What You Don't Know About Medicare Advantage Could Cost You

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Many older Americans don't realize that when they enroll in Medicare, they 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. There's a lot to like about Medicare Advantage plans, but they have some drawbacks, too.

Meet the Medicare Advantage plan

Medicare Advantage plans are administered by private insurers such as Blue Cross Blue Shield and UnitedHealth Group but are regulated by the U.S. government. Why might you opt for such a plan? Well...

  • While original Medicare doesn't cover hearing, vision and/or dental care, many Medicare Advantage plans do.
  • While those opting for original Medicare generally sign up for Part D (prescription drug coverage), too, Medicare Advantage plans often include such coverage. Having your costs capped may help you sleep better. Image source: Getty Images.
  • While original Medicare will often have you footing 20% of many bills with no end in sight, a Medicare Advantage plancan cost you less. You might be charged a low copay per doctor visit or service, for example. Medicare Advantage plans also feature out-of-pocket spending caps,too. The average out-of-pocket cap was recently $5,223, but many plans feature caps below $3,000 and the limit in 2016 was $6,700. (Of course, you can always add Medigap supplemental coverage to original Medicare for more financial protection.)
  • While original Medicare can't be used outside U.S. borders, some Medicare Advantage plans offer coverage abroad.

Note, too, that choosing to go with a Medicare Advantage plan is not a permanent decision. At least once a year, you can switch into and out of Medicare Advantage plans and original Medicare.

Drawbacks of Medicare Advantage plans

So far, Medicare Advantage plans may sound great to you. The upsides are indeed significant, but there are downsides, too. For example:

  • 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. Be sure to see what break you'll get on the drugs you take with any plan you consider. Image source: Getty Images.
  • 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 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. Even with a big network, though, 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.

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