January 31, 2023

In 2022, 48% of Medicare beneficiaries were enrolled in Medicare Advantage plans instead of the original Medicare plans, and experts predict that number will be higher in 2023.

Medicare Advantage plans are offered by private insurers and bundle Medicare benefits in a way that many people find attractive — but they also limit coverage to network providers, often require pre-approval to see specialists, and can have a high up-front cost for beneficiaries for serious illnesses burden .

Also of note is the number of older adults on Medicare Advantage, as financial experts are more likely to recommend Original Medicare with Medigap.

“I help my clients make Medicare choices, and what I tell them all is that if you can afford it, you should enroll in traditional Medicare with a Medicare supplement plan,” says David Haas, a certified financial planner in Franklin Lakes, New Jersey.

So why are so many people turning to Medicare Advantage for their retirement healthcare? Here are the most important factors.

MEDICARE ADVANTAGE IS OFTEN FREE

In 2023, 66% of Medicare Advantage plans with prescription drug coverage will have no premium — in contrast to Medigap, which has a monthly premium. If you don’t have any health problems, the choice may seem like a no-brainer.

“Medicare Advantage is extremely attractive when you’re healthy,” says Leslie T. Beck, a board-certified financial planner in Rutherford, New Jersey. “But if something happens — and something always happens — and you’re on a Medicare Advantage plan, you can’t switch back. You can switch to regular Medicare, but you’ll never get a Medigap policy.”

PLANS ARE BUNDLED

The original Medicare had people juggling individual pieces of coverage — Part A, Part B, Part D, Medigap — but Medicare Advantage offers a unique simplicity: There’s a premium for everything.

While choosing a Medicare Advantage plan may feel easier, it means you have to search for coverage again with every open enrollment. “You have to factor in the cost of prescription drugs and the cost of doctors, and you have to make that choice every year,” says Haas.

With the original Medicare, Haas says, “[You]have to opt into a new Part D plan, but you don’t have to reopen your entire medical equation every year like you do with Medicare Advantage.”

MEDICARE ADVANTAGE OFFERS EXTRAS

Many Medicare Advantage plans offer additional benefits such as: B. Money for dental or eye care not covered by original Medicare. According to a survey by the Commonwealth Fund, a healthcare think tank, about 1 in 4 people say that additional benefits have prompted them to choose Medicare Advantage.

“Medicare Advantage plans are heavily promoted and advertise that they include all the other services not available with Medigap — prescription drug plans, subsidized health club fees, dental care and vision,” said George Gagliardi, a board-certified financial planner in Lexington , Massachusetts. “So it seems to a lot of people that a deal is too good to turn down.”

But the additional benefits Medicare Advantage offers are generally fairly limited, and experts say choosing a health plan for dental insurance and gym membership misses the point of insurance.

“It’s not about paying for the ridiculous little expenses that you have,” says Beck. “It pays for the catastrophic expenses.”

YOUR FRIENDS CHOOSE MEDICARE ADVANTAGE

Many older adults choose a Medicare Advantage plan because someone they know chose one.

“We tend to have a snowball effect,” says Andrew T. Cook, a board-certified financial planner in Timonium, Maryland. “One pensioner made the decision, they’re talking to another pensioner who’s talking to another, and this groupthink often leads them to conclude that if they all made the decision independently, it must have been the right decision.”

But Medicare is one area where retirees shouldn’t just ask friends for advice. If a financial planner isn’t an option, every state has a State Health Insurance Assistance Program, or SHIP, where people can get free, unbiased advice. Visit shiphelp.org to find a program.

MEDICARE ADVANTAGE ADS ARE EVERYWHERE

“When you’re talking about advice about what’s better for the individual, it’s really the voice that’s loudest and most insistent,” says Beck. “If you’ve ever watched late-night TV, it’s just ad after ad for Medicare Advantage.”

The ads are not only productive, but also increasingly misleading. Increasing complaints about Medicare Advantage advertising have led the Centers for Medicare & Medicaid Services to now require insurers to obtain federal approval before airing television advertising.

“I’m watching these ads very closely, and they’re basically merging Medicare with Medicare Advantage,” says Beck. “It’s rare that they mention ‘Medicare Advantage.'”

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This article was provided to The Associated Press by personal finance site NerdWallet. Kate Ashford is a writer at NerdWallet. Email: [email protected] Twitter: @kateashford.

RELATED LINKS:

NerdWallet: Advantage Medicare vs. Medicare: Which Should I Choose?

The Commonwealth Fund: Traditional Medicare or Medicare Advantage: How Older Americans Vote and Why

Government Health Insurance Assistance Program

METHODOLOGY:

The Commonwealth Fund’s 2022 Biennial Health Insurance Survey asked people age 65 and older who were enrolled in Medicare as their primary source of insurance why they chose Medicare Advantage or traditional Medicare and what resources they used to choose their insurance. Survey company SSRS surveyed a nationally representative sample of 8,022 adults ages 19 and older between March 28 and July 4, 2022, and this analysis focused on 1,605 respondents ages 65 and older who were enrolled in Medicare.

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