Individuals should tread carefully and do their homework if they’re considering enrolling in Medicare Advantage, Medicare-approved health plans offered through private insurance companies. Enrollees may end up paying steep costs for specialty care and get locked in plans that don’t meet their healthcare needs in their senior years, advisors shared.
Maryann Vognild, a St. Louis-based wealth advisor at Buckingham Strategic Wealth, said there’s been a “big push” in recent years to get more people enrolled in Medicare Advantage plans. The plans offer enrollees perceived perks — like dental or vision coverage, gym memberships, or other discounts — to sign up.
Those perks rarely outweigh the challenges many face once in those plans, she said.
“This is something I’m really passionate about because I think the outcomes can be really hard,” Vognild said. “There’s pros and cons, and you need to go into it eyes wide open.”
Around 18 months ago, one of Vognild’s clients expressed interest in a Medicare Advantage plan, after estimating that they’d save thousands of dollars per year due to lower insurance costs and covered gym membership expenses and other perks.
“The challenge is, you’d be giving up choice,” Vognild said, adding that “nothing is ever free.”
“Most of these Medicare Advantage plans won’t pay anything in an out-of-network tier. Under most of their plans, it’s structured so that the primary care doctor loses money for referring you to an out-of-network specialist. It really provides a disincentive for your primary care doctor to refer you out. They are less likely to refer you, but you may need that care,” Vognild said.
Medicare Advantage & End-of-Life Care
Medicare Advantage enrollees often end up switching out of these plans because they don’t cover all of the medical benefits that traditional Medicare plans would, Vognild said.
“Many people are switching off of the Medicare Advantage plans right at end-of-life, because outcomes have been so poor [for their current care or coverage], so they switch back to traditional Medicare — and that costs taxpayers a lot of money.” In some cases, enrollees “are not getting the services they need, because everything is being denied,” Vognild added.
A recent analysis by The Wall Street Journal, which covers switches from 2016 to 2022, found that individuals in their last year of life switched from Medicare Advantage to traditional Medicare at double the rate of other enrollees. Taxpayers, not insurers, ended up footing the bill for end-of-life care services, which ended up being double the cost ($218 per day) of Medicare recipients who were in the last year of their lives.
Seniors Should Consider Their Individual Needs
Marci Bair, president and founder of Bair Financial Planning, said in an email to ETF Trends that “each senior needs to seek the advice of an independent Medicare insurance specialist to evaluate what plan is best for them based on their health needs and financial circumstances.”
She does not believe one option (Medicare vs. Medicare Advantage) is generally better than the other. However, “one might be more appropriate than the other,” for each person’s individual needs.
“Major items to clarify are the senior’s income as well as the network of doctors they want to see, their medical conditions, and prescriptions that they currently take. A good independent Medicare insurance specialist should be able to help educate them on what plan is best for them,” Bair wrote.
Medicare Advantage commonly doesn’t work for individuals with established care from out-of-network doctors. “They don’t find out until it’s too late to switch back,” Bair said.
“It’s important to do your homework ahead of time…so you don’t have any surprises or disappointments after the fact,” Bair added.
It Costs to Switch From Medicare Advantage
For Medicare Advantage enrollees who want to switch out of the program, it usually comes with increased costs.
“You can switch out of these Medicare Advantage plans [during annual enrollment]. But when you switch out — since you’ve effectively been off of Medicare — the costs of you getting back into the Medicare system may be different,” Vognild said.
Overall, Medicare Advantage plans would be more suited for seniors who are okay with the extra effort required, especially for specialty care, she said.
Enrollees may have to jump through extra hoops. This could look like having to “convince your primary care doctor to refer you to a specialist, and potentially lose money out of their pocket to do so,” she added. “When it comes to testing and procedures, all of that has to be approved first by the Medicare Advantage plan. If you don’t get it approved, it’s not paid for.”
“If it’s just a matter of trying to be frugal, this is not the place to try [that]. You are giving up so much choice,” Vognild cautioned.
Government Matters
In late September, the National Association of Insurance Commissioners sent a letter urging the Centers for Medicare & Medicaid Services to provide guidance regarding Medicare Advantage concerns.
NAIC members noted an increase in hospitals and other healthcare providers withdrawing from Medicare Advantage plans, “which can leave enrollees without ready access to care,” the letter said.
“State Departments of Insurance across the country are fielding consumer inquiries about the withdrawal of their providers from [Medicare Advantage] plans and since states do not regulate these plans, DOI staff are unable to offer recommendations to consumers beyond referring them to CMS or the administrator of their [Medicare Advantage] plan. Without clear guidance or a resolution from CMS, these consumers are left with few options,” the letter stated.
On November 26, the Centers for Medicare & Medicaid Services proposed new rules revising the Medicare Advantage program, which would push these plans to offer higher-quality coverage for recipients.
CMS proposed new protections to address marketing practices that could mislead seniors and those with disabilities. Other changes seek to improve access to prescription drugs and behavioral health benefits, and provide more clarity on the usage of Medicare Advantage debit cards.
Meena Seshamani, CMS Deputy Administrator and Director of the Center for Medicare, said in a statement on the proposed rules that the agency was aware of Medicare Advantage concerns and working to address them.
“We continue to hear from people enrolled in Medicare Advantage who are having difficulty accessing the care they need and are entitled to, and CMS remains focused on removing these barriers,” Seshamani said. “Whether it’s difficulty navigating options, being able to afford the lifesaving medications you are prescribed by your doctor, or receiving the inpatient or rehabilitation care you need to get well, no senior or person with disabilities on Medicare should be having these challenges.”
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