Seniors, be sure to check your 2025 Medicare Advantage plans

CNN
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Attention, Medicare Advantage enrollees: It's a good idea to review your plans during open enrollment, which begins Tuesday, so you don't get caught out next year.

Although the fast-growing market remains stable overall, insurers are making a flurry of changes that could cause some seniors to seek new policies, pay more out of pocket or receive fewer additional benefits.

“This is the biggest performance disruption we have seen in the market in recent years,” said Lindsay Knable, a partner in the health and life sciences practice of consulting firm Oliver Wyman.

The shifts come as Medicare Advantage enrollment is expected to reach 35.7 million, representing 51% of total Medicare enrollment. Under the Medicare Advantage program, which serves as an alternative to traditional Medicare, the federal government contracts with private insurers to provide Medicare coverage to beneficiaries, many of whom are very cost-conscious because they are on fixed incomes.

However, few enrollees make purchases during open enrollment, which runs through Dec. 7. Nearly two-thirds of Medicare Advantage enrollees have not compared their coverage with other options for 2022, according to a recent analysis from KFF, a health policy research organization.

Participants should review their annual change notice to see what might be different for 2025, said Jeannie Fuglesten Biniek, deputy director of the KFF Medicare Policy Program.

“People just have to be really observant to understand what they’re signing up for,” she said.

More than 1.8 million Medicare Advantage members this year, or about 8% of those in non-group and non-special needs plans, are enrolled in policies that will no longer be offered in 2025, according to an analysis by Oliver Wyman. About 1.3 million of them are currently enrolled in $0 rewards plans.

You must actively select new plans or they will be included in traditional Medicare coverage. In comparison, about 230,000 members, or about 1%, were in this situation in 2024.

According to David Windley, senior equity analyst at Jefferies, Humana and Aetna are the most aggressive in cutting their offerings, with about 10% of their members affected by the changes. Approximately 5% of UnitedHealthcare and Centene policy participants will be affected.

However, almost all seniors have numerous other options to choose from. According to the Centers for Medicare and Medicaid Services, they will have an average of 34 Medicare Advantage plans with drug coverage to choose from in their county in 2025, up from 36 this year. (These figures do not include special needs plans, which are only available to participants in certain situations.)

“Supply is stable and people will continue to have great, affordable choice in both the (Medicare Advantage) and Part D (drug plan) markets,” Dr. Meena Seshamani, director of the Center for Medicare, told reporters last month.

Additionally, average monthly plan premiums will fall to $17 next year, a decrease of $1.23 from this year, the agency said. Approximately 60% of participants who remain in their current plan will have a $0 premium in 2025, and the vast majority of members will have the same or lower premiums next year if they remain in their current plan.

Although some plans will be discontinued, Aetna will continue to have policies accessible to 59 million Medicare-eligible beneficiaries, said David Whitrap, a spokesman for the insurer. Plans will be offered in 76 new counties next year.

“For 2025, Aetna is investing in markets where we can provide competitive, high-quality and affordable benefits in a way that is sustainable for our business,” he said in an email.

Seniors also have to check whether they will have to bear more out-of-pocket costs next year, especially for medication.

More than 16 million enrollees have no-deductible drug plans this year, according to Greg Berger, a partner at Oliver Wyman.

But in 2025, more than 45% of those members will have to pay a deductible for at least some medications, particularly brand-name or specialty medications, if they remain in the same plan.

About 36% of Medicare Advantage enrollees with prescription drug coverage have plans that increase drug deductibles by at least $200, Jefferies said. Those at UnitedHealthcare and Aetna are most likely to face higher deductibles. (Maximum drug deductible is $595.)

Some insurers are also reducing their subsidies for dental, hearing and vision services. For example, in its top 20 plans, Aetna cut its subsidy by an average of more than $1,700 a year, while UnitedHealthcare cut it by an average of just over $750 a year, Windley said.

Likewise, Centene, Aetna and Humana are cutting benefits that help seniors pay for over-the-counter medications and offering flexible spending cards that can be used to pay for other health-related expenses, he noted.

Although many seniors focus on premiums when considering their options, they also need to examine the other benefits and features of their Medicare Advantage options, said Mary Beth Donahue, CEO of Better Medicare Alliance, an insurer-funded Medicare Advantage advocacy and research group .

“Seniors and those who support them through this process – the caregivers, families and senior organizations – really need to look at the bigger picture,” she said.

The changes are due to several legislative and regulatory changes to the Medicare Advantage program in recent years, as well as increasing use of health care services by enrollees.

Critics have long alleged that Medicare Advantage insurers are overpaid for the care and services they provide, and argue that many insurers classify some enrollees as sicker than those with similar health conditions under traditional Medicare in order to extract higher payments from the federal government receive.

In recent years, the Biden administration has made several changes to the Medicare Advantage payment system, particularly to measures related to enrollees' health status and plan quality ratings – both of which affect the overall payments insurers receive. In addition, some provisions from the Covid-19 pandemic period that temporarily increased the quality of insurers' plans have expired.

The result is that while the Centers for Medicare and Medicaid Services has increased rates, insurers argue that the payments are not enough to cover their medical costs.

Congress also made significant changes to Medicare drug benefits as part of the Inflation Reduction Act of 2022, which Democrats pushed through both chambers. Among the most notable provisions, starting in January, was a $2,000 annual cap on Medicare members' out-of-pocket costs for prescriptions. However, the law requires insurers to cover a larger share of costs once insureds reach the catastrophic coverage phase above the cap.

To better manage their increased liability due to redesigned drug coverage, some insurers are increasing their deductibles and implementing other changes to their drug coverage.

“There are changes that impact revenue in many different ways,” Knable said. “This requires insurers to rethink their product portfolios.”