Once you turn 65, you're generally entitled to healthcare coverage under Medicare. But from there, you have a choice.
You could stick with original Medicare, which consists of Part A (hospital care), Part B (outpatient care), and a Part D prescription drug plan. Or you could sign up for a Medicare Advantage plan.
Medicare Advantage plans are offered by private insurers. You may find that these plans are similar to the health insurance plans you may have had through different employers.
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One reason seniors tend to be drawn to Medicare Advantage plans is that they commonly offer a wider range of coverage than original Medicare. Many Advantage plans, for example, pay for dental cleanings and eye exams, whereas original Medicare will not pick up the tab for those services.
Medicare Advantage plans often go well beyond just extras like dental and vision services, too. A good number of these plans offer wellness benefits, like fitness club memberships. And some offer nutrition benefits, including meal delivery. But while Medicare Advantage plans certainly offer some advantages, there can be serious drawbacks to enrolling in one of them.
An increasingly popular option that may backfire on a lot of enrollees
A good 51% percent of eligible beneficiaries are currently enrolled in Medicare Advantage, according to data from Axios. That's an 8% increase from 2022.
While it's clear that seniors are increasingly drawn to Medicare Advantage plans, enrolling isn't always the best move. And a big reason stems from the strict rules these plans impose.
With original Medicare, you can see any provider in any office that accepts Medicare. With Medicare Advantage, however, you're limited to a specific network of providers that may not be vast. And going outside of your network could prove to be very costly.
Also, while Medicare Advantage plans tend to offer supplemental benefits, you may not automatically be eligible to benefit from them. If you don't have a health condition that can be treated or improved by diet, for example, then you may not be entitled to nutrition benefits or meal delivery, even if these are components of the plan you've chosen.
Plus, Medicare Advantage plans are notorious for making it difficult for patients to get authorization for procedures or diagnostics that they need. That can put providers in a tough spot.
In fact, hospitals and medical providers are increasingly dropping Medicare Advantage plans due to issues with payment rates and difficulties with preapproval for necessary care. Just recently, two large medical groups affiliated with Scripps Health in Southern California announced they would no longer accept Medicare Advantage plans, leaving more than 30,000 seniors in the San Diego area scrambling to find new healthcare providers.
A big part of the problem is the way these plans are marketed. Medicare Advantage plans are often touted as offering extra benefits with lower out-of-pocket costs. But those extra benefits can't always be utilized by enrollees. And getting Medicare Advantage plans to preauthorize treatment can be a major struggle for providers -- so much so that they're unable to give their patients the care they'd like to give them.
Be careful with Medicare Advantage
You may be inclined to make a last-minute switch to Medicare Advantage at the tail end of open enrollment. Or you may be thinking of switching to an Advantage plan in the future. Either way, make sure you read up on the benefits of these plans, as well as the drawbacks, so you don't wind up sorely regretting your decision after the fact.
