Medicare’s fall open enrollment ends soon, which means retirees will soon have to make up their minds as to whether they choose to stick with original Medicare, or choose to switch to Medicare Advantage plans. This decision is one that many don’t take lightly, and for good reason. There are a number of key differences between Medicare and Medicare Advantage which are worth pointing out, as they can affect retirees’ coverage, provider availability and other factors which may be very important to those who expect to require care in the coming years. 

It’s worth noting that employer and union-sponsored retiree health plans currently support 24% of Medicare beneficiaries. However, fewer employers offer these benefits than in the past. Large employers providing retiree health benefits dropped from 66% in 1988 to 24% in 2024. Additionally, it’s worth pointing out that among those offering coverage, 64% include Medicare-age retirees as Medicare Advantage continues to gain popularity, per the 2024 KFF Employer Health Benefits Survey.

Medicare is a big budget line item for the U.S. government, and there has been some talk that the new Trump administration may push to encourage some seniors to consider Medicare Advantage plans instead of the traditional Medicare program to save costs. Let’s dive into three reasons why this may not be the best idea for certain seniors.

Key Points About This Article:

• It’s expected that we could see a push from the incoming Trump administration to attempt to persuade seniors to consider Medicare Advantage plans in the coming years.
• The question for many seniors is whether expanded coverage makes sense, or if sticking with traditional Medicare is the way to go – here are three key things to consider.
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Limited Provider Networks

One of the biggest drawbacks for seniors with Medicare Advantage plans is the fact that healthcare provider networks can often be significantly limited by the plans in question. In essence, insurance companies are trading in the expectation that seniors will be covered for care during their retirement, but as profit-maximizing entities, these companies will look to minimize costs by significantly reducing the number of eligible providers within a network to the lowest-cost options, meaning some seniors may not have access to the closest or most convenient doctor at all times.

Original Medicare provides extremely broad coverage, with most doctors, hospitals and providers providing Medicare-based coverage. However, having a significantly reduce list of in-network providers can decrease access for seniors, and mean that the long-time physician or preferred specialist one has been used to seeing may not be accessible under such plans.

Additionally, many Health Maintenance Organization (HMO) plans limit patients to a specific network, and require referrals from a primary care physician to see a specialist. For those who seek care outside of this network, services may not be covered at all unless it’s an emergency situation. For those who travel frequently, this can be a rather significant consideration and lead to unforeseen out of pocket expenses.

Prior Authorization Requirements

Another important consideration is that many Medicare Advantage plans impose prior authorization requirements for certain medical services and procedures. Similar to the first consideration on this list, patients on Medicare Advantage plans should be aware that approval from your insurance provider may be required prior to any specific treatment or tests. Thus, while most services are accessible without pre-approval from original Medicare, this stipulation can result in Medicare Advantage insurers having an “out” to deny claims in certain cases, leading to the potential for big out-of-pocket expenses once again.

Clearing various tests and procedures beforehand is typically a good idea with any insurance plan, but it’s less of a consideration for Medicare. Medicare Advantage plans can be much more stringent on this stipulations, and can make things more difficult for seniors and their caretakers particularly in time-sensitive situations.

Those requiring prompt treatment may also be required to wait for authorization, which can be stressful and have the potential to impact health outcomes at the end of the day. Thus, for many seniors, the improved benefits many of these plans may provide simply aren’t worth the added risk and access to critical care when you need it most. 

Potential for Increased Out-of-Pocket Costs

While Medicare Advantage plans often promote low or even zero-dollar premiums, retirees might encounter higher out-of-pocket expenses due to copayments, coinsurance, and deductibles associated with these plans. As mentioned with the prior two sections, out-of-pocket expenses can be more commonplace with Medicare Advantage plans as a direct result of how these plans are designed, and those on such plans need to be acutely aware of how these plans are structured and what they need to do in certain scenarios to feel comfortable with proceeding.

For those with elderly parents who may be assisting those considering a Medicare Advantage plan, these are factors to take into consideration. For those without the ability to pay out-of-pocket healthcare costs, the potential for a catastrophic event which eliminates a senior’s nest egg via a few mistakes when filling out paperwork can be something specific individuals with a low risk tolerance may want to avoid. Recent studies have shown that enrollees in Medicare Advantage plans can be charged between 30% and 100% of the costs for out-of-network services, and that’s something that many simply can’t afford. 

The Verdict

Making the right choice for one’s Medicare coverage is a crucial decision which can impact the peace of mind for seniors and their caretakers, making this one of the more under-appreciated decisions I think those nearing or in retirement ought to consider right now. 

As mentioned, there are some advantages to Medicare Advantage plans, and the attractiveness of low premiums and additional benefits can suit many seeking the best care in retirement. But ensuring that one’s providers are included in-network, and how these plans restrict care to specific specialists can be important, particularly for seniors with known health issues.

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