Plain and simple, it is funding.
Medicare Advantage Funding
Looking at how Medicare Advantage (MA) plans are funded may give insight into why we see so many of these advertisements in the media during the last quarter of the year. This period is known as the Annual Enrollment Period, beginning October 15 until December 7. The Centers for Medicare & Medicaid Services (CMS) is the principal source of funding for MA plans, by paying insurance companies for each Medicare beneficiary's expected healthcare costs. Therefore, the more people who enroll in MA plans, the more funds Medicare gives insurance companies offering these plans.
The tradeoff is, the MA plans, rather than Medicare, pay for beneficiary’s care. The companies offering these plans make bids regarding estimated costs per enrollee, and Medicare accepts those meeting their guidelines. These bids may be based on each county (or region for regional PPOs) as they have a benchmark amount to which Medicare compares the bids.
When you have an MA plan and receive care, the insurance company pays your health care costs rather than Medicare. MA plans have networks with the most common ones being PPO & HMO. These plans resemble the employer coverage offered to you when you were working. These plans involve providers in network, if you see a practitioner outside your network, you may be responsible for more of the expense or even the whole expense may be out-of-pocket.
The MA plans work in contrast to your red, white, and blue card for Original Medicare. Original Medicare coverage enables you to see any doctor accepting Medicare assignment. As of 2021, only 1% of physicians treating adults had formally opted out of Medicare assignment, so it is almost like having an “unlimited network."
What Makes Them Easy to Advertise
These advertisements present many attractive features, but it seems like there are two features of MA plans that make them easy to advertise: the additional no-cost or added benefits and monthly premiums as low as zero dollars in some counties. Some of these added benefits may include coverage for dental, vision or hearing benefits, which Original Medicare does not include. Many MA plans may also include prescription drug coverage, which beneficiaries otherwise would have to purchase separately as a Part D plan, which Original Medicare does not include either.
Advertisements for MA plans are widespread during the Annual Enrollment Period. They can also make these plans seem tempting, with a multitude of benefits and zero to low premiums. When the dust settles, an MA plan could be the right plan for you, but it is important to do your research, understand how the coverage really works and speak to a Medicare agent about your needs and concerns. Rather than hastily enrolling in a plan that sounds great in its TV commercial with a celebrity telling you it is the best thing since sliced bread. Your annual out-of-pocket maximums and your out-of-pocket costs for doctors outside your network could each add up to more than what a Medigap premium would cost each year. MA plans are heavily advertised because of how they are funded. These plans' premiums are low or zero because Medicare pays the carrier whenever someone enrolls. It benefits insurance companies to encourage beneficiaries to enroll in MA plans because of the money they receive from Medicare. The question that you need to ask is, does it benefit you?