Should You Get a Medicare Advantage Plan?

You may or may not have heard of Medicare Advantage plans, but you would do well to learn more about them. After all, as of last year, more than 17 millionAmericans had enrolled in them, up from about 7 million in 1999. Enrollment in them has been steadily rising for more than a decade and now represents about 30%of the entire Medicare market. Should you enroll in a Medicare Advantage plan? You may well want to, once you review their upsides and downsides.

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Medicare Advantage in a nutshell

When you enroll in Medicare -- which you can do at age 65 -- you can choose either the "original" Medicare package of Part A and Part B (covering, respectively, hospital and medical expenses) or a Medicare Advantage plan, sometimes referred to as Part C. Those who opt for original Medicare typically augment it with Part D prescription drug coverage and sometimes a "Medigap" supplemental coverage plan, too.

Medicare Advantage plans debuted in 1995. Offered by private organizations such as health insurance companies and regulated by the federal government, they are required to offer at least as much coverage as original Medicare (i.e., Part A and Part B benefits).

During any Medicare enrollment period, you can choose between original Medicare (Parts A and B) and Medicare Advantage plans. And if you're not happy with your decision, you can make a different choice in the next enrollment period.

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Why sign up for Medicare Advantage?

Here are some reasons to favor Medicare Advantage plans:

  • Many Medicare Advantage plans, unlike original Medicare, cover hearing, vision and/or dental care. Medicare Advantage plans also typically include prescription drug coverage, while those with original Medicare have to sign up for -- and pay for -- Part D coverage.
  • A Medicare Advantage plancan cost you less. Original Medicare will often have you footing 20% of many bills with no limit on how much you might have to pay out of pocket. (Paying only 20% can seem OK until you get a bill for $50,000 and suddenly have to cough up $10,000.) A Medicare Advantage plan might charged you a certain copay per doctor visit or service, and many services will simply be paid for through your premium. Medicare Advantage plans also feature out-of-pocket spendingcaps. (The average out-of-pocket cap was recently $5,223,but many plans feature caps below $3,000 and the limitfor 2017 is $6,700.) Once you hit the limit, the plan will pay all further costs. Better still, many plans charge the enrollee nothing in premiums. (The Medicare program pays the insurance company offering it a set sum per enrollee and if the insurer thinks it can make a profit without charging its customers anything, it can do so.) The average monthly premium for Medicare Advantage plans was recently$33.
  • While original Medicare can't be used outside U.S. borders, some Medicare Advantage plans offer coverage abroad.

Medicare Advantage plans are probably sounding pretty good right now. They're not perfect, though.

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Why you might not want a Medicare Advantage plan

Here are some downsides:

  • It can be hard to compare Medicare Advantage plans, because of their different costs and fee structures and the different kinds of coverage they offer. Here's a tip, though: The Medicare system rates Medicare Advantage plans (and Part D plans), so look for ones with higher star ratings, as they will likely serve you best. (The top score is five stars.) Medicare Advantage plans earn their stars by being evaluatedon measures such as how well they're keeping their members healthy (via screenings, checkups, and more), how well they're managing members' chronic conditions, and how good their customer service is. You'll find the star ratings of plans available to you by using the Medicare Plan Finder at the Medicare website. (Another nifty thing about five-star plans is that they don't limit you to the usual enrollment period. If you're switching into a five-star plan, you can do so throughout mostof the year, from December 8 through November 30.)
  • A Medicare Advantage plan won't necessarily cost you less than original Medicare would. You need to take a close look at any plan you're considering and compare it with original Medicare, keeping your health profile and likely healthcare needs in mind. (For example, if most of your healthcare costs are related to prescription drugs, see which plan offers the best deal related to the drugs you take.)
  • While original Medicare lets you see any healthcare provider in the country who accepts Medicare, Medicare Advantage plans, often operating as HMOs or PPOs, will typically limit you to a network of doctors -- though these networks are sometimes very big. But even with a big network, if you travel frequently, you may find yourself far from service providers in your network.
  • Medicare Advantage plans may require you to follow certain rules regarding getting care, such as getting a referral to see a specialist from your primary care physician.
  • If you have a Medicare Advantage plan that you like, it may not be around next year. The insurance companies offering Medicare Advantage plans have contracts with Medicare that are not always renewed from year to year. Even when renewed, some terms of the plan may change, such as which drugs are covered.
  • Some members have reportedthat getting emergency or urgent care is more difficult with a Medicare Advantage plan than with original Medicare. It can be worth looking into how emergency care will work in any plan you're considering.

When it comes to choosing the best health insurance plan in retirement, there's no one-size-fits-all solution. Look into all your options and see which makes the most sense for you. Do the math, comparing premiums, copays, deductibles, and so on -- to see which plan is likely to cost you the least and/or offer more coverage.

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Longtime Fool specialistSelena Maranjian, whom you can follow on Twitter, owns no shares of any company mentioned in this article.The Motley Fool has a disclosure policy.