Switching Medicare Advantage Plans? Five Things to Know

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Medicare Open Enrollment is in full swing, which means now is a great time for people to make changes to their Medicare coverage. Amongst the many changes you can make during this time is switching from one Medicare Advantage plan to another. As a refresher, a Medicare Advantage plan is a single, all-in-one plan that bundles your Medicare coverage altogether from a single, private insurance company. Although the plans must cover the same services as Original Medicare, other factors can vary greatly — such as costs, where care is in-network, and which prescription drugs are covered. Every year, the details of these plans change. Which is why your clients might be itching to switch plans if their previous plan has changed drastically for the upcoming year. Before making the switch though, here are five things to know that will help you and your clients make the optimal health plan decision for their needs.

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Understand what all the different terms and definitions mean.

Before building a house, you start with a firm foundation. To pick the ideal Medicare Advantage plan (or any health plan for that matter) it’s helpful to start with a base knowledge of the terms and definitions you’ll run into. These terms will be good for you to know so you can adequately guide clients, but clients would also benefit from learning. Here are a few core definitions to know:

• Coinsurance & Copayment: An amount you may be required to pay as your share of the cost for services after you pay any deductibles. Coinsurance is usually a percentage (for example, 20%) while a copayment is a fixed amount (for example, you might pay $10 or $20 for a doctor's visit or a prescription drug).
• Deductible: The amount you must pay for healthcare or prescriptions before Original Medicare, your Medicare Advantage Plan, your Medicare drug plan, or your other insurance begins to pay.
• Network: A network is a group of healthcare providers who have agreed to provide care based on a plan’s terms and conditions. These providers include doctors, hospitals, and other healthcare professionals and facilities. With most plans, you’ll save money by using an in-network provider.
• Out-of-pocket: Health or prescription drug costs that you must pay on your own because they aren’t covered by Medicare or other insurance.
• Premium: The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.

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Definitions are from medicare.gov

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You might be forced to change your primary care physician and/or specialists.

Let’s say your client wants to change Medicare Advantage plans because their current one has increased its monthly premium and no longer covers one of their medications. Both are valid reasons to want to change health plans, but a factor to consider that’s often forgotten is providers. Not all physicians, specialists, and facilities are “in-network” for all health plans. If your client has a physician or specialist that they want to continue seeing, they’ll need to make sure they switch to a Medicare Advantage plan that has their provider in-network or risk paying for it out-of-pocket. If your client doesn’t mind changing providers, then that’s a factor they don’t have to worry about as much.

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If you take medications, they’re likely covered differently per health plan.

One of the biggest hurdles we see for clients when they do a HealthPlanning Analysis is that their health plan has stopped covering one or more of their medications, or changed its drug formulary, introducing a change in drug costs. It can be confusing to try and figure out on your own which health plans cover which medications and for how much — especially when you also bring generic vs name-brand into the conversation. For example, we recently had a 67-year-old client who takes several medications; one of which is an expensive brand medication called Taltz. Although the linked article shows she was in enrolled in Original Medicare (with a standalone Part D prescription plan) the same situation occurs for those who have embedded drug coverage within their Medicare Advantage plan. For 2022, her health plan showed she would have out-of-pocket expenses of $15,593.31. This isn’t an insignificant expense, but one that the client and her financial planner had foreseen and accounted for in her financial plan since she will likely be on this medication for some time. She hadn’t felt inclined since initially enrolling in Medicare to make changes, but her 2023 HealthPlanning Analysis showed that keeping the same plan for 2023, with the same medications, would result in out-of-pocket expenses (premiums plus drug costs) of $91,648.56! An alternative plan showed that annual expenses for 2023 would be $6,864.29. For obvious reasons, she changed plans. 

As you help clients pick their ideal Medicare Advantage plan, keep in mind that you’ll need to look into the drug formularies of the plans they’re considering to see if their medications are covered and affordable since that coverage is embedded within the plan.

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If you’re switching because of monthly premiums, consider other healthcare costs too.

Monthly premiums are one of the main considerations when choosing any kind of health plan, but it’s not the only consideration. Your client might be alarmed by an increase in their monthly premium and want to change plans, but sit down with them and look at other costs too. Did the out-of-pocket maximum change? What’s the deductible amount? What’s the coinsurance amount? What’s the copayment amount? Do they take medications that are significantly cheaper with this plan than another plan that has a lower monthly premium? Make sure to also look at these costs as annual totals. Doing this cost analysis will show which plans are the most affordable in the long run. Just because a plan has a higher monthly premium does not mean that it is the most expensive plan overall.

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Think about any plannable procedures or medical treatments you might receive in the coming year.

Let’s say your client has been enrolled in a plan with a relatively low deductible for the past year, but rarely used the healthcare system. To lower how much they pay in monthly premiums, they may want to switch to one with a higher deductible. Before they make this switch, it’s important to ask them to consider what their healthcare needs might be for this year. They may have been healthy and had no medical issues last year, and hopefully, that will be the same case for the upcoming year! But let’s say they were planning to see a specialist next year about the discomfort they’ve been having in their knee. There’s the first expensive medical bill they’ll get. Then, the specialist lets them know they need a knee replacement. There’s another expensive medical bill. Both of these could be a lot more affordable if they stay with a lower deductible plan. Of course, you and your clients can’t plan for medical emergencies. But if your client knows about any plannable procedures, imaging services, or lab services they want done next year, it’s important to factor those into the choosing process for their Medicare Advantage plan.

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Final Thoughts.

Healthcare costs can either help or hurt your clients’ financial goals, and healthcare costs associated with Medicare Advantage plans are no exception. Even beyond costs, helping clients pick the best health plan for their needs can save them a lot of unnecessary stress and give them peace of mind that their health needs will be taken care of. However, it can be easy to fixate on one factor and forget about the other factors to consider before switching Medicare Advantage plans. Let this blog serve as a resource to both your clients and you to make choosing a plan easier. The five things to know, listed above, will help clients pick the ideal plan for their needs, preferences, and financial goals.

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