When deciding on Medicare coverage, private Medicare Advantage plans can have a lot of appeal compared to Original Medicare, aka traditional Medicare.
For one, most Medicare Advantage plans offer all-in-one coverage for Parts A and B plus prescription benefits. Many plans also include extra coverage for vision, hearing and dental and other perks like gym memberships.
You won’t find that with traditional Medicare, with which you need a Part D plan for drug coverage and a supplemental Medigap plan for anything else Medicare doesn’t cover. Those eligible for Medicare have taken notice — over half of beneficiaries are enrolled in a Medicare Advantage plan.
But there’s a catch to all the extras those plans offer, and it could be costing you more than you think.
The federal government pays Medicare Advantage insurers up to $86 billion annually to provide these supplemental benefits, according to the Medicare Payment Advisory Commission. That’s a dramatic jump from $21 billion in 2018.
The problem is, most people don’t use them.
Research from the Commonwealth Fund shows that 69% of Medicare Advantage plan enrollees used any of their benefits. Here’s how respondents reported tapping into their plan’s extras:
- 42% use dental coverage
- 41% use vision benefits
- 19% use their fitness benefits
- 12% use grocery allowances
- 7% use hearing benefits
- 2% use meal delivery or other benefits
Yet 83% of enrollees say these extras are important when choosing their plans.
Hidden costs add up
While Medicare Advantage plans often advertise zero or low premiums beyond the standard Medicare Part B premiums, the supplemental benefits typically come with copays and coinsurance that can quickly add up.
Research shows the government consistently overpays Medicare Advantage insurers compared to what it costs to cover similar people under Original Medicare — by more than $27 billion in 2023 alone, according to one analysis.
The trade-off isn’t always favorable for enrollees. Medicare Advantage plans frequently require prior authorization and referrals to see specialists, while traditional Medicare lets you visit any provider without those hurdles.
As Gretchen Jacobson, vice president for Medicare at the Commonwealth Fund, tells MarketWatch, even dental plans that seem generous may only cover preventive care or require significant cost sharing for comprehensive services.
Limited provider networks are another issue. You might discover that few dentists or vision providers in your area accept your plan, forcing you to pay out-of-network rates or forgo the benefit entirely.
Alternatives worth considering
Before assuming Medicare Advantage is your best bet, compare it against Original Medicare with a Medigap supplement, which can offer benefits that are easier to navigate.
You can also purchase standalone dental coverage for as little as $20 monthly, and many over-the-counter hearing aids are now available without insurance. If you’re looking for ways to stay fit, look to online options or community centers that offer free exercise classes for seniors.
During Medicare’s open enrollment period through Dec. 7, take time to consider whether you’ll actually use those perks that a Medicare Advantage plan advertises. If not, you might save money with Original Medicare and targeted coverage for services you know you’ll need.
Need unbiased help in choosing the right Medicare coverage for you? Learn how you can get that for free here.
Add a Comment