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Medicare Advantage Plans Now Cover Close to Half of Beneficiaries

New report says soon enrollment in these private plans could overtake original Medicare

Medicare part C insurance papers with clipboard and pen.
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Soon more than half of Americans who get their hospital and medical coverage through Medicare are likely to be enrolled in Medicare Advantage (MA), the private insurance alternative to the government-run coverage, according to a new analysis by the Kaiser Family Foundation (KFF).

Of the nearly 59 million people who get their health care from both Medicare’s Part A, which covers hospital care, and Part B, which covers doctor visits and other outpatient services, 48 percent now get their coverage through a Medicare Advantage (MA) plan, according to the KFF findings.

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“Enrollment is projected to cross the 50 percent threshold as soon as next year,” the report says. The nonpartisan foundation based its analysis on the 58.6 million Medicare beneficiaries enrolled in both Parts A and B. Another 5.7 million Americans are enrolled only in Part A or Part B.

Medicare Advantage plans were created in 1997 as a one-stop shopping alternative to original Medicare. The new KFF report reveals that enrollment in MA plans has more than doubled since 2007. The nonpartisan Congressional Budget Office (CBO) also anticipates continued growth of MA membership, projecting that by 2032 among people enrolled in Part B, 61 percent will choose an MA plan.

“There are trade-offs between choosing Medicare Advantage versus traditional Medicare,” says Meredith Freed, a senior policy analyst with KFF’s program on Medicare policy. Freed coauthored the new report and a companion analysis of some of the costs and benefits MA plans provide. “Medicare Advantage has a lot of appealing aspects, such as extra benefits that are not available in traditional Medicare, such as dental, vision, fitness and others,” Freed says. “Medicare Advantage plans also have an out-of-pocket limit, unlike traditional Medicare.” (Thanks to the Inflation Reduction Act, starting in 2025 annual out-of-pocket costs will be capped at $2,000 for prescription drugs in both Part D plans and for people who get their medications under MA plans.)

But the trade-offs, Freed said, include the fact that “Medicare Advantage plans are limited in terms of their network of providers, unlike traditional Medicare, where you can see any doctor that accepts Medicare.” In addition, MA plans often require referrals to specialists and prior authorization for many tests and other medical services, she says.

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Here are some key findings of the KFF reports:

• People enrolled in MA plans are still required to pay the monthly Part B premium, which is $170.10 in 2022. The KFF study found that 69 percent of MA members pay no additional premium for the other services that their plan provides, including coverage for prescription drugs.

• While the federal government requires MA plans to provide an out-of-pocket limit for services, which in 2022 cannot exceed $7,550 for in-network care and $11,300 for both in-network out-of-network services combined, the KFF report says this year the average out-of-pocket limit in MA plans is $4,972 for in-network care and $9,245 for in-network and out-of-network combined.

• 99 percent of MA plan members have coverage for eye exams and/or eyeglasses, 98 percent are covered for hearing tests and/or hearing aids, and 96 percent have dental coverage.

• 98 percent of MA members have some fitness benefits, 84 percent have access to some over-the-counter drug benefits, 71 percent can get some meals delivered to their homes, and 39 percent are covered for transportation to doctor visits. 

What’s the Difference Between Original Medicare and Medicare Advantage?
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