Those Extra Medicare Perks Likely Cost More Than You Think

Medicare Advantage plans have continued to grow in popularity since they were established in 1997: 42% of all Medicare enrollees — some 26 million people — chose one of these plans for 2021 instead of traditional Medicare (which was established in 1965).

Cost is a big part of the draw, as Medicare Advantage plans not only often cost less but also often cover more benefits than traditional Medicare health insurance.

Vision, hearing and dental benefits are among the most coveted of these “extras.” They’re also among the most common, with each offered by well over 90% of the Medicare Advantage plans available for 2022.

The private health insurance companies that offer Medicare Advantage plans heavily advertise these three types of perks as well, according to the nonprofit Kaiser Family Foundation (KFF).

But just because a plan offers a particular benefit doesn’t mean that you will qualify for the benefit, or that the insurer will cover all your costs associated with the benefit even if you do qualify for it.

A recent KFF analysis found that although seniors on Medicare Advantage plans typically spend less money out of pocket on vision, hearing and dental services compared with those on traditional Medicare, the former group still spends a considerable amount on these services.

Among Medicare enrollees who used the following services in 2018, their out-of-pocket spending on each service that year averaged:

• Vision: $194 for Medicare Advantage enrollees versus $242 for traditional Medicare enrollees
• Hearing: $763 for Medicare Advantage versus $985 for traditional Medicare
• Dental: $766 for Medicare Advantage versus $992 for traditional Medicare

Medicare Advantage coverage limits

Medicare Advantage enrollees face out-of-pocket costs for extra benefits due to coverage limits. In other words, the insurers that offer these plans often limit the total dollar amount they will cover annually, or how many times an enrollee can use a benefit each year — or both.

Take hearing aid coverage, for example. The Kaiser Family Foundation analysis found that virtually all Medicare Advantage enrollees with this type of coverage are in a plan with a dollar-amount limit or frequency limit or both. The average dollar-amount limit is $960 per year, and the most common frequency limit is one pair of hearing aids per year.

In the case of other hearing benefits as well as vision and dental benefits, KFF also found that a vast majority of Medicare Advantage enrollees with each type of benefit have at least one type of coverage limit.

Why Medicare Advantage plans have limits

Medicare Advantage plans are managed health care plans, with the vast majority being health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Such plans tend to be more affordable than traditional Medicare, also known as Original Medicare, because they restrict their enrollees’ options in ways that Original Medicare does not.

For example, many Medicare Advantage plans restrict enrollees to a particular network of health care providers — and cover less or none of the cost when enrollees seek care from an out-of-network provider.

Sometimes, plans require referrals and prior authorization for a particular service, and then refuse to cover the cost if an enrollee obtains that service without first getting a referral or prior authorization.

So, dollar-amount limits and frequency limits on “extra” benefits are just two examples of how Medicare Advantage plans restrict their enrollees’ options as a way for the private insurers that offer these plans to manage their costs. Such restrictions, in turn, enable those insurers to keep their plans relatively affordable.

Restrictions vary from one Medicare Advantage plan to another, though. That’s why it’s especially important for seniors who are on or plan to switch to such a plan do their homework during open enrollment periods.

And certainly don’t rely on TV commercials or social media ads when researching the plans available to you.

As Jenny Chumbley Hogue, an insurance broker near Dallas and an analyst at medicareresources.org, told the Kaiser Family Foundation of some of her clients:

“They see a TV ad that says they can get everything for free when they may not qualify for those benefits. It’s hard to know if they are misinformed or not reading the fine print.”