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Open Enrollment: “Confusion” Surrounds Medicare Advantage This Year

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(Please note: This article was originally posted in early October 2024.)

Medicare open enrollment began October 15th, and this year already promises to be a confusing one for Medicare Advantage policy holders. That’s the clear conclusion we took away from this recent Associated Press article on the topic, written by reporters Tom Murphy and Amanda Seitz.

“Thinner benefits and coverage changes await many older Americans shopping for health insurance this fall,” these reporters warn us. “That’s if their plan is even still available in 2025.”

New Drug Cost Lid Triggers Premium Hikes, Benefit Cuts

Not long ago the Biden administration heralded a host of Medicare changes intended to reduce drug costs for millions of seniors. At that time in an article here on the Blog, we talked about the effects these changes might trigger.

“In order to cover added costs or loss of revenue, says AARP, Medicare Advantage insurers may trim benefits slightly,” we wrote. “They may adjust their list of covered drugs or increase the percentage you pay for some services. They could make extras like dental and vision coverage ‘a little less generous’ than before, experts say.”

Now that plan changes for 2025 are starting to arrive in the mail, Medicare Advantage clients will discover just what these changes look like. We predict an angry response as they process benefit reductions coupled with premium hikes that for some will exceed 22 percent.

Medicare Advantage Insurers Abandon Some Markets

In the AP article, Murphy and Seitz write, “More than a million people will probably have to find new coverage as major insurers cut costs and pull back from markets for Medicare Advantage plans, the privately run version of the federal government’s coverage program mostly for people ages 65 and older.”

On top of that, they state that experts predict “some price increases for Medicare prescription drug plans as required coverage improvements kick in.”  The AP article doesn’t specifically mention hikes in overall Part C (Medicare Advantage) premiums, but those seem to be coming for many.

MA Changes Equal Bad Election Year Politics

Murphy and Seitz point out that the timing of all this Medicare Advantage confusion could make a tight presidential race even tighter. “Voters will learn about the insurance changes just weeks before they pick the next president and as Democrat Kamala Harris campaigns on promises to lower health care costs,” they write.

“This could be bad news for Vice President Harris. If that premium is going up, that’s a very obvious sign that you’re paying more,” health care consultant Massey Whorley told the Associated Press. “That has significant implications for how they’re viewing the performance of the current administration.”

As the AP article puts it, “Insurance agents say the distraction of the election adds another complication to an already challenging annual enrollment window that starts next month.”

More People Than Usual May Shop for a New Plan for 2025

Medicare Advantage plans have continued to gain in popularity, as enrollees are drawn to the all-in-one simplicity and the added benefits of these policies. MA plans are projected to cover more than 35 million people next year, or around half of all people enrolled in Medicare, according to the federal government.

But there may be new reasons to shop around during open enrollment this fall. “Insurance agents say they expect more people than usual will have to find new coverage for 2025 because their insurer has either ended a plan or left their market,” Murphy and Seitz predict.

Insurance giant Humana is just one example. According to the AP, “The health insurer Humana expects more than half a million customers — about 10 percent of its total — to be affected as it pulls Medicare Advantage plans from places around the country. Many customers will be able to transfer to other Humana plans, but company leaders still anticipate losing a few hundred thousand customers.”

Reports from Aetna, owned by CVS, say that company anticipates a similar loss, while other big insurers have said they are leaving several states, AP reports. “Insurers say rising costs and care use, along with reimbursement cuts from the government, are forcing them to pull back,” the article states.

Some Patients Are Harder Hit When Companies Exit Markets

Experts quoted in the Associated Press article say they expect some policy holders to have a harder time than others when insurers leave Medicare Advantage markets. Many minority policy holders might find it hard to replace affordable coverage, as will people with several doctors, and patients with cognitive trouble like dementia.

“Most markets will still have dozens of plan choices,” Murphy and Seitz acknowledge. “But finding a new option involves understanding out-of-pocket costs for each choice, plus figuring out how physicians and regular prescriptions are covered.”

Even Companies Who Stay Might Trim Benefits

Even if your insurance company is staying in your market, you might discover that they plan to raise your deductibles and cut back on some perks, according to the AP article. These extras, things like cards that allow certain beneficiaries to pay for utilities or food, gained popularity during recent years of high inflation.

Fort Worth-based insurance agent Danielle Roberts told the Associated Press, “It’s really difficult for a person on a fixed income to choose a health plan for the right reasons … when $900 on a flex card in free groceries sounds pretty good.”

Despite CMS Predictions, Premiums Will Rise for Many

For the 13 million people who have standalone Part D prescription drug plans, premiums could rise substantially. This is in spite of projections from the Centers for Medicare and Medicaid Services that premiums for these plans will decrease about 4 percent on average to $40 next year.

“Brokers and agents say premiums can vary widely,” according to the Associated Press analysis, “and they still expect some increases. They also expect fewer plan choices and changes to formularies, or lists of covered drugs. Roberts said she has already seen premium hikes of $30 or more from some plans for next year.”

As the article explains, officials have tried to preclude hefty premium increases. “To ward off big premium spikes because of the changes, the Biden administration will pull billions of dollars from the Medicare trust fund to pay insurers to keep premium prices down, a move some Republicans have criticized,” says the article. “Insurers will not be allowed to raise premium prices beyond $35 next year.”

That’s small comfort to many. We know of one couple who just received their notice of a new Medicare Advantage premium for 2025. The hike is $34 for each spouse – barely below the allowed maximum, and 22 percent above their 2024 premium. Many benefits are also being trimmed.

Better Benefits are Expected – Eventually

The reasons for all this turmoil may be well-intentioned. “The changes come as a congressional-approved coverage overhaul takes hold,” Murphy and Seitz write. “Most notably, out-of-pocket drug costs will be capped at $2,000 for those on Medicare, an effort championed by Democrats and President Joe Biden in 2022.”

This is also the beginning of the new law allowing Medicare to negotiate some drug prices. Eventually, the reduced drug cost will benefit many, especially cancer patients and others with expensive prescriptions. KFF estimates that about 1.5 million people will benefit immediately.

But the message is clear: this is not a time to doze off during open enrollment, which runs from October 15th to December 7th.  “Experts say all the potential changes make it important for shoppers to study closely any new choices or coverage they expect to renew,” the AP concludes. This is a critical year to pay close attention and shop with care.

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(originally reported at https://apnews.com)

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