Medicare Advantage Isn't Always Cheaper. Here's What to Watch Out For.

Once you turn 65, you're generally eligible to sign up for Medicare. But you don't necessarily have to stick to original Medicare.

Medicare Advantage plans are an alternative to original Medicare. They're offered by private insurers and they're required to offer at least the same level of coverage as original Medicare.

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Often, though, they offer even more benefits. And that could lead to a world of savings.

Medicare Advantage plans have another, well, advantage over original Medicare -- they cap annual out-of-pocket spending for enrollees. Original Medicare doesn't do that, which can be challenging for retirees on a fixed income (though buying supplemental insurance can help cap costs to a certain degree).

Plus, many Medicare Advantage plans come with very low monthly premiums. Some even come with $0 premiums.

But you shouldn't assume that Medicare Advantage will automatically be cheaper for you because of these perks. You may find that you end up spending more money on healthcare if you enroll in a Medicare Advantage plan.

The hidden costs of Medicare Advantage

While it's true that Medicare Advantage premiums can be quite competitive, premiums are only a piece of the puzzle. Medicare Advantage plans commonly require enrollees to cover the cost of copays, deductibles, and other expenses. Depending on the state of your health and the amount of care you need, those costs could add up.

Plus, Medicare Advantage plans tend to impose strict provider networks. If you go outside of your plan's network, you may have to pay significantly more. Or, your Medicare Advantage plan may not cover your care at all.

Also, while Medicare Advantage plans offer the benefit of having maximum out-of-pocket limits, those limits can be quite high, reaching the several-thousand-dollar range. For retirees with limited income, hitting that max could be financially devastating.

Look at the big picture

It's easy to assume that you'll save money if you enroll in a Medicare Advantage plan. But you may end up spending even more on healthcare in retirement, depending on your plan's costs and the extent to which you end up using it.

Before landing on Medicare Advantage, compare your costs with original Medicare, keeping in mind that a Medigap plan could help offset many out-of-pocket expenses. Also recognize that with original Medicare, you may have easier access to care. You can see any doctor in the country who accepts Medicare, as opposed to being limited to a specific network.

Of course, you may, after doing your research, decide that Medicare Advantage is right for you. But it's important to run the numbers before assuming that Medicare Advantage is automatically the less expensive option.

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