The pros and cons of Medicare Advantage: Should you switch to a private plan?

If you've never seen an ad for Medicare Advantage (MA), you probably don't have a TV. During a span of just two months in late 2022, MA providers ran an average of over 8,000 Medicare Advantage ads per day on broadcast television.

Between the volume of advertisements and the problematic nature of MA marketing, it makes sense that nearly half of all Medicare enrollees — more than 31 million people — are on Medicare Advantage plans. But while MA usually includes more types of coverage than Original Medicare, it doesn't necessarily deliver more care. 

As open enrollment approaches, here’s what to know about Medicare Advantage — including what to weigh when deciding between it and Original Medicare.

Coverage choices for Medicare

You have two choices when it comes to your basic Medicare coverage: either Original Medicare or Medicare Advantage. When you choose the original option, you get Medicare Part A (also known as hospital insurance) and Part B (medical Insurance). 

Main reasons for choosing traditional Medicare include:

• Part A is usually free

• You can use any U.S. hospital or doctor that takes Medicare

• You don't usually need referrals for specialists

• Prior authorization is not needed for most services and supplies, including medications and dental, hearing and eye services

You might get Medicare coverage automatically — for instance, if you’re 65 and already receive Social Security — or you may have to sign up so you'll have coverage when your employer's insurance plan ends. You can also switch plans under special circumstances or wait for Medicare open enrollment, which happens every year from October 15 through December 7.

Dig deeper: Original Medicare vs. Medicare Advantage: Which should you choose for health coverage?

The benefits of Medicare Advantage: How it's different

Medicare Advantage — or Part C — is an alternative to Medicare parts A and B. These plans are offered by private insurers that contract with Medicare. 

Why would you choose Medicare Advantage over Original Medicare? Aside from heavy advertising, MA appeals to most people because it appears to give you more coverage at a lower premium. Like traditional Medicare, you get Parts A and B, but you usually get Part D drug coverage too, plus vision, hearing and dental insurance. 

Here are a few reasons you might find MA appealing: 

• Your one plan can replace multiple plans

• Average premiums are as low as $18 a month

• There's a limit on your annual out-of-pocket costs, unlike Original Medicare

• Part D coverage is usually included

• Many plans include hearing, vision and dental coverage

• Gym memberships or fitness benefits are often included

Of course, Medicare Advantage companies can exclude important facts about these plans. For example, you still have to pay a Part B premium with MA, and your options for where to get care are more limited. Also, coverage and rates advertised by MA carriers may not be available in your area.

If you want to sign up for MA, you can join when you first enroll for parts A and B or during Medicare Advantage open enrollment, which is January 1 through March 31. 

The drawbacks — and criticisms — of Medicare Advantage

Since private plans for Medicare were introduced in the 1980s, there have been challenges with program funding and beneficiary choice. The main appeal of Medicare Advantage are the lower premiums, which are a major draw for people budgeting with limited retirement savings and income. But the pros and cons of Medicare Advantage are lopsided. 

Like most health insurance plans, you get more coverage when you pay more for insurance. Unfortunately, many people don't realize how hard it can be to get the help they need through an MA plan until they're in poor medical condition. 

Dishonest marketing

To say that MA providers can use deceptive marketing is putting it lightly. On the whole, Medicare Advantage advertising is so misleading that the federal Centers for Medicare & Medicaid Services (CMS) put out a 226-page rule in 2023 to reign in MA's marketing practices and other major program issues.

Troublesome tactics highlighted in the CMS rule include:

• MA marketing postcards designed to look like Medicare notices from the federal government

• Providers overstating how much their plans could save customers

• Benefits advertised in areas that didn't support them

• Ads stating the ability to get money back from Social Security, even though the Social Security Administration's program was available in only two states

Perhaps even more troubling is MA's documented habit of marketing to people with dementia and enrolling customers or switching them to new plans without their consent, according to key Senate Finance Committee findings. 

Why do MA carriers go to such lengths to get your business? The federal government pays them a set rate — currently more than $12,000 per year — for each plan participant. In 2025, these carriers are projected to bring in more than $16 billion.

Limited choice

Want to choose your own doctor or specialist? Medicare Advantage could make it tough. 

With traditional Medicare, you can go to any U.S. hospital or doctor that takes Medicare, and you don't usually need referrals for specialists. However, with Medicare Advantage, you might need referrals for specialists from your primary physician. Plus, unless you opt for a pricier Medicare Advantage PPO plan, you're limited to in-network doctors and providers in your service area, which might not include specialists.

Unfortunately, if you rely on specialists, you can't believe what MA agents tell you about the availability of medical care in your area — instead, you'll need to do your own research to confirm that specialized care will be available when you need it.

Less coverage

It can be harder to get approved for the care you need with Medicare Advantage than with Original Medicare. For example, while MA is supposed to provide the same coverage as Medicare Parts A and B, psychiatric services — such as therapy, mental health treatment and substance abuse disorder treatment — aren't covered.You also have to get prior authorization for most other services. In other words, your doctor or clinician has to get approval from the insurance company to have your services covered.

And approval isn't guaranteed: MA plans have a history of denying prior authorization:

• MA service providers denied over 2 million of the requests they received in 2021, with CVS, Kaiser Permanente and Centene Corporation among the biggest offenders. 

• 13% of all denied requests in 2022 met the Medicare coverage rules, meaning they would have been covered under a traditional Medicare plan. 

• 48 members of the House and Senate wrote a letter in June 2024 urging CMS to curb MA providers' use of artificial intelligence to deny authorization requests. 

Unfortunately, the track record of MA carriers explains why there's a documented pattern of seriously ill and high-needs patients switching from MA plans to Original Medicare.

Inconsistent quality

There are more than 40 available Medicare Advantage plans available from nine insurers, and they're not created equal. 

The Centers for Medicare and Medicaid Services publishes Medicare Advantage star ratings to help you choose a provider, but its usefulness is limited. CMS ratings can be artificially high and may not give you insights into the quality of care available in your area, according to the Urban Institute. 

Still, you might want to avoid what CMS calls "consistently low performers." Note that four out of six of them are owned by the same company: Centene Corporation.

Should I sign up for Medicare Advantage?

If your only concern is finding the lowest monthly premium, you might carefully consider enrolling with a reputable Medicare Advantage provider. While Original Medicare premiums are around $175 a month, MA premiums can be more budget-friendly at less than $20 a month on average. 

Yet, despite more types of coverage, your quality of care with MA may not be better than with Original Medicare, according to a recent Urban Institute analysis of ratings and enrollment data. You're also more likely to face obstacles in getting the care you need, and you risk paying an annual deductible that can reach up to $8,550. 

If you're not sure which option is best, start by calling Medicare's 24-hour hotline at 800-633-4277 (800-MEDICARE). Or talk it over with a Medicare specialist, a certified retirement counselor or unbiased support through your State Health Insurance Assistance Program.

Can I switch from Medicare Advantage if I need to?

Yes, you can switch between traditional Medicare and Medicare Advantage plans during open enrollment. Depending on the type of coverage you have — and, in some cases, your special circumstances — you may be able to enroll during one or more of the following periods:

• October 15 to December 7 — switch to a different MA plan or between MA and Original Medicare plans

• January 1 to March 31 — switch from one MA plan to another, or from an MA plan to Original Medicare

• Special enrollment period — join an MA plan or switch between MA plans if you have a qualifying circumstance such as relocation or loss of coverage

Sources

• How Health Insurers and Brokers Are Marketing Medicare, KFF. Accessed July 22, 2024.

• Uncle Sam wants you to help stop insurers' bogus Medicare Advantage sales tactics, NPR. Accessed July 22, 2024.

• Your Medicare coverage options, U.S. Centers for Medicare and Medicaid Services. Accessed July 22, 2024.

• An Economic History of Medicare Part C, Milbank Quarterly. Accessed July 22, 2024.

• The Medicare Advantage Quality Bonus Program [PDF], Urban Institute. Accessed July 22, 2024.

• Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly [PDF], Federal Register. Accessed July 22, 2024.

• Deceptive Marketing Practices Flourish in Medicare Advantage [PDF], U.S. Senate Committee on Finance. Accessed July 22, 2024.

• Medicare Advantage: A Policy Primer, The Commonwealth Fund. Accessed July 22, 2024.

• Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care, U.S. Office of Inspector General. Accessed July 22, 2024.

• 2024 Medicare Advantage and Part D Star Ratings, U.S. Centers for Medicare and Medicaid Services. Accessed July 22, 2024.

About the writer

Sarah Brady is a finance writer and educator who covers a wide range of topics, from personal and small business credit and loans to financial scams. Her expertise has been featured in Yahoo Finance, Forbes Advisor, CNN, Fortune Investopedia and other top media brands. As an NFCC-certified credit counselor, Sarah taught workshops on money management and coached thousands of clients on how to improve their credit. She is also a former HUD-certified housing counselor and educator for the City of San Francisco's affordable homebuyer programs. 

Article edited by Kelly Suzan Waggoner