Traditional Medicare vs Medicare Advantage plan? Which way do I go? Do I choose a Medicare Advantage plan that has a built in pharmacy benefit? Or do I go with Traditional Medicare and get a separate part D plan and a separate supplement…and then which supplement? Which one is less expensive? Which one give you more control of your healthcare? These are all questions that need to be asked.
As far as which direction to go? I prefer traditional Medicare with a supplement, separate part D, and supplement to Advantage plans. Why? First, research shows that people who move from Medicare Advantage plans to traditional Medicare use more healthcare in their first year back. It kind of looks like they weren’t getting the care they wanted on their Advantage plan.
Traditional Medicare vs Advantage: Utilization Reviews and Pre-Approvals
How could that happen? With a Medicare Advantage plan the insurance company is paying the claim, not Medicare. Since they are paying the whole claim they have the leverage to look at the proposed plan of treatment and give a thumbs up or thumbs down. What I am referring to is the “pre-approval” process (which is sometimes called a utilization review).
When looking at Traditional Medicare vs Medicare Advantage these reviews and pre-approvals are just not as frequently used in traditional Medicare. Insurance companies will say they are just enforcing standards of care. Doctors like to cut out certain steps sometimes…but sometimes there is a good reason! The body is complex and sometimes care doesn’t need to follow a cookie cutter program.
The flip side of the argument is that these reviews and pre-approvals are a safeguard against fraud, waste, and abuse. Believe it or not, some doctors will do extra procedures or pad billing for no other reason than to make more money! There needs to be a balance, but for the time being, I am going to advise you to go for traditional Medicare IF you can afford it.
Traditional Medicare vs Advantage: Networks or No Networks?
Second, with traditional Medicare, you have no networks. You can use any doctor and any facility that will bill Medicare. That’s generally 85 to 95% of the doctors and facilities nationwide. I don’t think there are too many Advantage Plan networks that can boast that.
Most Medicare Advantage plans have state-by-state networks. Part of the problem is that insurance is a state-based product; so networks are state-based. Medicare is a federal program so it includes all the states (and territories too). This is a big advantage if you winter in the south and summer in the north.
That being said most Advantage plans to have some sort of program to allow you to get something like “in-network” benefits in most other states. Interestingly, these programs don’t apply to all states even for the companies that sell in all states. In fact, they break it down in most states county by county as to whether you can use the network in that county.
Traditional Medicare vs Advantage: There are no Networks for Emergency Care
Two things to remember about using your benefits out of state. First, if it’s not an emergency then call the number on the back of your card, tell them where you are, and ask them where you can go that might be semi-close by. Second, if it is an emergency then there are no networks. If you are in a car wreck, having a heart attack, stroke, etc. then the ambulance is going to pick you up and take you to the closest facility that they think can treat you appropriately.
Once you are stable and in a regular room then you or someone better be calling your insurance company to see if you should stay there or move to an in-network facility. You should also find out who is going to pay for that transfer. Ask the If you can’t get it in writing then make sure you get the name of the person you were talking to and note the time you called. (For More Information on Networks Click here)
What is Your Insurance Agent’s Advice and Why?
If you ask 10 insurance agents which is better; traditional Medicare or Medicare Advantage I’ll bet the majority will say Medicare Advantage. Why? We make more (substantially more) commission in the first year when we sell a Medicare Advantage plan.
It’s kind of backwards really. Traditional Medicare with a supplement, a Part D, and a dental plan will typically cost you more, but it pays agents less. Medicare Advantage plans typically cost you less each month, but they pay us more.
Medicare Advantage plans are heavily subsidized by the government. Research shows that many insurance companies that sell Medicare Advantage plans derive a disproportionate amount of profit from these plans. Since these plans are so profitable they really incentivize agents to push them.
Pretty Much Everything Inside Medicare is Better than Pretty Much Everything Outside of Medicare
I want you to remember something from a different article. One of my 4 Maxims of Medicare is that most everything inside Medicare is better than most everything outside of Medicare. So even though I think that traditional Medicare is better I’d still rather have someone on a Medicare Advantage plan than what is available to the 64 and under crowd.
For a lot of people Medicare Advantage just fits their budget and finances better. I DO sell Medicare Advantage plans, but if you can afford to stay on Traditional Medicare then I think thats the way to go. It gives you more flexibility (no networks) and better control (fewer utilization reviews) of your health care.
So I sell a lot more supplements than I do Advantage Plans…now you know why.