Pros and Cons of Private Medicare Advantage Plans

Who should take advantage of these all-in-one senior health care plans?

Private Medicare Advantage plans can be a good deal for seniors looking for all-in-one medical and drug coverage. There are three types of policies -- Medicare HMOs, which charge the lowest premiums but impose the most restrictions on which doctors and hospitals you can use; regional preferred-provider organizations, which offer discounts if you use in-network doctors and hospitals; and private fee-for-service plans, which let you use any doctor or hospital that accepts the plan’s terms.

Medicare Advantage plans may charge lower premiums than you’d pay for Medicare plus a medigap policy and Part D prescription-drug coverage. But you could end up paying higher out-of-pocket costs throughout the year.

Some Medicare Advantage plans charge higher co-payments for big-ticket items such as hospitalization, or for critical services such as chemotherapy. Or they might not pay for the first 20 days in a skilled-nursing facility (which traditional Medicare covers). In addition, a plan may provide limited coverage if you travel out of state.

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Instead of simply responding to a sales pitch from an insurance agent or to an ad, check all of the Medicare options in your area. Compare plans using the Medicare Options Compare tool at Medicare.gov/mppf (opens in new tab), looking at both premiums and total estimated costs for people like yourself.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.