Please be advised the series is meant to be read in chronological order from Part 1 to Part 4. Part 1 can be found here and also on our Facebook Group.

I want to stress how important it is to learn about both the risks and rewards, pros and cons of Advantage Plans as well as how they differ from Supplements. Nothing is more vital than having that understanding prior to making a choice between the two types of plans that limit out of pocket costs of Original Medicare Parts A and B. 

Question: Why are Advantage Plans such a vital part of Medicare? Why have they become so popular? Who benefits from them and is best to choose one instead of a Supplement? 

Advantage Plans are an essential option for those on Medicare

Answer: The reason Advantage Plans are vital and must always remain an option for those on Medicare is simple. Premiums are affordable, with plans as low as $0 to $30 per month. Advantage Plans also put a limit on what someone can be billed in a calendar year, known as a Maximum Out of Pocket or MOOP, while there is no end to what someone on just Original Medicare can be billed!  

Prior to Advantage Plans becoming mainstream in 2006, millions of seniors were forced to ride with Medicare only because they couldn’t afford a Supplement, leaving them vulnerable to 20% of the cost of Part B outpatient services and the entire hospital deductible, $912 in 2005 and $1,736 today. Due to these expensive out of pocket costs, many seniors would often put off getting care. 

Advantage Plans can dramatically reduce medical bills versus Original Medicare alone. For example: A routine knee replacement surgery for someone on Medicare only would have an out-of-pocket cost between $1,500 to $2,500. A well-chosen Advantage Plans can limit that same service to between $200 and $400. Chemotherapy for someone with Medicare could easily cost as much as $20,000 annually while Advantage Plans, because of their MOOP, can limit those bills to as little as $4,500. 

Supplements, in contrast to Advantage plans, eliminate all costs for a knee replacement or Chemotherapy once the Part B deductible of $283 has been met. However, they start at $80 to $100 per month for a 65-year-old and can get very expensive over time. People in their 80s and 90s often have premiums in the $300 to $600 per month range. This is why it’s so important to have Advantage Plans available as a fallback option for seniors on a fixed income to help limit costs of care versus returning to Medicare only, which many people had no choice but to do prior to Advantage Plans becoming viable in 2026. 

What has driven the popularity of Advantage Plans?

Today, 54% of all Americans on Medicare are enrolled in an Advantage Plan. I just discussed one of the reasons, the lower premiums compared to Supplements. Those who stay relatively healthy can save hundreds to thousands of dollars annually. Over a five-year period, considering rate increases on Supplements, Advantage Plans offer potential premium savings of $7,000 to $8,000! 

It’s important to mention again, however, that Medicare combined with a Supplement limit out of pocket costs to a bare minimum, while virtually all medical services for those on Advantage Plans come with a cost, from just a few dollars to thousands (refer to Part 1 for a list of examples). So, keep in mind, it would only take 1 year of meeting the average MOOP on Western PA plans for most, if not all, of those five-year premium savings to evaporate. Those who met their MOOP twice in five years would find themselves in a deficit. 

I think possibly a greater allure than the low premiums are the ancillary benefits, “extras,” that Advantage Plans offer. For example, one of my favorites costs less than $30 per month and provides excellent dental coverage that pays 100% for cleanings and X-Rays as well as 90% for services like fillings, crowns, root canals, extractions, and even dentures while offering thousands of dollars annually in total benefits. This and many other plans also come with more “extras” such as: A no cost exam and an annual allowance to purchase glasses or contacts; OTC benefits that provide a quarterly or annual dollar amount that can be used to purchase products like toothpaste, vitamins, pain relievers, cold medicine, and practically anything you could find in the health section of a grocery store or pharmacy;  A free gym membership; Monthly or quarterly allowance to purchase groceries (limited plans only). 

When people start tallying how much money can be saved in premiums along with the potential real dollar value of all the ancillary benefits, some might wonder why anyone would ever choose not to enroll in an Advantage Plan. The answer is because there are several risks involved, most of which are never explained or disclosed by Medicare agents or Advantage Plan company representatives. 

And that, along with the controversies surrounding Advantage Plans, is the focus of Part 3 of this series. 

If you have any questions about this week’s edition or would like to make an appointment for a no-cost consultation with one of our experienced and licensed agents, give us a call, 724-603-3403, or email me personally, Aaron@GetYourBestPlan.com.