University of California Employees Must Understand These Medicare Disadvantages

Healthcare Provider Update: For the University of California, the primary healthcare provider is Kaiser Permanente, which is part of a network that offers comprehensive medical services to faculty and staff. They participate in programs designed to provide quality health care as well as manage costs effectively. Looking ahead to 2026, healthcare costs for University of California employees are projected to rise significantly. Premiums in the Affordable Care Act (ACA) marketplace are expected to increase sharply, with some states anticipating hikes exceeding 60%. This situation may result in more than 22 million marketplace enrollees facing increases in their out-of-pocket premiums by over 75% due to the potential expiration of enhanced federal subsidies. The combination of escalating medical costs and these subsidy changes will likely strain budgets and access, prompting employees to reevaluate their healthcare options for the upcoming year. Click here to learn more

Choose Medicare Advantage plans or Original Medicare based on your University of California employee retirement plan objectives because selecting the right plan affects both your healthcare provider choices and out-of-pocket expenses, according to Kevin Landis of The Retirement Group, a division of Wealth Enhancement Group.

As more University of California employees approach retirement age, it's important to compare Medicare options because the healthcare choice between Medicare Advantage and Original Medicare directly impacts both current healthcare needs and future financial security. According to Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group, it is crucial to understand both Medicare Advantage and Original Medicare plans.

In this article, we will discuss

1. the main variations between Medicare Advantage and Original Medicare programs,

2. the effects of provider networks and referral requirements as well as preauthorizations on coverage,

3. and how the financial implications change based on selecting Medicare Advantage as opposed to Original Medicare.

Medicare is a federal government-funded insurance program designed primarily for seniors but available to other eligible groups. Medicare eligibility begins at age 65. No matter if you’ve just turned 65, are approaching it soon, or have already reached it, you should know your Medicare options. In this in-depth analysis, we will examine the differences between Medicare Advantage, also known as Medicare Part C, and Original Medicare, focusing on nine key factors that may impact your retirement goals.

Provider Network Differences Original Medicare and Medicare Advantage have distinct network sizes of healthcare providers as their most obvious distinction. Most medical facilities and practitioners in the United States accept Original Medicare coverage. Medicare Advantage plans have restrictions on provider choice, which are narrower than those of Original Medicare. Before enrolling in Medicare Advantage, patients should verify that their desired doctor or specialist belongs to the network. If you want to choose your healthcare provider, then Original Medicare's wide provider network might be more appropriate for you.

The Scope of Service Area Medicare is a government program, which is accepted by almost all U.S. medical facilities, whereas Medicare Advantage is region-specific. The standard enrollment in Medicare Advantage limits patients to receive care from providers within their local area, except during emergencies. Your ability to receive medical services is restricted by your geographical location. 

The Challenge for Rural Communities Research data from 2021 shows Medicare Advantage gaps occur between rural and non-rural populations. A total of 10.5% of rural Medicare Advantage subscribers crossed over to Original Medicare within one year of enrollment, while only 5% of urban beneficiaries did so.

Specialist Referrals Requirement You need a specialist's referral under Original Medicare because direct visits to specialists are permitted, but not under Medicare Advantage where additional procedures apply. The processes to see a specialist require a primary care physician referral before you can consult with the specialist. This additional procedure layer may come with additional costs and longer wait times, which will matter for University of California employees who need frequent specialist visits.

High-Cost Service Preauthorization Some healthcare services come with higher costs.The following services require prior authorization for Medicare Advantage patients: hospital admission, physical therapy sessions, dialysis, hearing tests, psychiatric care, and other similar services. You will have to pay these expenses unless your plan has prior authorization permission. Step requirements are rarely needed for Original Medicare patients as they generally provide a straightforward use process.

Part B Medications and their Related Preauthorization All Medicare Advantage programs include Medicare Part B medical insurance coverage. However, there are conditions attached to this integration. All Part B outpatient services, excluding those under Part D, require prior authorization before your Medicare Advantage plan will pay for them. Almost all these drugs are injectable treatments for conditions such as osteoporosis, hemophilia, and end-stage renal disease.

The Implementation of Step Therapy Some doctors may advise the patient to begin treatment with a less expensive drug and step up to more costly drugs if needed. Under Part B Medicare Advantage programs, Step Therapy is allowed for Part B drugs. This means that your plan will not cover a drug recommended by your doctor if more affordable options exist according to your plan. 

The Economic Aspect of Hospital Stays Although Medicare Advantage might seem cost-effective to some people, such as University of California workers who regularly prevent disease through check-ups, its cost-effectiveness is poor during emergencies. Research shows that 50% of elderly individuals under Medicare Advantage plans will incur higher costs for one week of hospitalization than those covered by Original Medicare. If you have a higher risk of hospitalization, then Medicare Advantage may end up costing you more money.

The Challenge of Health Care Budgeting This topic represents the complex science of healthcare spending prediction. Original Medicare requires members to pay a fixed monthly fee, which provides straightforward financial planning because there are no sudden medical cost surprises. The majority of Medicare Advantage plans do not require monthly premiums from enrollees. Instead, you are responsible for covering medical expenses up to a predetermined maximum.

This flexibility can make financial planning more complicated, especially for retired people with stable incomes. The most critical aspect to consider is how much the out-of-pocket maximum differs between plans, especially for those leaving comprehensive University of California insurance plans. According to the Kaiser Family Foundation (October 2020), the average out-of-pocket maximum for Medicare Advantage plans in 2020 was $5,059 for in-network services and $8,818 for in-network and out-of-network services combined. Although the premiums are low, prospective costs during illness might be substantially higher.

In Conclusion While Medicare Advantage presents certain advantages suitable for certain retirees' health and financial situations, it remains neither the only nor the best option. Your decision should depend on evaluating the plan's advantages and disadvantages while considering both your personal situation and future healthcare requirements. Original Medicare might be more suitable for you if you tend to require hospitalization frequently or want freedom of provider choice or dislike the preauthorization requirements since it protects against unexpected healthcare expenses.

Medicare Advantage and Original Medicare are comparable to choosing between a luxury car with limited dealership locations and a reliable sedan accepted by the majority of service stations. The luxury vehicle (Medicare Advantage) may have appealing features and a stylish appearance, but you will be limited to service at certain dealerships and possibly encounter additional costs. On the other hand, the sedan (Original Medicare) has fewer bells and whistles but has the advantage of being more adaptable and having a wider selection of service stations, thus providing a more consistent experience for people who used to have University of California insurance. The recommendation to review the engine becomes relevant when making decisions about retirement planning.

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Added Fact:

According to recent data from the Centers for Medicare & Medicaid Services (CMS), Medicare Advantage plans have started to offer a wider range of supplemental benefits. These additional benefits may include coverage for services like adult day care, in-home support, transportation to medical visits, and even meal delivery. Even though these additional benefits can be useful, University of California employees who are preparing to retire need to evaluate the particular features of each Medicare Advantage plan because they differ significantly. This information remains important for those selecting Medicare Advantage because it demonstrates which plans can go beyond typical medical coverage to offer more value in particular circumstances.

Added Analogy:

Selecting between Medicare Advantage and Original Medicare is a matter of choosing the right retirement home. Medicare Advantage is like a pretty yarded up retirement community with plenty of things to do. It's restricted to certain neighborhoods. On the other hand, Original Medicare is like a standard senior living facility into which residents can move regardless of their location. It may not have as many frills as other options but it does offer flexibility and a broad range of choices. When selecting your retirement home, you think about location, amenities, and cost, but you should perform similar evaluations of your healthcare needs, provider choices, and personal financial situation when deciding between Medicare options. As crucial as it is to choose where you want to spend your golden years, do so because it determines your health and financial situation in your later life.

Sources:

1. Centers for Medicare & Medicaid Services. 'Compare Original Medicare & Medicare Advantage.'  Medicare.gov , U.S. Department of Health and Human Services, October 2024,  www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/your-coverage-options/compare-original-medicare-medicare-advantage .

2. National Council on Aging. 'Is a Medicare Advantage Plan Worth It?'  National Council on Aging , February 2025,  www.ncoa.org/article/weighing-the-pros-and-cons-of-medicare-advantage .

3. The Commonwealth Fund. 'Medicare Advantage: A Policy Primer.'  The Commonwealth Fund , January 2024,  www.commonwealthfund.org/publications/explainer/2024/jan/medicare-advantage-policy-primer .

4. Wellcare Health Plans. 'Medicare Advantage vs. Original Medicare.'  Wellcare.com , October 2024,  www.wellcare.com/en/resources/medicare-advantage-vs-original-medicare .

5. NerdWallet. 'Original Medicare vs. Medicare Advantage: How to Choose.'  NerdWallet , December 2024,  www.nerdwallet.com/article/insurance/medicare/medicare-vs-medicare-advantage .