Medicare Advantage is fast becoming the Medicare plan of choice, with 31% of Medicare recipients now opting for Advantage, per data from the Henry J. Kaiser Foundation. That represents brisk growth for Advantage, the managed care program in Medicare. In 2004, Kaiser said 5.3 million were in Advantage, and by 2016, that number had climbed to 17.6 million.
The reason: costs. Join an Advantage plan and you get all your Medicare services (hospitalization as well as doctors) through a private provider, instead of the open market built into Medicare itself. Essentially an HMO, Advantage plans also offer deal sweeteners not included in Medicare, such as eyeglasses or perhaps hearing aids. All that often is free, but sometimes Advantage comes with a fee of perhaps $100 per month.
Traditional Medigap supplement plans - which cover what Medicare doesn't and usually give seniors an open marketplace of physicians and hospitals - often cost twice as much. Do the math, and, for many seniors, Advantage is a no brainer. That's especially the case with seniors for whom every dollar counts, and that is most of them.Except Advantage comes with a catch, a big gotcha. And it's a feature understood by few seniors, suggested multiple experts. Once in Advantage, it may be very hard - and expensive - to get out and into open choice Medigap coverage.
"People go into Advantage because it costs zero dollars," said Ash Toumayants, a financial advisor based in State College, Pa., who routinely assists clients with Medicare choices. "It works. But the problem is what happens when your health declines. Will the plan give you the coverage you need."
An Advantage plan - by its nature - is built around a network, typically one assembled by an insurer or perhaps a hospital. But what if you have been diagnosed with kidney cancer and you want specialist XYZ who isn't in the network? Tough luck.
More seniors in Advantage are facing exactly this kind of situation. Hector De La Torre, executive director of the Transamerica Center for Health Studies, said that the national trend is for insurers to narrow their networks to reduce costs. So the specialist you want may be out of reach when you are in an Advantage plan.