Should You Choose Medicare Advantage over “Regular” Medicare?

If you’ve been stuck at home watching TV for the past 12 months, you may have seen ads offering perks for choosing Medicare Advantage over “regular” Medicare. The perks sound like a great deal, and Medicare Advantage plans can indeed be a great choice for some. However, there are some important differences that you need to be aware of before deciding.  And since the decision could be irreversible, considering the effect of these differences is paramount.

Medicare basics

When people think of Medicare, they are really thinking about Part A and Part B, also called “Original Medicare.”

  • Medicare Part A covers inpatient hospital care, some skilled nursing care and some other services like hospice.
  • Medicare Part B covers some doctors services, outpatient care, medical supplies, and some preventive services.
  • Medicare Part D covers prescription drugs.

Medigap insurance

While parts A, B, and D cover most services, there are some that are not covered. Of the services that are covered, deductibles, co-payments, and co-insurance apply. These add up to about 20% of the total costs that you must pay out of your own pocket. 

Most people will purchase a supplemental “Medigap” policy to cover the gaps. They will also typically purchase a prescription drug plan under Part D. When you first become eligible for Medicare, you cannot be turned down for a Medigap policy, nor can you be charged more for any preexisting conditions.

Medicare Advantage

Medicare Advantage is a private insurance policy that covers all the things Medicare would cover. The all-in-one coverage may have a lower monthly cost than the “regular” Medicare combination. Insurance companies also add additional features to make the policies attractive. These can include dental and vision coverage, transportation to doctor appointments, in-home services, and the like.


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The additional features and perks are attractive, but your out-of-pocket costs may be more under Medicare Advantage, and services may be unavailable in some areas.  There are also important restrictions and limits:

  •  You typically can only use doctors and hospitals in the plan ‘network.’ If you go outside the network, unless it’s a life-threatening emergency, the cost won’t be covered.
  • Some of these plans require you to choose a primary care physician (PCP) who will coordinate your care. That means you must see your PCP first and get a referral before you see a specialist.
  • Your doctor may be in the network this year, but Doctor groups move in and out of networks all the time, forcing you to either change doctors or change plans.
  • If you travel abroad or spend time in other parts of the country, these plans usually won’t cover you outside of their ‘area’.

While your insurance premiums may be lower under Medicare Advantage, the coverage tends to be better and more predictable under traditional Medicare with a supplement plan. This matters most if you need a lot of care, treatments, and services.

Changing your mind

If you start out with Medicare Advantage, you can switch back to “regular” Medicare. However, unless you switch back during the first 12 months, you might not be able to get a supplement plan. The insurance company can require underwriting and can turn you down or charge you more for pre-existing conditions. This is one of the most important issues in your decision to choose Medicare Advantage.


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For example, if after 10 years on Medicare Advantage, you are diagnosed with cancer that is expensive to treat, you may wish to switch back to a regular medigap policy for the more comprehensive coverage it provides. However, the medigap insurance companies can decline to issue you a policy or may charge a lot more based on the pre-existing conditions you now have.

Is Medicare Advantage an advantage?

If you are healthy and you stay that way for many years, Medicare Advantage can be a great deal. However, if you run into health issues, costs may be much higher, and the restrictions may severely limit your choices for care.  

Planning to stay healthy throughout retirement is a great goal. But who knows what will happen between ages 65 and 85? If you decide to go with Medicare Advantage, you should set aside some savings for the additional medical costs you may eventually have. At Blankinship & Foster, navigating health insurance choices is one part of the overall financial planning we help our clients do. As fiduciary financial advisors in San Diego, our job is to make sure our clients meet their retirement goals, despite all the uncertainties they face. Contact us today to discuss how we can help you develop a multi-year plan that aligns with your goals.

About Rick Brooks

Rick Brooks, CFA®, CFP® is a partner of Blankinship & Foster LLC and is the firm’s Chief Investment Officer. He is a lead advisor, counseling clients on all aspects of personal financial management. Rick serves on several boards. He is the Chairman of the Board of Girl Scouts San Diego, and also chairs the San Diego Foundation’s Professional Advisor Council. Rick and his family live in Mission Hills. Rick enjoys spending time with his family, theater, cooking, skiing, gaming and reading.

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