Why are Advantage Plans controversial and what are the risks of choosing one instead of a Supplement? 

I’d like to remind everyone again that this series is intended to be read in chronological order and prior editions may need to be referenced to fully comprehend all the important information I feel people need to make the best personal decision when choosing a Medicare plan. You can find all previous columns on our Facebook Group, “Ask the Medicare Specialist,” or our website, www.GetYourBestPlan.com. 

No shortage of controversies surrounding Advantage Plans

The number one controversy may be the cost to taxpayers versus Original Medicare. As I wrote in Part 1 of this series, the intent of the Advantage Plan program at inception was for it to be less costly than Original Medicare. And it was at one time, saving taxpayers approximately 10% for every person enrolled. However, today, it’s estimated that Advantage Plans cost 20% or more than Original Medicare. With 35 million enrolled in Advantage Plans, the bill for American taxpayers is approaching $100 billion more annually than if everyone were on Original Medicare instead. So today, rather than saving money, Medicare Advantage has ballooned into a liability that’s a huge contributor to the insolvency of Medicare Part A, which is now projected to occur as early as 2033. When this day comes, there will be serious ramifications for all Americans, not just those on Medicare, because payroll taxes will likely have to be increased and reimbursements to providers of Medicare Part A services will automatically be cut by 11%, wreaking havoc on hospitals. 

Another controversy of Advantage Plans, and other commercial health insurance such as employer coverage and Obamacare for that matter, is the use of “prior authorizations,” which can lead to delays in getting care or denials of claims. Before services such as MRIs, CT scans, PET scans, surgeries, infusion therapy, and a few others can be performed, Advantage Plan companies must give them the “green light”. Even when everything goes smoothly that can cause a couple of weeks’ delay in getting care your physician ordered. From time to time, insurance companies may force people to get physical therapy or injections first, causing further delays. Although not common, a claim can be denied altogether. In contrast, Original Medicare almost never requires prior authorization. They allow the treating physician to order services which can be received immediately without any interference or delay. 

Yet another controversy is the accusation that some Advantage Plan companies, who also own large healthcare and physician networks, have employed the practice of “upcoding,” which is the diagnosing of patients with more severe illnesses and conditions than they actually have in order to get a higher level of “risk-adjusted payments.” Some reports estimate that this practice cost taxpayers $40 billion dollars in overpayment to insurance companies in 2025 alone. Several larger Advantage Plan companies have already settled or are facing lawsuits by the Federal Government for “upcoding.” I want to make it clear that none of our local Western Pennsylvania Medicare Advantage companies have been included in these accusations. 

Another controversy which I mentioned at the end of Part 2 of the series is how the risks of Advantage Plans are almost never disclosed by agents or insurance company representatives. In fact, most sell Advantage Plans exclusively and never even mention Supplements as an option. Or if they do, simply dismiss them as a waste of money or only for people who aren’t healthy. Agents who advise Medicare recipients in this manner are derelict in their duties. The reasons this is so common is because Advantage Plans pay much higher commissions than Supplements, which I consider another controversy in itself. 

Risks of Advantage Plans

One of the first risks that should be disclosed is the potential for much higher out-of-pocket costs each year, up to one’s MOOP, which average around $6,000 today. The services most likely to result in paying to the MOOP with Advantage Plans are chemotherapy or other infused drugs, injection therapy, radiation, and Skilled Nursing. I’m very concerned that hospital stays are going to increase dramatically and will be added to this list in the coming years. In states outside Pennsylvania, it’s already common for a single 5-day or longer hospital stay to have a co-pay of $1,500 to $2,500. Be advised that those on Supplement Plans G or N would pay $0 for every service I just mentioned once their $283 deductible had been met. 

Which brings me to another risk; benefits can change year to year. The period from 2019 to 2025 was what I call the “Golden Age of Advantage Plans.” Never in my 19 years in the Medicare insurance industry was there a better combination of low premiums, co-pays, and MOOP along with as generous ancillary benefits than from 2019 to 2025.  However, as Advantage Plan companies face lower profit margins and even losses, I believe 2026 started the move back to what plans looked like prior to 2019 when the most popular had premiums of $50 to $80/month, higher hospitalization co-pays, and very few, if any, ancillary benefits. 

If that’s where we’re headed, the biggest risk of choosing an Advantage Plan, in my opinion, is the very real possibility of never being able to change to a Supplement again. You see, acceptance in a Supplement is only guaranteed 6 to 12 months after one’s initial Medicare Part B effective date. After that, Supplement companies in most states can discriminate on who they accept into their plans based on current or previous health conditions. Those with a diagnosis of kidney or heart disease, lymphoma or myeloma, diabetes with neuropathy or retinopathy, auto-immune disorders, among other chronic conditions will be denied. If Advantage Plans return to pre-2020 structures with higher premiums and co-pays along with little or no “extras,” their value diminishes. At this time, a large number of people will want to move to a Supplement. But because the agent or company representative who originally enrolled them never explained this risk, they’re going to be shocked to learn they won’t be able to get a Supplement and will be forever limited to Advantage Plans only. 

Part 4 is the last edition of the series and will focus on what I already gave of glimpse of in this edition. The following questions will be answered: How have Advantage Plans changed over the years? What does the future look like and how will that affect those currently on HMOs and PPOs? What should those currently on Advantage Plans consider now and during the next Medicare Annual Enrollment Period?

If you have any questions about the first three Parts of The History and Facts of Advantage Plans or would like to make an appointment for a consultation, give the office a call, 724-603-3403 or email me personally, Aaron@GetYourBestPlan.com.