Three Risks to Consider in Medicare Advantage Programs for Senior Citizens
Once you reach 65, you become eligible for healthcare coverage through Medicare. However, it's your choice whether to continue with traditional Medicare (Parts A, B, and a Part D drug plan) or switch to a Medicare Advantage plan. Offered by private insurers, Medicare Advantage operates much like workplace health plans and can be a suitable choice for some retirees. Yet, there are a few disadvantages to consider before making this decision:
- Territorial limitations
With traditional Medicare, you can typically consult any doctor in the US who accepts Medicare. However, with Medicare Advantage, you're confined to a specific network of providers. If you find yourself in another area of the country, you might not have access to in-network providers.
The cost of out-of-network services varies by plan. It's crucial to note that out-of-network care could turn out to be a substantial expense.
2. Preauthorization requirements
Medicare Advantage plans often demand preauthorization for tests or procedures that are considered out of the ordinary. The reason behind this is that these procedures usually lead to increased expenses for insurance companies. Consequently, you may need to overcome certain obstacles to get them approved.
The downside is that some Medicare Advantage plans can be challenging with approving such care. This may cause particular aspects of your treatment to be delayed or, worse, disapproved.
According to the Kaiser Family Foundation, 99% of Medicare Advantage subscribers need prior authorization for at least one service. On the other hand, traditional Medicare requires prior authorization for only a limited number of services.
3. Challenges transitioning back to traditional Medicare
There may be financial benefits to choosing Medicare Advantage, as these plans often provide additional benefits beyond what traditional Medicare covers. Since many Medicare Advantage plans include a $0 premium beyond the required Part B premium, they can be cost-effective for certain enrollees.
If your Medicare Advantage plan doesn't meet your expectations, you're not obligated to stick with it. Medicare enrollees have the opportunity to modify their coverage annually during the fall open enrollment period, which includes switching from one Medicare Advantage plan to another or rejoining traditional Medicare.
However, moving back to traditional Medicare isn't always straightforward, as you might find it challenging to secure affordable supplemental insurance, known as Medigap. Medigap is usually a necessary addition for enrollees in traditional Medicare due to the absence of an annual spending limit. But once your initial Medigap enrollment window expires, it becomes more difficult to procure Medigap coverage, potentially leaving you in a precarious situation.
Some seniors have a positive experience with Medicare Advantage plans, and each plan comes with its own rules, benefits, and costs. Your experience with one plan may differ significantly from your experience with another. Nevertheless, it's essential to be aware of the general drawbacks of Medicare Advantage to avoid regretting your decision.
While considering your retirement funds, it's essential to account for the potential cost of out-of-network services if you opt for a Medicare Advantage plan. Due to the specific network of providers, you might encounter substantial expenses for out-of-network care.
Moreover, as you plan your retirement finances, keep in mind that transitioning back to traditional Medicare might pose challenges, particularly in securing affordably priced Medigap insurance after your initial enrollment window expires.
