Medicare Advantage Looks Great When You’re Healthy - Here’s the Trap That Springs When You Get Seriously Ill

The extra benefits for seniors offered by Medicare Advantage can look attractive when someone first enrolls. Low premiums, bundled drug coverage, and dental or vision benefits may make a plan seem like an easy choice.

But a serious diagnosis can change what a person needs from their coverage. A recent study found that Medicare Advantage members were likely to leave their plans as their medical needs became more complicated. Worse, some may discover that returning to traditional Medicare with affordable supplemental coverage isn't always easy. Here's what the findings mean for current and future enrollees.

Serious illness was tied to higher disenrollment

The JAMA Health Forum study followed more than 1.05 million Medicare Advantage beneficiaries using enrollment and claims data from 2016 through 2021.

Developing at least one complex condition was associated with a 3.3-percentage-point increase in leaving the person's current plan. Most of that increase involved beneficiaries moving to traditional Medicare rather than selecting another Medicare Advantage plan.

The likelihood increased with each new condition

The more medically complex a beneficiary became, the more likely they were to leave their plan.

The adjusted increase in disenrollment ranged from 1.4 percentage points for one new condition to 12.8 points for four or more. In the study's unadjusted results, 37.3% of beneficiaries who developed at least four conditions left their plan within a year, compared with 17.6% of those who developed none.

Alzheimer's disease had the largest effect

Researchers examined eight complex conditions, including heart attack, stroke, chronic kidney disease, congestive heart failure, and chronic obstructive pulmonary disease.

Alzheimer's disease and related dementias produced the largest condition-specific increase in plan disenrollment, at 8.6 percentage points. Caring for someone with dementia often involves multiple doctors, changing care settings, and heavy involvement with family caregivers. Under those circumstances, a plan's network and approval rules may become much more important.

The research doesn't prove why people left

The study identified a strong relationship between new medical complexity and plan disenrollment, but researchers didn't survey beneficiaries about their reasons. That means it can't prove that coverage problems caused each person to leave.

A diagnosis also tends to coincide with more appointments, treatments, medications, and claims. As people use their coverage more often, they may get a clearer picture of whether their plan still works for them.

Medicare Advantage restrictions may become harder to manage

Medicare Advantage plans may require members to use a provider network or obtain prior authorization before receiving certain services. Those restrictions might barely register when someone only needs routine care.

After a major diagnosis, though, access to specialists, rehabilitation facilities, home health care, or particular hospitals can become more urgent. Even an otherwise good plan may no longer fit if a trusted doctor is out of network or treatments require repeated approvals.

Traditional Medicare offers broader provider access

With traditional Medicare, beneficiaries can usually visit any doctor or hospital in the country that accepts Medicare. That flexibility may be especially useful for someone seeking a specialist, getting care across multiple health systems, or spending part of the year in another state.

However, the tradeoff is cost. Traditional Medicare doesn't have an out-of-pocket maximum, so many beneficiaries purchase Medigap coverage to help pay out-of-pocket costs like deductibles and copayments.

Medigap may be difficult to obtain later

This is where the decision can get tricky. A beneficiary receives a one-time, six-month Medigap open enrollment period beginning when they're at least 65 and enrolled in Medicare Part B. During that window, insurers can't deny coverage because of preexisting health problems.

Afterward, an insurer may use medical underwriting unless the applicant has a guaranteed-issue right. Depending on the state and situation, someone who becomes ill could face a higher premium or be unable to buy the Medigap policy they want.

State protections can make switching easier

Where someone lives may substantially affect their options. The study found that beneficiaries who developed complex conditions were more likely to switch to traditional Medicare in states offering both guaranteed-issue and community-rating protections for Medigap.

That suggests some people may want to leave Medicare Advantage but remain because supplemental coverage isn't affordable or available. Medigap rules vary by state, so two beneficiaries with nearly identical medical needs may have very different choices.

Look at the exit route before enrolling

Before choosing Medicare Advantage, consider what would happen if your health changed next year. Check whether your preferred hospitals and specialists participate, how the plan handles prior authorization, and the maximum out-of-pocket cost.

It's also worth researching your state's Medigap protections before giving up the initial enrollment window. Anyone considering a switch should compare total costs and confirm Medigap eligibility before leaving an existing plan.

Bottom line

Medicare Advantage may work well while you're healthy, but serious illness can make provider networks and prior authorization rules much harder to manage. Reviewing how a plan handles complex care before you enroll could help you avoid money mistakes and coverage headaches later.

If you switch to traditional Medicare, remember that Medigap doesn't include prescription drug coverage. You may need a separate Part D plan, so coordinate the effective dates carefully to avoid an unexpected gap in coverage.

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