Medicare Advantage Plans (2025 updates) Pros and Cons

More than half of people on Medicare are enrolled in a Medicare Advantage plan, but is that a good thing, or are these plans not all they are cracked up to be? Today I'm explaining the pros and cons of Medicare Advantage plans for this coming year, so stay tuned. If you're not familiar, Medicare Advantage plans are also known as Part C of Medicare, so this is one of the optional parts of Medicare. And if you choose to enroll in a Medicare Advantage plan, then essentially you are choosing to receive your Medicare benefits through a managed care program administered by a private insurance company that's contracted with Medicare. So it breaks down like this. Everyone who's enrolled in Medicare has two main options on how they can get their coverage. Option number one is to go with traditional Medicare Parts A and B. This is your hospital and medical coverage that you're receiving through the federal government Medicare program. Essentially, it's kind of like 80-20 coverage where Medicare pays 80% and you're responsible for the other 20% of your medical bills. Now from here, you can choose to add on a Part D prescription drug plan to cover prescriptions that you would pick up at the pharmacy, and many people that go this route will also choose to add on a Medicare supplement plan, also known as a Medigap plan, and those plans are designed to cover the 20% that traditional Medicare doesn't pay. Now, alternatively, the other option is to go with Part C, also known as Medicare Advantage. And that's what we'll dive into today. So Medicare Advantage is not traditional Medicare. It's important to differentiate. Now while you must be and remain enrolled in Medicare Parts A and B in order to choose a Medicare Advantage plan, once you enroll in a Part C Advantage plan, you are essentially replacing your traditional Medicare benefits with this Medicare Advantage managed care plan. So instead of your doctor or hospital billing traditional Medicare when you go in, they are now billing your Medicare Advantage insurance company. So say Humana or Aetna or whoever your insurance carrier is through, they are the one paying on your medical claims. So why would someone choose a Part C Medicare Advantage plan over traditional Medicare? Let's break down some of the pros of these plans. Well, in most parts of the country, Medicare Advantage plans are $0 a month. So some people call them free Medicare plans. It's not exactly free Medicare because you have to continue to pay your Part B premium typically, but these plans often have a $0 per month premium on top of your Medicare Part B premium. They also usually include prescription drug coverage, Part D benefits rolled right into the plan, and they include a maximum out-of-pocket, a cap on covered medical expenses. Additionally, these plans also have usually extra benefits rolled right into the plan. So you may see things like dental or vision or hearing benefits, things that are not covered on traditional Medicare are often rolled into these $0 a month Medicare Advantage plans. Some plans also include things like an over-the-counter pharmacy benefit, so you get extra dollars that you can use every month or every quarter to pay for some over-the-counter items at the pharmacy, things like aspirin. These benefits are very attractive to a lot of seniors. In fact, the idea of a free dental benefit alone is enough to entice many seniors to enroll in one of these Medicare Advantage plans. But when something sounds too good to be true, there are probably some disadvantages to it as well. So I do want to mention some of the cons to these Medicare Advantage plans. So I'll mention a few of the negative aspects of these plans, but I'm going to save the biggest con for the end. So please watch to the end if you want to truly weigh your Medicare options. Okay, so con number one is planned networks. These plans contract with doctors and hospitals every year, and many plans offer no coverage out of network, or if you do go out of the network, you may have to pay a much higher cost share for your services. And many large hospital facilities like MD Anderson or Mayo Clinic are notorious for contracting with little to no Medicare Advantage plans. So if you want to see a specialized hospital or specialist, you may or may not be able to if you have a Medicare Advantage plan. Con number two is co-pays and co-insurance. These plans are kind of like pay-as-you-go plans. They have a low or $0 monthly premium, but you are responsible to pay co-pays and co-insurance when you go to the doctor, hospital, get testing done, et cetera. And you'll pay out-of-pocket until you meet your plan's annual maximum out-of-pocket limit for the year. Now the maximum out-of-pocket limit can vary depending on the plan that you have and whether you're in network or out of network. So it could be as low as a $2,000 to $3,000 per year maximum out-of-pocket cap, but it could be as high as $8,000 to $10,000 per year. So if you're pretty healthy or rarely seeing the doctor, it can be great. But if you get hit with a major medical event, let's say something like cancer, you generally have to pay 20% of the cost of your chemotherapy treatment until you reach your plan's maximum out-of-pocket limit. And that resets every January 1st. Another con to these plans is the need for prior authorization. Now traditional Medicare, also known as original Medicare, rarely requires prior authorization for any services. The government program generally covers medically necessary services without requiring you or your doctor to complete forms in advance or even requiring a referral to see a specialist. But when it comes to Medicare Advantage, most Medicare Advantage plans do require prior authorization on at least some medical services. Usually this will be for more costly services, things like hospital stays, cancer treatment, skilled nursing facility care, etc. And it's up to the insurance company whether or not to approve or authorize these services. One of the biggest complaints we hear when it comes to Medicare Advantage is skilled nursing care. Your doctor may say you need several weeks or several months in a skilled nursing facility, but the insurance company could only approve you for a few days or a few weeks, even if your doctor says you should be in there longer. Now fortunately, most people on Medicare Advantage plans won't have to worry about this. Most people on a Medicare Advantage plan won't meet their out-of-pocket limit each year. But if you are one of the unlucky ones that does have to deal with something like this, it can be a headache to say the least. Some people feel like it's a nightmare. Now CMS has finalized a rule recently aimed at streamlining the prior authorization process. So policyholders can hopefully get a faster turnaround time on these authorization decisions, and hopefully fewer prior authorizations will get denied. However, this is something to be aware of if you are considering a Medicare Advantage plan is the potential for these types of prior authorization issues. Again, some folks won't get impacted by this, but for others, it can be a very big deal. So I've included more information in the show notes below. When it comes to prior authorizations and Medicare Advantage, please feel free to review that if you want to go in more depth on that topic. There's a lot of information about it. Now the final con that I want to mention isn't so much a Medicare Advantage specific con, but it has to do with what happens if you are on a Medicare Advantage plan that isn't working for you and you want to get off of it. Now most people wrongly assume when they are choosing between a Part C Medicare Advantage plan and say a Medicare supplement plan that goes with traditional Medicare, that they'll be able to switch back and forth every year depending on their needs. But it's important to know two things. First is that Medicare Advantage plans are calendar year contract plans. So generally when you sign up for a Medicare Advantage plan, that is your plan for the full calendar year. And even if your doctor stops taking the plan in the middle of the year, you're still kind of locked into that plan for the full calendar year unless you have a very specific type of qualifying event like moving out of your plan's service area. The other important thing to know is if you do want to drop your Medicare Advantage plan at the end of the year and go back to traditional Medicare, Medicare supplement plans, those are the plans that cover the 20% that traditional Medicare doesn't cover, those plans do not have an annual open enrollment period. So in all but four states, if you want to purchase a Medicare supplement plan, you may need to pass through medical underwriting in order to qualify. Now when you're brand new to Medicare, you can get a Medicare supplement plan without any health questions. But when you're no longer new to Medicare, you may need to health qualify for a Medicare supplement plan. And depending on your current health or your health history, they could just deny your application for coverage. So it happens often where someone will call into our office in their 70s, they've been on a Medicare Advantage plan for a while, but it just isn't working for them anymore. And they want to switch back to traditional Medicare and get a plan G. But once we ask them about their health or their health history, we have to let them know that they are likely not eligible for a Medicare supplement plan, meaning that if they do decide to return to traditional Medicare, then they would be responsible for that full 20% that Medicare doesn't cover. And this can oftentimes leave seniors feeling stuck. So it's very important to know, especially when you are brand new to Medicare, the pros and cons of these different options, because you may or may not be able to switch back and forth every year. It's really going to depend on your health and where you live. Now, Medicare Advantage plans are not all bad. Here in my office, we help people with Medicare Advantage plans. We help people with Medicare supplement plans. Really, the best plan for you is going to depend on your needs, your budget, and where you live. And there can be some Medicare Advantage plans that are very decent options. I usually recommend trying to go with a PPO plan over an HMO plan. Additionally, certain insurance carriers are better than others when it comes to approving and paying on claims. So no matter which direction you're deciding to go in, I definitely recommend talking to a knowledgeable independent broker to help guide you. Now, of course, that's what we do here in my office. We would be delighted to help you. My team and I are licensed in 46 states. Our service is 100% free of charge. And we would love it if you gave us a call. But even if you don't work with my team, find someone who's very knowledgeable, works with both Medicare Advantage and Medicare supplement plans that can help get you the information you need to make an educated decision. You really want someone that can give you the inside scoop on what your best options are. Thank you so much for watching. I hope this video helped go over the pros and cons of Medicare Advantage plans so you can better understand what your best options are for the coming year. Thanks again for watching, and we'll see you soon.