Joel Thompson: Don’t Buy The Medicare Advantage Hype

“Medicare Part C” plans, as they’re also known, are actually a way to opt out of the Medicare coverage you’ve been paying into through your working life and instead funnel money to participating insurance companies for policies with relatively high out-of-pocket maximums and limited networks.

Alternatively, original Medicare paired with supplements (“Medigap” plans) can limit yearly out-of-pocket medical costs to the Part B deductible ($233 in 2022). Yes, they do require monthly premiums, but in most cases those are far lower than what consumers are used to paying for in their share of employer-sponsored group plans.

Yes, there is a lot of attention being given in TV spots to Medicare Advantage plans right now because the insurance carriers and their agents are making a lot of money that would be better applied to medical costs than expensive commercials.

Now, there is a good purpose in some markets for Medicare Advantage in that supplements are not available to anyone receiving Medicare who are under 65 (on Social Security disability benefits). And unless someone signed up for a Medigap plan within six months of turning 65, their acceptance could be subject to being in good health, unlike Medicare Advantage plans that offer open enrollment to all Medicare beneficiaries yearly.

Once you have a supplement, you can keep it forever, unless you drop it, like to enroll in a Medicare Advantage plan. You may or may not be able to get it back the following year if the Medicare Advantage plan is not to your liking.

The history of Medicare Advantage plans dates back to the George W. Bush administration, when it was a bargaining chip in a deal that yielded prescription drug coverage (through Part D cards) to Medicare beneficiaries for the first time. The carriers would only offer the prescription coverage if they could be allowed to encourage people to reject original Medicare for their Part C plans as well. I’ve always said anything advertised on TV costs too much. And anything advertised a lot on TV costs way too much!