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Supplemental Benefits Are Remaking Medicare Advantage Plans

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What You Need to Know

  • The changes began with a policy adopted in 2019.
  • In 2020, what plans could do for chronically ill enrollees expanded.
  • Now, plans can include what they spend on supplemental benefits in medical loss ratio calculations.

Although many of the changes in health care and health benefits this past year came as a result of the global pandemic, regulatory changes and new priorities for health care consumers have also fueled shifting priorities and growth. Areas like mental health benefits and more flexible health insurance coverage have garnered a lot of attention — and for good reason.

But when it comes to the fastest-growing segment in health insurance, Medicare Advantage (MA) eclipses them all. MA beneficiaries have doubled to 24 million since 2010, and projections show that MA plans will account for nearly half of total Medicare plans by 2025.

The rules of the MA game continue to change rapidly, based on regulatory changes from the Centers for Medicare and Medicaid Services (CMS) around the idea of supplemental benefits. Supplemental benefits continue to increase in value and have the ability to determine the winners and losers in this growing space as Americans age into Medicare.

Here’s an overview of this came to be and how Medicare specialists can create the best plan for their clients.

Opportunities Stemming From Legislation

CMS announced a new policy in 2019 that expanded the definition of health-related supplemental benefits. For the 2020 plan year, CMS expanded supplemental benefits for chronically ill MA enrollees to include all benefits that have a reasonable expectation of improving or maintaining the health or overall function of the enrollees. This could be anything from Uber rides to the grocery store to nutritional counseling to gym reimbursements. With 68% of MA enrollees having two or more chronic conditions, this change alone had the potential to make a big impact.

Then in May 2020, CMS announced that by 2021 — this year — MA carriers could count supplemental benefit spending in the numerator for medical loss ratio (MLR) calculations, and that eligibility for supplemental benefits would go beyond the set of specific conditions outlined in the Medicare Managed Care Manual (Chapter 16b).

That means the supplemental benefits can now be part of what the MA carriers are paid to provide.

This change accelerated the inclusion of many supplemental benefits in MA offerings.

What Consumers Want

A positive member experience begins with understanding the unique needs of consumers. And as these needs and expectations have changed — especially after a year defined by a global health crisis — health insurance coverage has greatly expanded.

We now see health plans expanding coverage from traditional doctor and hospital visits to include gym memberships, acupuncture and many other benefits that, although non-traditional, can have positive impacts on employee health.

This trend of benefits expansion has carried over into the MA space as well.

In response to consumer needs and the favorable legislation from CMS, MA plan providers have included more supplemental benefits in their 2021 plans than in any previous year. Home-delivered meals, for example, are now offered by more than half of MA providers, when just a few years ago only a quarter offered them. In addition, 13% of MA plans offered acupuncture as a supplemental benefit in 2018. For the current plan year, that number has nearly doubled.

How advisors can meet consumer needs

As health care consumers demand more supplemental benefit offerings, Medicare specialists should take note. An incredible opportunity exists to conveniently deliver benefits that entice consumers and make a real difference in their post-retirement life.

However, the recent nature of these rulings carries with it a risk of confusion among consumers.

To get the most out of this opportunity — and to help consumers reap the most benefits — I recommend that advisors:

1. Get up to speed on the offerings available.

Supplemental benefits range from dental needs to structural home modifications. Look into the full list, as well as what new regulations have made them more favorable to offer. Ultimately, learn which plan providers offer which supplemental benefits.

2. Understand how supplemental benefits are delivered.

A range of platforms and processes exist for delivering supplemental benefits. In some cases, members have to purchase benefits up front and then submit claims for reimbursement. Others take a simplified approach by loading funds onto a card for easy swiping. You’ll need to find the platform that delivers the best experience for your clients.

3. Understand your clients’ individual needs.

Compare what’s out there to what clients may benefit from. The more you know your clients’ life circumstances, the more tailored your plan recommendation can be.

4. Communicate clearly about the opportunity.

Ensure your clients are aware of and fully understand the recent regulatory changes around supplemental benefits, as well as what these changes mean for them. It is crucial to take the time to walk them through what’s out there and what they might need.

What’s Next?

As we look ahead to the rest of the year, benefits leaders would do well to monitor these regulatory changes closely, but also keep in mind what consumers are looking for and would benefit from.

As more and more Americans age into Medicare, advisors will want to make sure they’re aware of how supplemental benefits can help them now and, in the years, to come.

Pen (Image: iStock)Brian Colburn is senior vice president for corporate development and strategy at Alegeus Technologies.

(Image: Shutterstock)


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