3 BIG Reasons People Are Dropping Medicare Advantage
With all the marketing, buzz online, and publicity that Medicare Advantage plans receive, you’d be surprised to know:
A lot of Medicare Advantage members want to disenroll once they understand how the plans actually work.
Hi, my name is Mark Prip. For over 15 years, I have been helping people compare and find the right Medicare Advantage plan.
Today, I want to take a moment and shed some light on some of the downsides of Medicare Advantage plans and why a certain percentage of the population is choosing to leave or disenroll from them.
Reasons for Leaving Medicare Advantage
Roughly 17% of beneficiaries disenroll annually from a Medicare Advantage plan, which continues to increase as more people switch to a Medicare Supplement plan.
There are three big reasons that Advantage members leave their plans:
#1. Network restrictions
#2. High cost-sharing rates
#3. Annual plan changes
Based on what I’ve seen in the last 15 years of working with Medicare Advantage plans – I could summarize this article with one sentence:
- The big print giveth and the fine print taketh away.
Most people don’t realize how Medicare Advantage plans actually work until they enroll in a plan, and 6 or 12 months later, they have experienced how that plan really works.
The first big reason members are disenrolling from Medicare Advantage – one that we receive many phone calls about in our office – is network restrictions.
#1. Network Restrictions
Network restrictions are usually caused by beneficiaries enrolling in an HMO plan, the most common Medicare Advantage plan. These plans are problematic because they limit the doctors and providers that beneficiaries can see (especially if an approved doctor you’re currently seeing leaves the Medicare Advantage network).
These plans also don’t provide coverage outside the local region, which makes it inconvenient for travelers.
All Medicare Advantage plans will cover you nationwide for urgent emergency care matters. The limitations you receive on an HMO (in your region or nationally) are for things that are not emergency-related or urgent care, such as planned treatments or procedures.
Next, let’s cover the second reason Medicare Advantage loses members: the high-cost sharing rates.
#2. High Cost-Sharing Rates
Medicare Advantage plans require low cost-sharing rates on most procedures but often ask members to pay a larger share for the most expensive covered services. This makes the cost of an Advantage plan higher than many beneficiaries originally bargained for.
Most people are told by agents (that are not doing a good job) how the benefits work.
These agents say, “Oh yes, you can go to your primary care doctor for a $0 copay. You can see a specialist for $25.”
But they usually don’t get into the more complex things – like paying $300-$400 a day if you’re hospitalized, have an outpatient surgery, or even chemotherapy.
In some plans, you may be responsible for paying 20% of that treatment which gets very very costly.
These examples refer to my earlier statement that “the fine print taketh away.” You don’t realize that until you’re on the plan and have used it.
Most people don’t like unexpected changes to their plan – so let’s move on to discuss our third big reason that beneficiaries are leaving Medicare Advantage plans.
#3. Annual Changes
Unlike Medigap (Medicare Supplement), Advantage plans can change their benefits, copays, or deductibles annually, leaving beneficiaries stuck with inadequate coverage OR forcing them back to the marketplace to find a better plan.
The Medicare Advantage companies can change benefits and premiums during that once-a-year Annual Election Period. So, when you first enroll in your plan, it may be appealing and attractive, but as you’re on it longer and longer, those copays can increase, and your provider list of doctors and hospitals can change.
And when I say change, I typically mean it’s very common for a hospital or medical group to get into a payment dispute with your insurance company.
Here’s an example:
- You have a large hospital that says, “We have 30,000 patients who have, say, UnitedHealthcare or Aetna or Cigna, and we are not going to renew that contract because we couldn’t settle on the terms of the agreement.”
- That contract ends which requires you to find new doctors, or a new hospital if you want to keep that plan or pushes you back to the marketplace to say,
- “Hey, I am on a plan, but I just lost my doctors and hospitals, I need to keep those providers. Can you find me a plan that allows me to do that?”
Finding a new plan is possible, but it creates a lot of work for you now that the dispute is ongoing and hasn’t been resolved; it pushes you back to find another suitable plan.
Now, I touched on Medigap plans briefly, but let’s go a little bit deeper.
Benefits of Medigap
While Medigap plans may require a higher monthly premium, they often come with more comprehensive benefits.
Let’s look at why Medigap is a better choice than Medicare Advantage.
#1. No benefit changes
Since the government has established Medigap benefits structures, insurance companies cannot change them on a whim or even change them annually.
Typically, the Medigap benefits remain the same year over year over year.
Things that may change:
- If you’re on Medicare Supplement Plan G, you’re responsible for the Medicare Part B deductible. This is only a few hundred dollars ($240 in 2024), but it can increase over time.
- If you have Medicare Supplement Plan N, which requires copays for certain office and emergency room visits, those copays can change over time. Still, it’s a very small percentage of the overall Medicare Supplement benefit.
With Medicare Advantage, all benefits, features, cost sharing, and networks are always subject to change annually. So, Advantage plans have many more moving parts than Medicare Supplement plans.
#2. No network restrictions
Medicare Supplement plans have no network restrictions. You can see nearly any doctor or specialist that accepts Original Medicare.
What does that mean? This means there are no referrals or provider disputes between the hospital or medical group and the insurance company. These disagreements and arguments simply don’t exist because there are no contractual agreements between a Medigap company and different providers and hospitals.
As long as you see a provider or hospital that accepts Original Medicare, Medigap will automatically pay the remaining 20% and has nothing to do with the network.
#3. No copays
Medigap plans do not have copays. Once you pay your premium, Original Medicare covers office visits, tests, surgery, and hospitalization at roughly 80%, and the Medigap plan pays the remaining 20%.
The most popular Medigap plan is Plan G. That plan requires you to pay your Medicare Part B deductible, then the 20% kicks in.
If you’re on Medigap Plan N, you must also pay the Medicare Part deductible and small copayments for office visits and emergency rooms.
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Downside of Medigap:
One drawback of Medigap plans is that they don’t automatically include prescription drug coverage, unlike most Medicare Advantage plans. If you switch from Medicare Advantage to Medigap, you’ll also need a standalone prescription drug plan for your medications.
When to Disenroll from Medicare Advantage
Each year, during the Annual Election Period (Oct 15 – Dec 7), you have the option to disenroll from your Medicare Advantage plan and enroll in a Medicare Supplement plan.
If you’ve been enrolled in Medicare for more than 12 months and want to switch, the Medigap company will ask health questions in underwriting, and you would need to qualify for the Medicare Supplement company to approve your application.
Typically, the best time to enroll in a Medicare Supplement plan is during your Medigap Open Enrollment Period. This period starts the first day of the month you turn 65 and are enrolled in Medicare Part B, and then it lasts for roughly 6 months.
This is the best time to enroll because you have guaranteed-issue rights, which means you cannot be denied even if you have health conditions.
Now, there are other times that you may qualify for a Special Election Period (SEP).
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Special Election Period:
Let’s say you’re on an HMO plan in one county; you move to another, and that HMO is not there. That creates a Special Enrollment Period where you can opt for a Medigap plan.
SEPs may also apply to some other situations. If you have questions about those, give us a call, as they vary by individual circumstances. We’d be glad to help you sort it out.
Final Thoughts
I have helped thousands of people understand Original Medicare, Medicare Advantage, and Medicare Supplement. Unfortunately, the Medicare Advantage market and advertising is much bigger than the Medicare Supplement advertising and awareness.
Regarding Medicare Advantage, the big print giveth and the fine print taketh away. I highly encourage you to understand what plan you’re getting and ask many questions (regarding copays, referrals, networks, etc.).
Here are my final thoughts.
The problem with Medicare Advantage (again) is all of the advertising, all of the marketing in your mailbox. All of that carries a heavy emphasis on free grocery benefits, a free gym membership and maybe a $0 premium.
No one talks about the prior authorizations, referrals, network limitations, higher copays for hospitalization or chemotherapy care.
They’re simply not going to promote those as value adds.
They’re going to promote the things that look the most appealing.
If you find yourself in a situation where you want to get off of a Medicare Advantage plan, you really have two choices:
- Wait until the Annual Election Period (if you’re brand new to Medicare, you may also have a window where you can switch).
- If you moved or made lifestyle changes, determine if you qualify for a Special Election Period.
In my professional opinion, Medicare Advantage plans are helpful to people, but Medigap is far superior. A ton of flexibility and freedom with a Medigap plan allows you to do what’s best for you and your healthcare needs.
If you have questions, email or give us a call. We’d be happy to help you do a needs analysis to decide whether you can disenroll or compare the available plans. Thanks!
Source: The Commonwealth Fund
FAQs
- What is the difference between a Medicare Supplement and a Medicare Advantage plan?
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