Should You Ditch Your Medicare Advantage Plan? Most People Do

Medicare coverage doesn't just mean signing up for government insurance. In fact, more than half of Medicare recipients now get their coverage through a Medicare Advantage plan, or Medicare Part C plan, which is offered by a private insurer.

Advantage plans are an alternative to original Medicare, replacing Part A (hospital coverage), Part B (outpatient care coverage), and sometimes Part D (prescription drug coverage).

Enrollment in these plans is expected to grow to 60% of the eligible population by 2030, with many people drawn to them because they're often marketed as "zero premium" plans with out-of-pocket limits, while Medicare Part B has uncapped spending and charges premiums. The Trump administration strongly favors the expansion of Medicare Advantage plans.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Yet, while Advantage Plans seem like a good alternative, a substantial number of older Americans who sign up for them don't stick with them. In fact, among those who signed up between 2011 and 2022, around half left their plans within five years.

Recent research published in the journal Health Affairs helps demonstrate why so many are opting out of their Advantage Plan during open enrollment, either by switching to a different Part C plan or by returning to traditional Medicare instead. Since these Advantage plans are less likely to attract beneficiaries over the long term, the study warns that such plans will likely have less incentive to cater to participants with chronic conditions.

Should you ditch your Medicare Advantage plan? Why others are

Researchers sought to gain insight into why Medicare Advantage participants were disenrolling by using information from the Medicare Current Beneficiary Survey, linked with data on Medicare Advantage enrollment. The survey measures patient satisfaction with access to medical care, as well as the cost and quality of the care they receive.

Researchers found two primary factors drove departures from Medicare Advantage plans, and neither was related to cost. Instead, most people who disenrolled did so because of difficulty accessing care as well as concerns about the quality of their care.

Access issues, in particular, were especially likely to prompt Advantage customers not just to switch to a different Medicare Part C plan but instead to return to traditional Medicare. This makes sense, given that traditional Medicare doesn't impose the same limits as Advantage Plans on which doctors or care providers patients can visit.

Hospitals have also been ending their affiliations with Medicare Advantage Plans, creating huge problems when break-ups happen outside of the open enrollment period, and Advantage Plan customers suddenly find themselves without coverage at the hospital where they'd been treated.

Researchers also revealed that individuals with health issues were more likely to switch out of their Medicare Advantage plan. Those who described themselves as being in poor health were:

• More than twice as likely as other Advantage members to express difficulty with getting care;
• More than three times as likely to be dissatisfied with the quality of care they are getting
• More than twice as likely to be unhappy with the cost of their care
• More than twice as likely to be dissatisfied with their specialty care.

"People who stay in [Medicare Advantage} are shopping for better service, but … those who switch to traditional Medicare are the ones potentially with high health care needs, who are much more strongly driven by dissatisfaction with access to care issues " said Geoffrey Hoffman, Ph.D., Associate Professor, U-M School of Nursing and one of the study's authors.

This tendency to switch between Advantage plans or back to original Medicare could undermine the long-term effectiveness of these plans while also driving up the nation's cost to provide original Medicare. The study warns that Advantage plans will likely focus on the short-term healthcare needs of beneficiaries due to plan hopping.

How you can find the right Medicare plan

Since concerns about care quality and accessibility were the most likely reasons for retirees to switch out of their Medicare Advantage Plan — often back to traditional Medicare — it's clear that these are issues that older Americans should pay attention to when shopping for an Advantage Plan.

Those shopping for coverage should visit the Advantage plan's website to find their searchable directory and determine if their preferred care providers accept that insurance plan. Plan websites may also offer a comprehensive directory of all care providers whose services are covered, providing insight into the breadth of the plan's network. The Medicare Advantage open enrollment period is from January 1 to March 31 each year. original Medicare's open enrollment period is from October 15 to December 7 each year.

Those looking for a plan should also check the Star Ratings published on the Medicare Plan Finder by the Centers for Medicare and Medicaid Services (CMS). The Health Affairs research revealed that enrollment in a plan with a low star rating was far more likely to result in dissatisfaction with the Medicare Advantage Plan and to lead to disenrollment when given the opportunity, as shown in the figure below.

"While imperfect, the star rating a plan receives is still signaling something important, that our study tells us is definitely linked to why people are switching," Hoffman said.

Online guides that provide insight into shopping for a Medicare Advantage plan can also be a helpful resource. It's best to start exploring these tools before open enrollment, though, to prepare in advance, as there's limited time to sign up for coverage you're committing to for the year — except in situations where major life changes entitle you to a special enrollment period.

Read More

• Problems With Medicare Advantage Plans Keep Mounting
• Medicare Advantage Customers Face Shrinking Pool of Insurers
• The Medigap Trap
• The Surprising Way to Reduce Your Dementia Risk