Society of Certified Senior Advisors: Why Medicare Advantage Is So Popular

Millions of seniors are choosing Medicare Advantage over traditional Medicare. Lower cost is just one of the reasons.

Medicare Advantage is becoming increasingly popular. More than 43% of 63 million adults eligible for the Medicare healthcare program in 2022 decided to go with an Advantage plan, administered by private insurers that contract with the federal government. That’s up nearly 9% over last year alone. In August, Senior Spirit explored the pitfalls of Advantage plans, but there’s obviously a flip side to that coin.

Vision, Hearing, Dental

Most Advantage plans bundle hospital (PartA), outpatient (Part B) and prescription drug (Part D) coverage. Nearly all of these plans offer additional benefits not covered by traditional Medicare. Consider that 99% of Advantage plans come with some coverage for eye exams or glasses, 97% will cover hearing exams and hearing aids, and 94% offer dental benefits.

New Law Delivers Medicare Benefits

The recently passed Inflation Reduction Act delivers the biggest change to healthcare coverage since 2010’s Affordable Care Act, and seniors are the big winners. The law limits Medicare expenses for individuals in four ways:

Part D prescription drug costs are capped at $2,000 (previously $7,000) out-of-pocket annually
Insulin cost is capped at $35 per month
Vaccines are now completely covered, with no co-pays
Expansion of the low-income drug subsidy

And at long last Medicare will be granted the authority to negotiate prescription drug prices. Beginning in 2026, Medicare can bargain on the cost of 10 retail drugs, which expands to 20 retail and 20 doctor-administered drugs by 2029, saving an estimated $288 billion over the coming decade.

Price

Then there’s cost. With Medicare Advantage, the average older adult is out less than $3,400 for their insurance per year. Conversely, traditional Medicare costs about $5,000 annually, and a third of enrollees opt for a Medigap (supplemental) plan for up to $3,600 more. The senior with Advantage may pay more in copays and deductibles, but traditional Medicare and Medigap are pricier year in and year out, in good health years and bad. This difference can add up in a 30-year retirement.

Health Outcomes

Furthermore, Advantage enrollees tend to have better outcomes. They get more depression screenings and pneumonia vaccines. They have more visits for preventive care and go to the emergency room fewer times than their peers on traditional Medicare. And for those with complex, chronic conditions, Advantage beneficiaries are a whopping 57% less likely to end up in short-term hospitalization, according to an analysis done by the Better Medicare Alliance.

What can account for this disparity? Traditional Medicare "has no quality care processes, no quality reports, and no quality standards or expectations at all,” according to George Halvorson, former Kaiser Permanente CEO. In Medicare Advantage, competing private insurers vie to offer the best coverage at the lowest price. Every Advantage plan is rated on a star system that considers overall quality and client satisfaction. In 2022, more than 70 Advantage plans got a coveted five-star rating … four times the number that achieved that status in 2021.

Additional Benefits

Advantage plans compete with each other to offer perks. Two big ones for 2022 are Telehealth visits (95%) and fitness (97%), which may include a gym membership, cash rewards for healthy food purchases, and more. Most (81%) cover over-the-counter items, 67% offer meal benefits, and 38% come with transportation benefits. A few (8%) include bathroom safety and 10% have in-home support benefits.

“There have also been additional benefits added to some Medicare Advantage plans for long-term care services,” says Cynthia Pruemm, investment advisor, founder and CEO of SIS Financial Group in Hoffman Estates, Illinois. “Look for plans that cover adult day care, home safety modifications, meal delivery service, and transportation service, just to name a few.” These benefits often vary quite a bit from plan to plan. For instance, one plan may offer hearing aid coverage up to $2,000, while the limit is $400 with another company. Additionally, most plans mandate the use of the insurance company’s third-party vendor. And you will nearly always pay upfront and wait to get reimbursed.

Still, these services are worth checking out. For example, Scan Health Plan covers 40 hours of in-home caregiving after a hospital discharge, complete with 28 days’ worth of home-delivered meals including breakfast, lunch and dinner. But read the fine print; some providers will offer different benefits to different enrollees, and all benefits are county and zip code specific.

How to Find the Right Advantage Plan

Because of Medicare’s complexity and the variability between different plans, it is highly recommended that beneficiaries use a local insurance agent. It’s a great idea to peruse plans yourself at medicare.gov to familiarize yourself with available options first. But an agent who works with all the plans and has no incentive to steer you toward one insurer over another can help you pick the right one for your specific needs. You may want a plan that will allow you to keep the doctor you know, or you may prefer an insurer with many specialists in their network.

Another option for expert advice is your State Health Insurance Assistance Program (SHIP) office where you will get “trusted, unbiased, one-on-one counseling and assistance.” It’s free, and the people there know Medicare intimately since it is all they do. Finally, be sure to check out Senior Spirit’s technology article this month, where we look at apps to help you make the most of Medicare.

You’ll also need to review your plan annually to make sure it is still the best bet to fill your needs at the best price. Plans can, and do, change from year to year. However, you may find you save substantial money and receive valuable extra benefits by choosing a Medicare Advantage plan.