Ask Liz Weston

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Medicare Advantage

Q&A: Benefits of Medicare Advantage HMOs

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Dear Liz: You mentioned that Medicare Advantage Plans have networks that can change from year to year, as well as other disadvantages. This is not true for our Medicare Advantage HMO, according to my experience. The HMO has its own doctors and hospitals, but I have not noticed them pulling any surprises. And they do look after your health much better than the traditional Medicare that some of my friends are on. My friends’ care is entirely in their own hands, and some are getting very old and would benefit from the care that my HMO provides.

Answer: You’ve highlighted one of the key advantages of a Medicare Advantage HMO, which is coordinated care.

There are two main types of Medicare Advantage plans, the all-in-one private insurance alternative to original Medicare. With PPOs — preferred provider organizations — people are generally allowed to see medical providers outside their networks, although those visits will cost more. With HMOs — health maintenance organizations — you’re expected to stay in the network for most care, and you often need a referral to see a specialist. You could pay up to 100% of the cost if you use a doctor or hospital not in the HMO.

In exchange for those restrictions, people get a primary care provider who coordinates all of their care. That’s in contrast to PPOs or original Medicare, where a patient may have many providers who never talk to each other.

Q&A: Medicare Advantage to Original Medicare

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Dear Liz: I just read your answer about switching from Medicare Advantage plans to original Medicare, and how you might not be able to get an insurer to write you a supplemental Medigap plan. I was with a Medicare Advantage plan for years and then my medical group stopped participating. I have many preexisting conditions and would not be able to find adequate or affordable coverage if I had to apply for a supplemental plan. Luckily another insurer gave automatic acceptance to the 32,000 of us who were thrown out of our medical group so I was able to get full coverage through a Medicare supplement.

I hope you will repeat this info in several columns so consumers are better informed. I had no idea you couldn’t easily switch back and forth.

Answer: To recap, Medicare Advantage is the private insurance alternative to original Medicare. Like other private coverage, Medicare Advantage plans have networks and benefits that can change from year to year. Original Medicare benefits typically don’t change, but many expenses aren’t covered so you generally need a private insurance supplement to pay for those costs.

If you want to switch from Medicare Advantage to original Medicare after the first year, however, you normally don’t have “guaranteed issue” rights for a Medigap supplemental policy and you could pay a lot more for this important additional coverage.

There is a “nuclear option” that would give you guaranteed-issue rights again, and that’s moving out of your Medicare Advantage plan’s coverage area. You have to actually move, not just temporarily relocate. But you would be able to switch to original Medicare and get a guaranteed-issue supplemental plan.

Q&A: Be aware of these issues when switching between Medicare Advantage and Medicare

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Dear Liz: I am planning to retire this year. If I choose a Medicare Advantage Plan, am I able to switch back to original Medicare without paying a fine?

Answer: Medicare won’t charge you extra, but you won’t necessarily have “guaranteed issue” rights for a Medigap supplemental policy. If you want to switch after the first 12 months, you could pay a lot more for this important supplemental coverage.

To recap, Medicare Advantage plans are the all-in-one alternative to original Medicare.

Medicare Advantage plans may offer types of coverage that original Medicare does not, such as hearing, dental or eye care. Many people like the fact that their Advantage plans seem to include more than original Medicare, and do so for a low or even no additional monthly premium.

But Medicare Advantage plans are offered by private insurers, which typically have networks of medical providers. These networks, as well as other benefits, can change from year to year. If you get care outside the networks, you typically pay more — sometimes a lot more. The rap on Medicare Advantage plans is that they can be great when you’re healthy, but depending on the plan may not be so great if you get sick.

With original Medicare, benefits remain the same and you can use any provider that accepts Medicare (the vast majority do). But original Medicare coverage has significant gaps, which is why you’ll need a Medigap plan offered by a private insurer.

If you opt for original Medicare when you are first eligible, insurers are required to issue you a Medigap policy and can’t charge you more based on your health status. Without guaranteed issue, an insurer can refuse to write you a Medigap policy or charge you a lot more.

You also have guaranteed issue rights if you buy a Medicare Advantage plan when you first become eligible for Medicare, but decide within 12 months to switch to original Medicare.

Q&A: Why Shopping for the Right Medicare Plan Matters

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Dear Liz: In the past, you’ve discussed the pros and cons of Medicare Advantage plans versus original Medicare. There is one more point I think you need to tell readers, and that is the high cost of Part D prescription drug coverage for people who choose original Medicare. For example, if you need just a few expensive drugs that are Tier 3 or higher, coupled with the monthly premium, you can easily pay $3,000 a year or more. I am not saying original Medicare is bad. On the contrary, it gives you great freedom of health choice. However, Part D is expensive.

Answer: Let’s start with the news that in 2025, Medicare Part D will have a $2,000 out-of-pocket maximum. The cap applies to Part D plans purchased by people on original Medicare as well as to Medicare Advantage plans that have prescription drug coverage. Once you hit the limit, you won’t have to pay more for covered drugs for the rest of the year.

Note the phrase “covered drugs.” Prescription drug coverage is provided by private insurers, and their lists of covered prescriptions can change every year. An insurance plan that covers a drug this year may not cover it next year, so every year during Medicare’s open enrollment — which ends Dec. 7 — you should be shopping to make sure your plan provides the coverage you need. If you don’t comparison-shop during the annual open enrollment period, you can wind up paying substantially more than you expected.

As background, Medicare Advantage plans are provided by private insurers as an alternative to original Medicare. Whereas original Medicare allows you to choose any doctor who accepts Medicare — and the vast majority do — Medicare Advantage has provider networks and may not cover care outside those networks, or may charge more. Also, Medicare Advantage networks and benefits can change from year to year.

Fortunately, Medicare offers a comparison tool to help you sort through your options. Entering the drugs you take and your preferred pharmacy can help you select the best plan for your circumstances. Now’s the time to compare and switch plans if necessary.

This week’s money news

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This week’s top story: October mortgage rates forecast. In other news: 6 pitfalls to avoid when shopping for Medicare Advantage, 5 tips to get primed and ready for Amazon’s October Prime Day, and entrepreneurs feeling less optimistic as rates rise.

October Mortgage Rates Forecast: Highest in 2 Decades
In September, mortgage rates reached their highest levels since 2000, and they could inch upward in October.

Shopping for Medicare Advantage: 6 Pitfalls to Avoid
From picking a plan for the perks to not checking next year’s network, here are some traps it’s easy to fall into while shopping for Medicare Advantage.

5 Tips to Get Primed and Ready for Amazon’s October Prime Day
Amazon’s Prime Big Deal Days event is next week: Oct. 10-11.

NerdWallet Small-Business Financing Index: Rates Up, Optimism Down
NerdWallet’s annual index considers data about delinquency rates, new loan volumes and business-owner sentiment.

Q&A: Switching back to original Medicare

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Dear Liz: I’m 75 and I’ve been on an Advantage plan since I started on Medicare at 65. I’m interested in switching to original Medicare with a supplemental policy. I know I will have to enroll in a drug policy also. Will I be subject to any penalties for late enrollment for any of the three policies?

Answer: You won’t be subject to penalties but you will be subject to underwriting for the supplemental policy. That means the private insurance companies that offer these plans can deny you coverage or charge you more for preexisting conditions.

There are a few exceptions. Insurers can’t subject you to underwriting if you’re still within the first 12 months of having a Medicare Advantage plan, for example, or if you move out of the plan’s service area. In addition, four states — Connecticut, Maine, Massachusetts and New York — require Medigap companies to offer coverage to all Medicare beneficiaries.

Start shopping around and make sure your application for a supplemental policy has been approved before canceling your current plan.