Medicare Advantage Plans are Changing
Obamacare includes some changes to the Medicare Advantage program:
- Starting January 2014, Medicare Advantage plans will be held to a minimum loss ratio of 85%
- Requires restructuring the funding levels to Medicare Advantage plans in order to reduce payments closer to traditional Medicare (i.e. remove the 14% “overpayment” to Medicare Advantage)
1) Congressional Budget Office estimates this will cut $145 billion over 10 years
2) The payment restructuring was designed to be implemented in 2011.
- However, in 2012 CMS expanded “quality” payments to Medicare Advantage plans through a demonstration program (outside of Obamacare) that effectively mitigated most of the impact of the Medicare Advantage funding cuts from Obamacare. The demonstration program is targeted to continue through 2014, at which time the additional bonus payments will end unless other measures are put in place.
Medicare Advantage Plans are receiving less money from the Government, therefore the insurance companies are going to have to do better with less money. I look for the smaller Medicare Advantage companies to either go out of business, or be purchased by one of the bigger insurance companies.
Examples: Care Improvement Plus has been purchased by United Healthcare, and Coventry has been purchased by Aetna.
What does this mean to people one Medicare Advantage Plans?
· Less options
· Less benefits
· Maybe more of a monthly premium
The days of paying a $0.00 premium and receiving a rich Medicare Advantage Plan are ending soon. However, when you compare the benefits and premium of a Medicare Advantage Plan to an Employer or Private insurance Plan, Medicare Advantage Plans are still typically going to offer better coverage. Medicare Advantage Plans over the next few years should still offer good benefits for a low monthly premium.
Robert Bache aka “MedicareBob™”