More Retirees And Employers Are Opting For Medicare Advantage

As Medicare Advantage (MA) plans near its 25th anniversary — the statute that created the present system allowing private health care providers to offer a one-stop-shop option to original Medicare was signed into law by President Bill Clinton in 1997 — they have become a vital aspect of the program. Presently, 42 percent of Medicare participants have coverage through an MA plan, and analysts forecast that by 2030, the majority of Medicare participants will have coverage through an MA plan.

The expansion of MA plans is intimately tied to the original intent of Medicare, which was to provide elderly individuals with the same health insurance coverage they had while employed. Throughout the first 20 years of the program, the original Medicare offered straightforward health insurance in which doctors and hospitals were paid just for services delivered. With the advent of health maintenance organizations (HMOs) and preferred provider organizations (PPOs) in the 1980s and 1990s, more people grew accustomed to receiving treatment through a single, comprehensive healthcare network. This resulted in the formation of Medicare Part C in 1997, formerly known as Medicare+Choice and now Medicare Advantage.

Since then, most Medicare subscribers have had to choose between pay-per-service health insurance under traditional Medicare or membership in a Medicare Advantage (MA) plan that the federal government pays a flat amount to provide all treatment. In 2005, 13% of subscribers opted for the MA option, and the growth rate has been consistent; participation in Advantage plans increased by 10% between 2020 and 2021 alone.

According to a new survey, companies also use Medicare Advantage coverage for retirees to reduce expenses. In the same way, many Medicare beneficiaries are participating in Medicare Advantage plans. An increasing number of companies that provide health benefits to retirees are doing so via these private insurance policies.

According to a new survey by the nonpartisan Kaiser Family Foundation, just 13% of firms with more than 200 employees provide health insurance to retirees 65 and older. In comparison, 21% provide retiree coverage regardless of age. A growing proportion of employers who provide these benefits do so through Medicare Advantage plans, the private insurance alternative to traditional Medicare.

In 2018, 50 percent of major businesses that provide health benefits to Medicare-eligible seniors did so via a Medicare Advantage plan, up from 26 percent in 2017. Yet 44 percent of major firms that utilize the private insurance alternative do not allow their retirees to enroll in a Medicare Advantage plan or use traditional Medicare if they wish to receive their retirement benefits.

42% of the nation’s top businesses told Kaiser that they primarily switched their retirees to Medicare Advantage plans to save expenses.

Moving to Medicare Advantage plans “may benefit seniors if it permits businesses to preserve or even expand retiree health benefits,” according to analysts at Kaiser. Nevertheless, according to the research, this method may limit retirees’ access to physicians and hospitals, depending on the plan’s provider network.

Medicare Advantage plans rely on a network of doctors and hospitals to deliver care to members, who often incur greater out-of-pocket expenses if they visit providers, not in their network. Under original Medicare, participants had access to any Medicare-participating medical practitioner.

According to Kaiser research, Medicare Advantage plans may require beneficiaries to get prior authorization for some medical procedures, which may restrict access to Medicare-covered services.

According to figures issued by the Centers for Medicare & Medicaid Services on November 29, over half of the 65 million Medicare beneficiaries, or 30 million, have enrolled in a Medicare Advantage plan.

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