Most Medicare Advantage plans are free -2-

Karen Bell is an insurance agent specializing in Medicare, and she says her office in Rochester, N.Y., will assume that anyone with cancer will hit the out-of-pocket maximum of a Medicare Advantage plan. If they know this before sign-up, the person might choose a Medigap plan right at the start. If it comes up a few years down the road, they will look at the timing during the year, and see how much they've already paid out of pocket on the Medicare Advantage plan. If it's early enough in the calendar year, it might make sense to switch to a Medigap plan, because New York state is one of the few states that allows for that possibility without penalty or medical underwriting.

Calculating maximum risks

In October, Blue Cross and Blue Shield of Arizona launched a television advertising campaign that coincided with the start of Medicare open enrollment. The ad featured a grandfather playing with his grandson and a retired couple dancing, declaring that "Blue Cross and Blue Shield of Arizona has $0 premium Medicare Advantage Plans," according to a version of the ad posted on YouTube. Aetna kicked off the open-enrollment period by promoting in a press release that the big health insurer "offers a plan with a $0 monthly plan premium in every county where plans are available."

Across the country this month, health-insurance companies have blitzed consumers with zero-dollar-premium messaging for Medicare Advantage plans. The Blue Cross and Blue Shield of Arizona ad did not mention out-of-pocket maximums for enrollees and the Aetna press release only mentioned out-of-pocket maximums of $2,100 for covered prescription drugs.

Blue Cross and Blue Shield of Arizona and Aetna did not respond to requests for comment.

Out-of-pocket maximums exist in a lot of different health-insurance scenarios today, and they are there to keep people from facing catastrophic medical debt.

Medigap plans typically cover all of Medicare's extra charges and do not have out-of-pocket maximums. The insurance is designed to pick up the costs that original Medicare does not cover, and people don't often have costs besides their monthly premiums. Two specific Medigap plan types, known as K and L, do have limits, but these have very low enrollment currently, according to KFF. On the other hand, Medigap has other costs for health issues that Medicare does not cover, like dental, vision and hearing. Part D drug plans have a $2,000 out-of-pocket maximum in 2025, which is going up to $2,100 in 2026 (which also applies to prescription coverage under Medicare Advantage plans).

What's your chance of hitting that out-of-pocket maximum? Nobody really knows, because Medicare Advantage data, coming from private insurers instead of the government, is opaque.

"We don't have good data on out-of-pocket spending for Medicare enrollees," said Jeannie Fuglesten Biniek, an associate director for the Program on Medicare Policy at KFF. "We've always been concerned about comparing apples to apples, and we've tried to do this by looking at plan benefit data. But the way Medicare Advantage plans pay can be different, and it's hard to make it comparable."

Without the robust data, it turns into a roll of the dice, essentially. Cheryl Weitzel, a Kansas resident, went through this calculus when she was recently helping her husband pick a plan at 65 (she's still on her employer's plan). She advised her husband to choose a Medicare Advantage plan, figuring that he was healthy now, and would be for some time, so the costs would be lower overall if he were on Medicare Advantage, even if he got sick later. He'd have maybe 10 years of paying no premium, she speculated, as opposed to paying $2,400 per year for Medigap, which would add up to $24,000. The Medicare Advantage copays would have to exceed $24,000 in this scenario for Medigap to approach making sense.

The way Weitzel sees it, if her husband chooses Medigap and stays healthy for a decade, "We'd have wasted all the supplement premium."

Tyler Cromer, a principal at ATI Advisory, said we're all basically in the same boat as Weitzel. "We're all just predicting what we think we'll need," she said. "People may not be aware of the trade-offs initially."

What she suggests for incoming enrollees is to look at as many of the plan details as possible and compare what you can. "You work through the process," she said. Look at the networks, the out-of-pocket maximums, the covered medications, and see where you have the best options for what you need.

There is a safety net on the very low end of incomes. Cromer said that when people hit their highest medical costs as they age and need full-time nursing care, they end up switching to dual-eligible plans for both Medicare and Medicaid, and out-of-pocket costs get largely eliminated. "If somebody has very low income and high-cost medical, that can push that into Medicaid, or a special-needs plan," she said.

For those who still have assets and income, it's a question of careful shopping and risk assessment. As Harvard's Grabowski put it, much of the outcome "hinges on whether you're healthy or not."

-Beth Pinsker

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(END) Dow Jones Newswires

10-29-25 1455ET