Medicare Advantage Plans: Why Are They So Popular?

In 2020, there are more Medicare Advantage (MA) plans than ever before. In fact, enrollment in MA plans has doubled in the past decade, and the Congressional Budget Office predicts that nearly 47 percent of all Medicare beneficiaries will be enrolled in MA plans by 2029. Their popularity makes sense: MA plans offer all of the benefits of Original Medicare and include additional benefits and coverage, and most MA plans (90 percent) also include prescription drug coverage (MAPDs). MA and MAPD plans are generally more comprehensive than Original Medicare, so they can provide more assurances that certain services and treatments are covered. In addition to comprehensive coverage, MA and MAPD plans typically have an out-of-pocket maximum for qualified medical costs, which makes it easier to plan for health care expenses.

The Basics of Medicare Advantage Plans

MA plans are offered by private insurance companies and include a variety of added benefits in addition to providing the same coverage as Original Medicare. For retirees who are looking for a one-stop or all-inclusive type of coverage, MA plans are a good solution. The additional benefits or “extras” vary by plan, but they can include items like:

  • Telehealth Benefits
  • An over-the-counter allowance
  • Dental
  • Hearing
  • Vision
  • Fitness membership

MA plans have one low or zero-dollar monthly premium. When you use services or have a doctor visit, your pay copays or coinsurance. The plan’s out-of-pocket maximum is the most you could pay in a year, so it protects you from high medical expenses and provides more overall stability in costs. It also means that your MA plan will cover all of your expenses once you hit your maximum for qualified medical costs.

The Growth of Medicare Advantage Prescription Drug Plans

Many retirees often weigh the differences between an MAPD and a Medicare Supplement plan, also called Medigap. Both plan types have cost-sharing measures in place to protect you from high out-of-pocket costs you would otherwise be responsible for on Original Medicare. Explore the differences between MAPDs and Medicare Supplement plans in more detail by reading this article.

In recent years, MAPD plans have grown more popular. In fact, nearly one-third of all seniors opt to purchase an MAPD plan over other plans available. Medicare Supplement plans do not include prescription drug coverage, but prescription coverage can be obtained by purchasing a separate Prescription Drug Plan. Individuals who like to have the convenience and added value that comes with an “all-inclusive” style of coverage will prefer MAPDs.

Expanding Coverage at Lower Costs

Another compelling statistic is the comparatively low cost of MA plans. According to data from the Kaiser Family Foundation, all MA plans’ in-network out-of-pocket spending limits are currently capped at $6,700. This number can play a significant role in planning and predicting your finances. Original Medicare does not have a built-in cap on out-of-pocket expenses. Regardless of plan type, you are required to pay the Part B monthly premium (averaging $144.60 per month) in order to have Medicare Part B coverage, but most MA plans do not charge an additional premium for their medical or prescription benefits.

Even with already-low costs and minimal premiums, covered services continue to expand. In 2020, services were added to MA plans to incorporate new benefits for individuals with chronic diseases, including dementia, diabetes, and heart disease.

Federal Investment in Medicare Advantage Plans

As indicated by the expansion of services provided under MA plans, the federal government is investing in these plans in a variety of ways. The Centers for Medicare and Medicaid Services (CMS) has “taken several actions over the last two years to protect and strengthen the Medicare Advantage and Part D programs, driving competition and lowering costs.” Those actions, which can been seen in detail on the CMS website, enable insurance companies to offer more benefits under their plans while also reducing the out-of-pocket prices for retirees. In particular, the government is offering taxpayer subsidies to encourage participation in Medicare Advantage plans. According to CMS, taxpayers have saved nearly $6 billion via lower premium subsidies.

Understanding Your Options

The most important step in ensuring you have the right plan to fit your needs is to understand your options. Medicare Supplements are a good fit for some individuals, and Medicare Advantage plans work better for others. Start by exploring the difference between Medicare Supplements and Medicare Advantage plans. If you have questions or would like to discuss in more detail, we are here to help you! Please reach out to us at 1-877-222-1942 or client@retiremediq.com.

If you are not a RetireMEDiQ client and have questions about retirement, Medicare, or any topics discussed in this post, please contact us at 1-855-999-7039 or advice@retiremediq.com. We look forward to helping you!

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