Medicare Advantage plans are booming — 30.8 million of the 60 million Americans with Medicare are now enrolled in the private plans rather than the traditional government-run program.

But a little-known fact: Once you’re in a Medicare Advantage plan, you may not be able to get out.

Traditional Medicare usually requires beneficiaries to pay 20 percent of their medical bills after their deductibles are met — a potentially ruinous expense that most people cover in part with a private supplemental plan called Medigap. But unless you sign up for Medigap soon after you’re first eligible, insurers can often deny coverage or charge steeper premiums based on preexisting conditions. 

Medicare Advantage can look pretty attractive to new Medicare beneficiaries, especially if they’re healthy. While there are co-payments and deductibles, annual out-of-pocket expenses are capped — unlike in traditional Medicare. Many Advantage plans offer low (or zero) premiums compared with the traditional program, while often including drug coverage and sometimes low-cost vision, hearing and dental benefits.

They are also heavily marketed, contributing to their growth, said Christine Huberty, a lead benefit specialist supervising attorney at the Greater Wisconsin Agency on Aging Resources.

“They’re out there, they’re talked about, and I think there’s a little bit of lack of education too,” she said. “People don’t really know what they’re signing up for or what their options are.”

But when enrollees start to depend on the insurance for “bigger issues,” Huberty said, “that’s when people realize, ‘Oh no, this isn’t going to help me at all.’” By then, it may be too late to sign up for a Medigap plan.

Or as David Lipschutz at the Center for Medicare Advocacy put it: “When it comes to Medicare Advantage plans, some people swear by them and other people swear at them.”

Advantage plans control their costs by limiting their customers’ selection of hospitals and doctors and requiring prior authorization for some care — a process detested by doctors and patients. The Biden administration issued new requirements for prior authorization last week, following complaints from major physician and hospital lobbies.

Medicare Advantage open enrollment is happening now through the end of March. It’s a sort of “buyer’s remorse” window, when anyone who entered 2024 already signed up for an Advantage plan can switch plans or go back to traditional Medicare. 

David Meyers at Brown University School of Public Health said about 15 percent of Advantage customers change enrollment annually. Most switch to another Advantage plan.

After I wrote about this issue recently for KFF Health News, I heard from retired pharmacist Jami Holt. The 66-year-old Virginia resident signed up for Medicare last year and “ended up calling a broker who helped explain it.”

Holt said the decision was scary: “I had to make the right decision at that moment.” She picked traditional Medicare and also signed up for a Medigap policy.

But Holt’s husband is on Medicare Advantage. It “works pretty well” but carries a higher deductible than her Medigap plan. “If you have one hospitalization, you’re going to run the bill,” she said.

Holt said she and her husband would like to move him to traditional Medicare, but he has a chronic condition that would make it “cost-prohibitive.”

The inability of most Advantage enrollees to switch back to traditional Medicare has been a known concern for years in policy circles, said Tricia Neuman, executive director of KFF’s Program on Medicare Policy.

One solution under discussion, she said, is putting a limit on out-of-pocket spending under traditional Medicare. That would increase federal spending on the program and might offset the need to increase Medigap premiums when beneficiaries enroll.

Paul Ginsburg, a professor of the practice of health policy at the University of Southern California, said another possible solution is to allow current beneficiaries to enroll in Medigap during specific enrollment periods each year without facing rejection for preexisting conditions, but to let insurers charge higher premiums — say an extra 20 percent for the first year or two.

That might still be too much of a burden for many Medicare beneficiaries; half had income under $30,000 in 2019.

With so many people enrolled in Advantage plans, “the current effective barrier on moving back to traditional Medicare is really a problem that policymakers should want to address,” Ginsburg said.

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By Sarah Jane Tribble, KFF Health News
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.