When working adults turn 65, they have a lot of options about their health coverage. According to the Kaiser Family Foundation, currently about 25 percent of Medicare enrollees have opted for Medicare Part C, also known as the Medicare Advantage (MA) plan. Such plans have been growing at a tremendous rate; since 2004, the number of beneficiaries enrolled in private plans has more than doubled from 5.3 million to 13.1 million in 2012, as determined by the Foundation. However, the coverage varies, making it a challenge for seniors and their insurance agents to find the best plan for their needs.
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According to the Congressional Budget Office, MA plan participants will expand to 21 million by fiscal year 2023, from 14 million this year. For insurers, membership growth is a good sign. They should consider the following to get the most out of Medicare Advantage.
1. Potentially low operative costs for the senior care market
Although costs vary state to state, generally the MA program offers an affordable, simplified solution. This plan allows the elderly and disabled to receive their benefits through privatized health plans as an alternative to the traditional Medicare program. Senior citizens in good health may be more likely to purchase Medicare Advantage than other supplemental Medicare insurance options because the policies are more affordable on a monthly basis.
With traditional Medicare, Part A, the hospital provides coverage for inpatient care but the deductibles associated with this option vary from year to year. Part B is medical insurance which covers the doctor’s expenses and other medical services. Part C, Medicare Advantage, fills the financial gap left from Parts A and B, helping healthy elderly adults get all of their medical costs covered. Unfortunately, those with End-Stage Renal Disease do not have these options.
Savings on premium costs are a big driver of Advantage plan growth. Enrollees pay their regular Part B premium, which is $104.90 this year. The Advantage plans can also charge a supplemental premium, but many don’t. This year, 55 percent of enrollees are in plans with no extra premium, and two-thirds of HMO Advantage plan members pay nothing extra, according to data compiled by the Kaiser Family Foundation.
Also, MA participants do not pay standalone premiums for prescription drug coverage, averaging $30 per month this year. The Patient Protection & Affordable Care Act (PPACA) gradually reduces reimbursement to MA plans, but also creates quality bonuses for the plans that provide the best services for their members. These bonus funds are used to maintain the extra benefits and care management programs that members rely upon.