Is Medicare Advantage “Actually” Free?

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In fact, according to the Centers for Medicare and Medicaid Services, 40% of Medicare beneficiaries are enrolled in a Medicare Advantage Plan. But what is it? How does it work? And is it really free?

Let’s start from the top. Medicare Advantage Plans are an alternative (not a replacement) to Original Medicare. They are managed by private insurance companies and provide an all-in-one solution. These plans often have a zero-dollar monthly premium. (That means you may not pay extra for them.) when you have a Medicare Advantage Plan, you’ll still pay your Medicare Premiums, but a private insurance company will be providing you with your benefits. They can include additional benefits like Prescription Drugs, Dental, Vision, Hearing, and more. And they also provide an annual limit on your expenses and perks like gym memberships, etc.

Now, you are probably thinking, that sounds great! What’s the catch? Well, let’s get into the details of how these plans work.

Advantage plans work with network restrictions, and you’ll want to know which type of network your plan has. These are the three main types:

  1. HMO – You MUST stay within your network at all times, or you will NOT have coverage.
  2. PPO – You MAY go outside of your network; however, the charges for Out-of-Network can be higher.
  3. PFFS – You may see any doctor, but they must AGREE to accept your plan in advance for coverage.

It’s also important to know that you may need referrals from your Primary Doctor to see specialists. This will require some additional planning if you’re used to the freedom of Original Medicare. Also, take note, physicians can choose to leave a Medicare Advantage plan mid-year. As a consumer, you can only make changes annually.

Another often-overlooked topic with Medicare Advantage is the concept of “prior authorizations” for services rendered. This means that if your plan requires it, you may have to submit your upcoming surgery, medication, or therapy for approval before the insurance company will pay. In the event of a denial, you’ll have to go through the appeal process, which can significantly delay your services.

If you fully understand the above restrictions and feel Medicare Advantage is a good fit for you, it may be a cost-effective alternative to Original Medicare. If you choose Medicare Advantage, it’s important to review your doctors, prescriptions, and benefits annually, as all of these things are subject to change. This is done during the Annual Enrollment Period from October 15th through December 7th of each year. Always speak with a licensed professional regarding these matters.

If this doesn’t sound like a good fit for your situation, consider Original Medicare with a Supplement. You’ll have low-to-no copays, no prior authorizations, and nationwide coverage. You will pay a monthly premium for your Supplement, and depending on the Insurance Company, it may increase with age. However, if your rate gets too high, you have the right to shop for the same plan with a different company at any time. (Your health can affect your ability to switch, so work with a professional to ensure you get the best rate.) You’ll also pay additionally for services like Dental, Vision, Hearing, and Prescription Drug Coverage.

Your licensed agent will be able to provide you with a quote for both scenarios upon request. Ensure that they are independent, and you’ll get unbiased advice that is in your best interests. Your agent should have the appropriate state health insurance license, as well as the AHIP Medicare, Fraud, Waste, and Abuse Certification from the current year. Without the AHIP certification, the agent has not been trained on Medicare Advantage.

Remember, your health insurance choices may be the most important financial decision in your retirement plan!

Like all important decisions, make sure you understand the information and that your source is a licensed and authorized source.

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