Costs to Consider Before Leaving the Medicare Advantage Plan Completely

For some Medicare beneficiaries, an Advantage plan ends up not being suitable.

If you are in this situation and are considering dropping your plan to return to basic health insurance – Part A (hospital coverage) and Part B (outpatient services) – there are some things to consider before doing so.

While you generally have the freedom to go to any doctor or other provider you choose, rather than only seeing them in a plan’s network, the switch will likely incur new costs.

“It is important to compare [coverage options] not only on a provider and drug basis, but also on your overall financial situation,” said Elizabeth Gavino, founder of Lewin & Gavino and independent broker and managing general agent for health insurance plans.

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During Medicare’s annual open enrollment period, which began on October 15 and ends on December 7, you can make changes to your coverage. Here’s what to consider if you want to ditch an Advantage plan altogether.

From the 61st to the 90th day, the coinsurance will be $400 per day in 2023. For lifetime spare days, the fee will be $800 per day.

As for Part B, the standard premium next year is $164.90 (although high-income earners will pay more). The deductible will be $226 and you will then typically pay 20% of the cost of the services.

“That could include expensive things like outpatient surgery, diagnostic tests, ambulance rides, chemotherapy and dialysis,” said Danielle Roberts, co-founder of insurer Boomer Benefits.

There is also no maximum outlay with basic health insurance. However, you may be able to get a Medigap policy which would cover some of the cost sharing.

However, be aware that you may need to review medical insurance to be approved for this type of supplement.

Medigap plans, also sold by private insurance companies, help cover the cost-sharing aspects of Parts A and B, including copayments and coinsurance. The policies are standardized—plans of the same name offer identical benefits regardless of which insurer sells them—but premiums vary by plan, insurer and location.

These plans also come with their own set of enrollment rules.

When you first sign up for Part B, you have six months to buy a Medigap policy without an insurance company looking at your medical history and deciding whether or not you want insurance. After that, unless you meet a special exception or live in a state with no enrollment restrictions, you’ll usually need to review medical insurance.

“There is no guarantee that the insurer will approve you for the Medigap policy,” Roberts said.

This means it may be wise to avoid dropping your Advantage plan until you know you would be able to get the Medigap policy.

There is one exception: If you had a Medigap policy but left it to try an Advantage plan for the first time, you have one year to change your mind. This 12-month trial period allows you to drop an Advantage plan and return to the Medigap plan you were previously enrolled in.

Also be aware that while Medigap plans help cover the costs of Parts A and B, they do not provide any coverage for Part D.