service can worsen patients’ health conditions.

You can appeal a denial of service, but do not assume that you will necessarily win, even with the full support of your loyal PCP. According to a Kaiser Family Foundation report, in 2021, over 35 million requests for preauthorization were filed with insurance companies. About 6% of them were denied, although a ray of hope is that most of those who appealed eventually won. Be aware that the insurers who make the decisions need to justify denials with a reason, such as inadequate documentation.

The advertising blitz

The incessant stream of ads for Advantage Plans kicks off as soon as enrollment season opens. Not only are the ads annoying, they also can be misleading. They fail to explain Advantage Plans clearly and sound as if they come from the government. They don’t!

The ads emphasize perks such as free vision, hearing, dental and/or fitness coverage but neglect to discuss higher copays. For example, daily copays apply immediately upon hospital admission, compared to original Medicare which allows the first 60 days free.

Your adviser should be able to help you decide whether Advantage Plan limitations justify the cost savings.