Medicare Advantage or Disadvantage?

You may have seen the ads on TV for Medicare Advantage Plans. I've noticed several in the past couple of weeks. Insurance companies want to provide you better and less expensive coverage than Medicare. The chances of you seeing these ads has a lot to do with where you live.

Medicare Advantage Plans (HMO's and PPO's) and a subset Private Fee-for-Service plans work for the insurance companies in places where the payments they receive from Medicare are generally greater than the costs of providing those services. So the marketing is generally targeted to the most profitable areas for the insurance companies.

Many plans will advertise broad acceptance, but you should check with your personal physicians and other health care providers before you make a decision, sometimes the delivery is less than the promise.

The New York Times reported recently that the GAO has questioned the effectiveness of Medicare Advantage plans:

"But, the report said, certain costs are not counted toward the out-of-pocket limits established by some insurers. Thus, it said, among Medicare plans with out-of-pocket limits, 29 percent exclude the cost of some cancer drugs, 23 percent exclude the cost of some mental health services and 21 percent exclude home health care expenses."

The plans can be cost effective by reducing your total premium payments or increasing your benefits. If you choose a PFFS plan your medigap policy becomes unnecessary, but the should you decide to go back to traditional Medicare coverage a new medigap policy may cost more. You generally sign up for these plans November 15 through December 31 of each year. Once you have enrolled you remain in the plan for at least the next calendar year.

If you did not select a medigap policy during the guaranteed acceptance window one of these plans could be a good choice for you, but check for any restrictions on access before you move outside of the traditional Medicare coverage.