What's Up With Medicare Advantage in 2017?
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Open enrollment for Medicare Advantage plans kicks off today, and if your options have your head spinning, rest assured that you're not alone.
This year 17.6 million Americansare enrolled in Medicare Advantage, and roughly a quarter of them will make changes during open enrollment. Because Medicare Advantage is an important option that's worth considering, let's take a closer look at what it is, what it costs, and why you might want to sign up for it in 2017.
The big reason to buy a Medicare Advantage plan
There's one very important reason why Medicare Advantage enrollment has grown to represent 32% of Medicare enrollees from 24% of enrollees in 2010: out-of-pocket spending caps.
Image source: "Medicare Advantage," The Henry J. Kaiser Family Foundation, accessed 10/13/2016.
Medicare provides a critical safety net for seniors, but it doesn't pay for everything.
Medicare Part A covers hospitalization, but there's a $1,288 deductible for each separate hospitalization event, and cost-sharing by patients kicks in after 60 days in the hospital.
Medicare Part B covers doctor visits, outpatient services, and durable equipment. However, there's a $166 deductible per year, and after that deductible is met, people typically pay 20% of theMedicare-approved amount for healthcare services.
Neither Part A nor Part B caps how much cost-sharing a patient is responsible for every year. That means that patients facing a serious illness or injury could wind up with bankruptcy-causing medical bills, despite having Medicare.
One way that Medicare recipients can insulate themselves against that risk is by enrolling in a Medicare Advantage plan. These plans charge deductibles, co-insurance, and co-pays, but they provide the same coverage as Part A and Part B, and they can cap annual out-of-pocket spending. For example, the average Medicare Advantage out-of-pocket limit is $5,223 in 2016.
Additionally, Medicare Advantage plans can include coverage for healthcare typically not covered by Part A and Part B, such as prescription medicine. That makes them valuable, too.
What's a plan going to cost me?
Medicare Advantage plans are offered by private insurers, and while some Medicare Advantage plans won't cost more than your current Part B premium ($121.80 per month for new Medicare Part B enrollees), premiums for Medicare Advantage plans do vary from place to place and plan to plan.
According to the Centers for Medicare & Medicaid Services, or CMS, premiums will generally remain stable in 2017 from 2016. In fact, the average Medicare Advantage monthly premium will decrease by $1.19 to $31.40 per month (about 4%) next year.
That's about 4% less than the average $32.59 plan cost in 2016, and it's also about 13% lower than the average Medicare Advantage premium before Obamacare's passage.
Averages, however, can be misleading, and some Medicare recipients will see premiums increase this year. Therefore, it's important that everyone already in a Medicare Advantage plan review the updated plan documents that insurers are required to send prior to open enrollment. That being said, the CMS estimates that 67% of Medicare Advantage enrollees won't see a premium increase in 2017.
What if I don't want Medicare Advantage?
Many Medicare enrollees continue to pair up Part A and Part B with a Medicare Part D prescription drug plan, rather than enroll in Medicare Advantage.
If you're one of them, then you'll be happy to know that Part D premiums aren't going up significantly in 2017 either. On average, Part D premiums for a Medicare prescription drug plan in 2017 will be about $34 per month.
However, as with Medicare Advantage plans, the cost of Part D prescription plans can also vary, and that means that some Americans will see their plan premium increase.
If you're not already enrolled in a Part D plan, the open enrollment period is a great opportunity to shop for options to add this coverage.
Open enrollment is also a good opportunity to consider supplementing Part A and Part B Medicare with a Medigap plan.
Medigap plans can cost hundreds of dollars per month; however, they pick up most of the costs that traditional Medicare doesn't. That means Medigap can significantly lower the risk for out-of-pocket costs to lead to financial insecurity.
Medicare recipients without Medicare Advantage can enroll in a Medigap plan during open enrollment. Unless you've enrolled in Medicare recently, you'll have to go through underwriting and qualify for coverage.
Summing it up
The CMS estimates that 18.5 million people will enroll in Medicare Advantage plans in 2017, up 60% from 2010. If enrollment hits that target, then 2017 will mark the seventh consecutive year of record Medicare Advantage enrollment.
If you're considering Medicare options and you're finding the process overwhelming, it might be time to call in a professional to help. Fortunately, free local help for understanding your Medicare benefits is provided by non-profits called State Health Insurance Assistance Programs, or SHIPs. Every state has a SHIP and contact information can be found here.
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