If you’ve watched television at all in the past 5 years, there is a good chance you’ve seen a commercial with Hall of Fame Quarterback Joe Namath touting the many benefits available to Medicare eligible beneficiaries through Medicare Advantage plans. “Get the benefits you deserve” we hear, “pay $0 for your benefits, get money back on your social security check, dental benefits, hearing, vision, gym memberships, telehealth visits, transportation and meals”— the list goes on and on. Many seniors are left wondering, “how can all this be true?” and “how do I get the benefits I’m entitled to?”

Many seniors asking these questions are also enrolling in these plans. For the past 15 years or more Medicare Advantage Plans have exploded in popularity. In 2021, nearly 42 percent of all Medicare eligible beneficiaries are enrolled in a Medicare Advantage, up from 32 percent just 5 years ago. With that number set to surpass 50 percent by 2030, there are still plenty of questions, mainly: is Medicare Advantage a viable and safe option for my clients?

In this article, we’ll present the facts mixed with some opinion regarding “Traditional Medicare” (Medicare Part A and B, often in conjunction with Medigap/Medicare Supplements and Medicare Part D/Prescription Drug Plans) vs. Medicare Part C (i.e., Medicare Advantage Plans). At the end of the day, every Medicare Eligible Beneficiary has a special set of circumstances to consider; and choosing the right Medicare options should be based on those individual circumstances with the guidance of a licensed, certified, professional insurance agent.

First, the facts: The visual below illustrates the differences between Original Medicare and Medicare Advantage. These Medicare Advantage plans are offered by private insurance companies that essentially absorb the risk or cost associated with the Part A and B of the beneficiary. They receive a reimbursement from the government by doing that. Whereas with Original Medicare, beneficiaries are going direct to the government for Part A and Part B, and then if needed purchasing a Medicare Supplement plan and Prescription Drug plan from private insurance companies.

So, how does a Medicare beneficiary decide what is best for them? With so many things to consider when it comes to healthcare expenses, and the fact that many seniors are on a fixed income (or headed to it for the first time), this is one of the biggest decisions that seniors must make early on in retirement. They’re forced to consider a whole host of “what ifs”:

  • Monthly premium cost
  • Out of pocket exposure for hospital visits and major procedures
  • Prescription drug use
  • In network doctors and hospital systems
  • Travel and restrictions
  • Value adds and additional benefits (Dental, Vision, Hearing, Gym, Meals, Transportation)

In my opinion, the “Cadillac” of Medicare coverage is Original Medicare parts A & B, paired with a rich Medicare Supplement plan (Plan G today or Plan F if you qualify) and a stand-alone prescription drug plan. In terms of flexibility this allows individuals to go anywhere Medicare is accepted, out of pocket exposure for medical expenses is next to nothing and there are no changes to plan benefits.

If you look back to the comparison chart with pricing averages included, you can gain a ballpark figure of what it cost to have the “Cadillac” of Medicare insurance. But what about those that can’t afford the additional monthly premiums for the supplemental coverage and the drug plan? What if they have additional benefits they need to consider? Or what about those that can’t afford their Part B premium?

Here is where Medicare Advantage comes into play. Because there is such a significant portion of the American population that is middle to lower income, reducing premium expense has become one of the major driving factors in the Medicare decision-making process. Insurance at its foundation is all about risk management. The insurance carriers are navigating profit margins based on projected risk and outcomes, but consumers are also navigating their own risk management. Trying to determine what may or may not happen in terms of future medical cost and unforeseen medical issues is a coin toss. That’s why when it comes to this decision, many individuals on a tighter income choose the lower upfront cost option, even though there is much more out-of-pocket exposure should they end up in the hospital or needing a procedure done. At the end of the day, individuals must make their own personal decision. But with the help of a professional insurance agent, individuals can make an educated decision when it comes to choosing a Medicare Advantage plan. The following are some Pros and Cons to consider:

One final and very important factor to consider is when and how you can enroll in these plans, and how enrolling in a Medicare Advantage plan effects your ability to enroll in a Medicare supplement plan. I could pen an entirely separate article about the different enrollment periods for Medicare, but in an effort to keep things simple I’m going to skip over explaining these in depth. Basically, if you choose a Medicare Advantage Plan during your Initial Enrollment Period (when first turning 65) or at a later date, and then choose to switch from an Advantage plan to a Medicare Supplement you forfeit the right to enroll in that Supplement plan without answering health questions. One of the major benefits of first-time enrollment in a Supplement is the guaranteed issue rights, which prevents exclusion from Supplement plans due to pre-existing conditions.

This is a very important factor to consider in the decision-making process between choosing Medicare Advantage and Original Medicare.

As I said in the beginning, every individual has a unique set of circumstances. There is no “one size fits all” when it comes to Medicare, which is all the more reason for Medicare eligible individuals to consult with a professional agent.