How to Handle a Dropped Medicare Advantage Plan

By Nancy DellaVecchia
eMedicareSupplements Contributor

Since private insurers are not as stable as government programs, Medicare Advantage plans have been dropped in the past by companies changing their policies, withdrawing from the program or going out of business. If your Medicare Advantage plan is dropped, rest assured you will still have medical insurance under Traditional Medicare. Additionally, you still have the option of changing your plan during the annual enrollment period.

If you are notified that your Medicare Advantage plan will not be available in the next calendar year, you can switch to a different Advantage plan or Traditional Medicare from November 15 to December 31 each year. New coverage will begin on January 1, and your previous insurance will remain in effect until the your new coverage begins.

New Fee-For-Service Regulations

While most Medicare Advantage plans are managed care programs (either health maintenance organizations or preferred provider organizations), some plans are private fee-for-service, or PFFS. Medicare regulations for PFFS plans changed in 2011, requiring carriers to establish a provider network for beneficiaries.

Since PFFS plans are now required to contract with service providers, a significant number of insurers are withdrawing from this form of Medicare Advantage. When this first occurred in 2011, this left 28 rural counties in Colorado and one county in Utah with no remaining Medicare Advantage plans, but alternative plans remained available throughout the rest of the country.

Switching to Original Medicare

If you transition to Original Medicare after leaving a Medicare Advantage plan, you should keep in mind that, in addition to parts A and B, you must select a Part D prescription drug plan if you want drug coverage. If your Medicare Advantage plan offered dental and vision care, you may want to purchase stand-alone dental and vision care policies since these benefits are not offered by Medicare or Medigap policies.

may also wish to consider Medicare supplement insurance, or Medigap, which covers many of the expenses not covered by Traditional Medicare. Application for Medigap insurance must take place within 63 days of the termination of Medicare Advantage plan coverage.

If you are suffering financial hardship, you may be eligible for your state Medicaid insurance program and should contact the state Department of Health and Human Services for more information. Different Medicaid rules apply to Medicare recipients under the age of 65.

About Medicare Advantage

In 2004, the Medicare program began subsidizing private health insurance companies to handle health insurance for seniors. It was hoped that the plan would save the program money, but Medicare cites that it now costs 12 percent more for health care on Medicare Advantage plans than it does for health care on Traditional Medicare. For this reason the Medicare program will begin reducing funding for Medicare Advantage plans in 2012.