We’ve heard Original Medicare paired with a Medicare Supplement (Med Supp) called the Cadillac of coverage, but recent trends show that more and more people are choosing to drive Medicare Advantage (MA).
Although the combination of Original Medicare, Med Supp, and Part D drug plan can be a better fit for some, MA plans are proving to be an increasingly attractive option for your clients.
The Upward March
Since the early 2000s, MA plans have grown steadily in popularity, now accounting for 51 percent of, or 30.8 million, Medicare beneficiaries — up from 19 percent in 2007 — according to KFF. On trend with recent years, the number of enrollees grew by about 2.3 million, or 8 percent, between 2022 and 2023.
The majority of new enrollees come from “switchers” who left traditional Medicare to join an MA plan, according to new research published by Health Affairs. Researchers found that, since an acceleration began around 2020, between 80 and 90 percent of the net MA increase was due to those switching, with a much smaller share due to changes in eligibility (like turning 65). “Switchers” were more likely to be young and healthy, a racial and ethnic minority, dually eligible, a rural resident, or someone with a disability. Although they account for a smaller portion of new enrollees, beneficiaries enrolling in MA plans right off the bat when they turn 65 is higher than ever before, too.
Not only do these numbers show MA plans’ increasing popularity, but the growing number of available plans signals the rising supply to meet the demand. Over the past few years, the number of available MA plans has surged, reaching 3,998 in 2023, KFF reports.
Currently, the average Medicare beneficiary has 43 MA plans — 35 Medicare Advantage Prescription Drug (MAPD) plans — available to them. Beneficiaries also have more types of plans to choose from than ever before. While health maintenance organization (HMO) plans remain the dominant type at 58 percent of available plans, local preferred provider organization (PPO) options have increased from 30 percent to 40 percent of MA plans since 2019. A more even split between HMOs and PPOs means more flexibility for you and your clients.
The Advantages of Medicare Advantage
The upward enrollment trend and new research indicates that 88 percent of MAPD members are happy with their plans. What is it about these plans that have so many Medicare eligibles jumping aboard the MA ship?
Although not all MA plans offer prescription drug coverage (e.g., Medicare Medical Savings Account plans), 89 percent of them do. Bundling drug, hospital, doctor visit coverage into one plan appeals to beneficiaries; in fact, nearly half of enrollees stated that bundled coverage is why they chose an MA plan. On top of that, 97 percent of 2023 MA plans include dental, vision, and hearing benefits. Instead of four cards, you can just have one. Instead of multiple accounts to keep track of, you can just have one. Such simplicity is attractive.
Instead of four cards, you can just have one. Instead of multiple accounts to keep track of, you can just have one.
Because private companies build MA plans, they have more flexibility in what extra perks and benefits they can offer, compared to the traditional Medicare program run by the government. Some companies are also getting creative with how they promote preventative care. MAPD members may enjoy no- or low-cost gym memberships, free health classes and fitness plans, transportation services, over-the-counter benefits, nutrition apps, home-delivered meals, and more. Sell 5-star MA plan for the most complete menu of extras.
It’s hard to argue with a $0 premium, which 73 percent of MAPD beneficiaries enjoyed in 2023, according to KFF. Of those plans with a premium, 16 percent of enrollees paid less than $50 per month, while 10 percent paid $50 or more.
Lower monthly premium costs are a big reason why people choose MA plans.
Lower monthly premium costs are a big reason why people choose MA plans. In a survey, 49 percent of respondents said they like their MA plans because of affordable premiums. But it’s important your clients are aware that lower premiums may lead to higher costs elsewhere — such as potentially higher copays and out-of-pockets expenses.
The Trade Offs
No insurance plan is perfect, including MA plans. Some drawbacks that may give clients pause include:
Fewer Predictable Costs
Unpredictable and potentially higher out-of-pocket costs are MA shortcomings. Enrollees can expect copays, coinsurance, and deductible expenses until they reach a maximum out-of-pocket (MOOP) set by the carrier. In 2023, MA plans cannot have a MOOP that exceeds, or charge clients more than, $8,300 per year for in-network costs ($8,850 in 2024) and $12,450 for combined in-network and out-of-network expenses ($13,300 in 2024). While this cap is a protection against truly catastrophic and expensive events, out-of-pocket costs are still a financial strain on many households.
An MA plan may not provide the same financial security of Original Medicare with a Med Supp if something catastrophic happens or if your client goes to the doctor often. However, clients with money saved up for retirement health care expenses may not be concerned about their out-of-pocket expenses as much.
However, clients with money saved up for retirement health care expenses may not be concerned about their out-of-pocket expenses as much.
Another reason clients may not want an MA plan is that they often have provider networks. With Original Medicare and a Med Supp, beneficiaries can see any doctor in the U.S. who accepts Medicare. Some Med Supp plans even help pay for health care costs abroad. MA carriers treat their plans more like traditional employer-provided health insurance, partnering with a specific network of doctors, specialists, hospitals, and other health care facilities where their members can save on services.
Similar to employer and under-65 health plans, there are HMO and PPO MA plans, with the HMOs having the more restrictive network. Certain plans even require referrals for specialists. All this means your clients may not get to see their doctor of choice, depending on their MA options and if those plans work with their providers.
Switching Back Can Be Difficult
If you have a client who’d like to switch back to Original Medicare and pick up a Med Supp, they may have a harder time enrolling in a Med Supp if they have certain health conditions and do not qualify for a guaranteed issue right. They’ll also have to wait until the Annual Enrollment Period, or until they qualify for a Special Enrollment Period, to return to Original Medicare if they’ve already used their MA trial right or if it has expired.
Expand Your Portfolio
Balancing the advantages and drawbacks of MA plans will help you determine whether they are the best fit for your clients, but the climbing numbers show that more and more Medicare-eligible adults want MA plans. Experts believe their popularity will only continue to grow, so we recommend enhancing your portfolio to offer more than one MA option. Bulking up your portfolio with more MA plans means more possibilities for you, too — selling 5-star plans all year, cross-selling hospital indemnity plans, and retaining business!
We don’t want you to miss out on potential sales because you have no, or limited, appointments with MA carriers! Here at Ritter, it’s our job to help agents be competitive. To prepare for this upcoming AEP, register with Ritter for free, contact your sales specialist for information on available plans in your area and a free portfolio review, and check out your contracting opportunities on the Ritter Platform.
MA carriers tend to expand yearly, so refreshing your portfolio every summer will ensure you’re competitive with new MA plans in your area come AEP. Remember, the average Medicare beneficiary has access to 43 MA plans in 2023. How many does your portfolio feature?
Editor’s Note: This article was originally published August 2022. It has been updated to include relevant statistics for the 2024 Annual Enrollment Period.