Medicare Advantage plans provide you with an alternative to getting traditional Medicare coverage from the government.
When you sign up for an Advantage plan (also known as a Medicare Part C plan), you'll get Medicare benefits from a private insurance company. Your Advantage plan must cover everything that Medicare Parts A and B pay for, and it may also include prescription drug coverage and some extra benefits that traditional Medicare doesn't offer.
That all sounds pretty great.
But Medicare Advantage plans have some big problems that may not be highlighted in the marketing materials that insurance companies often target seniors with.
It's critical that you know about a few major issues in particular that could make Medicare Advantage the wrong choice for you. Here are three Advantage Plan problems you should be aware of before you sign up for coverage.
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1. You may not be able to see your chosen doctor
If you have original Medicare, you have your pick of providers, as you can see any doctor nationwide that accepts Medicare (which is most physicians). However, if you have a Medicare Advantage plan, your plan will typically have a provider network. This provider network could be pretty narrow, and it can also change from year to year.
This means that doctors you would prefer to see may not accept your insurance, and a doctor who is in your network one year may not be the next. Unfortunately, the result is that you may be forced to switch providers or incur significantly higher costs to see the doctor of your choosing.
If you don't have a ton of extra money in your retirement plans to do that, that could be a big problem in terms of quality and consistency of care.
2. You may have limited coverage when you travel
Those Medicare Advantage networks mentioned above could be a big problem for another reason. Your network will probably consist primarily of insurers in your local area. This means if you go outside of your home state for vacation, you may not be able to find an in-network doctor at all.
Typically, a Medicare Advantage plan would have to cover emergency medical services even if you were outside of the region that your network covered. But if you needed more care in a different location, then you'd be out of luck or paying a lot more out of pocket.
This can be a problem for any senior who likes to hit the road, but it becomes an especially big issue for retirees who spend long periods in a different location.
If you're a snowbird who spends winters in Florida despite living in the North, for example, you may spend your trip hoping you don't get sick because you're afraid that getting the ongoing care you need in your winter location will lead to bills that drain your 401(k).
If you have traditional Medicare, this isn't really an issue since Part B pays for any doctor across the U.S. who is a participating Medicare provider.
3. Your insurance company could deny your claim
Finally, Medicare Advantage plans may require preauthorization for many different kinds of services, while Medicare usually doesn't impose this hurdle if a service is covered.
When an insurer requires preauthorization, that sets up an opportunity for the company to deny care. And, in fact, some Medicare Advantage plans are known for high denial rates. This means an insurance company can serve as the gatekeeper and make it hard for you to access medical services your doctor thinks you need.
All of these downsides are well worth considering when you decide whether a Medicare Advantage plan is the way to go. Before you pick your plan, research the network, coverage limitations, and rules for prior approval so you can make sure you'll truly have the coverage you need to stay as healthy as you can throughout your retirement years.
