In January 2020, Medicare Advantage plans began offering expanded supplemental benefits intended to improve the health outcomes of enrollees. Although their effectiveness won’t be known for some time, the new benefits could change your clients’ care planning decisions. Depending on an individual’s health, the expanded Medicare Advantage benefits may be more appropriate than those offered by traditional Medicare. Before considering the new benefits, however, let’s review how the pieces of Medicare fit together.
Here's what’s covered under each of Medicare's parts:
When helping clients navigate their Medicare options, you weigh how each plan’s features and costs match with the client’s health and lifestyle. Seniors can obtain comprehensive health care coverage by enrolling in Medicare Parts A, B, and D as needed, and perhaps adding Medigap coverage. So, often, the decision was an obvious “no” to the costs of a Medicare Advantage plan, especially for individuals who spend part of the year outside a plan’s coverage network.
Still, Medicare Advantage has also been considered an attractive choice by many. These plans cover everything that traditional Medicare covers and often include health-related supplemental benefits such as dental and vision care and subsidies for gym memberships. How popular are Medicare Advantage plans? According to the “Medicare Advantage 2020 Spotlight: First Look,” published by the Kaiser Family Foundation, approximately 34 percent of Medicare beneficiaries enroll in a Medicare Advantage plan, and approximately 97 percent of beneficiaries in Medicare Advantage plans use the supplemental benefits.
In a press release on April 1, 2019, CMS announced the following expanded Medicare Advantage benefits:
Together, CMS’s new regulations and the CHRONIC Care Act create three categories of Medicare Advantage supplemental benefits:
In a study cited by an article in Home Health Care News, Milliman, an actuarial consulting firm, estimated that approximately 364 Medicare Advantage plans will expand their supplemental benefits. Of these plans, Milliman estimated that, at the least, 64 will cover adult day care, 58 will cover home-based palliative care, and 148 will cover in-home support services.
The expansion of supplemental benefits is a positive development for Medicare enrollees. The expectation is that focused benefits will result in healthier outcomes for enrollees, but please be aware that this program is an experiment. Because 2020 is the first year for expanded Medicare Advantage benefits, many health care analysts are cautious about the probability of their success. It will be several years before enough data is collected to allow us to understand how the changes to Medicare Advantage benefits will affect retirement health care costs.
What strategies do you use to calculate future health care costs? How do you think that the expanded Medicare benefits will affect your planning solutions? Please share your thoughts below!