Medicare Advantage plans, like traditional Medicare, are funded by the federal government, but they are offered though private insurance companies, which receive a set payment for each enrollee. The idea is to help control costs by allowing these insurers, who must cover the same services as traditional Medicare, to keep some of the federal payment as profit if they can provide care less expensively.
Excerpt: Which to Choose: Medicare or Medicare Advantage? New York Times By Paula Span
Published Nov. 20, 2022Updated Nov. 20, 2022
These plans do not provide care, they pay for it.
Over the last several weeks TV ads for Medicare Advantage plans have promised one or more of the following:
- No premiums
- Medicare Part B premium reimbursement
- Prescription drug coverage
- Dental, vision and hearing coverage
- A dollar allowance for groceries
- Money to spend on non prescription drugs
- Money toward utility bills
- Money toward pet expenses
- Fitness center membership
- Free trips to receive medical care
What’s going on? How can these plans that often have no premium and rebate the Part B premium provide all this additional coverage?
How indeed?
The answer can only be one or more of the following: Medicare is subsidizing at too high a level, the plans attract healthier seniors, the plans have restricted provider networks and strictly manage care, benefits as advertised are not as they appear.
QUINNSCOMMENTARY 
I have not shopped for Medicare yet. I did not realize the bullet points listed here. What I do know is my current EPO plan only pays an average of 71.2% of all my bills. I will have one doctor dropping my insurance next year. According to KFF, the average health insurance company pays 199% more than Medicare and 143% toward doctors than Medicare. This would mean that I should be able to pay cash for my healthcare at a Medicare rate of somewhere are 35% of what I am billed.
Besides the cost shifting done in the healthcare industry, either the doctors can afford to take less money or they cannot. I get some lab tests that reimbursed at $7.75. The 10 minutes of the person drawing the sample, shipping costs, testing supplies, the IT network, the lab tech processing the sample, and the doctor verifying the sample in the lab, all cost something. Some how they make money? Or do they shift the costs onto others?
If I was a doctor, I know that I would want to earn enough to pay back my college loans and live in a house, not my car. So how can these rates hold up? But that have been for years.
For the Medicare Advantage plans to be true and offer all of those things in one plan (if they really do) for FREE, then either the healthcare system charges too much or care choices are extremely limited.
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Richard,
As a former CFP prior to retirement, I studied these in depth for my clients and if they knew all the facts, they would almost always opt for regular Medicare. Problem is, when folks call the number on the screen, I believe that full disclosure is not made, PARTICULARLY the fact that if you become disenchanted with your MA plan, you have to apply to rejoin regular Medicare and they don’t have to accept you if you then have serious medical conditions. Let the buyer beware, but I’m afraid that seniors are taken advantage of with these come-ons.
Rick Peenstra
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I believe switching from MA back to original Medicare is not an issue. The issue is getting medigap plan in most states would require underwriting. So if one is happy to pay the 20% that original Medicare does not pay, then can switch back. But there is no longer a cap for that 20% you have to pay.
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You’re right, Medigap plans can charge extra, even refuse to accept your enrollment.
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100% correct.
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