Contributor: Vulnerable Seniors Are at Risk With Looming Medicare Advantage Cuts—Income-Based Programs Can Minimize the Damage

For Medicare members, navigating Medicare plans and benefits is often overwhelming. For starters, the average American senior has access to a dizzying 43 Medicare Advantage (MA) plans¹—more than double the options available in 2018—spanning both health maintenance organizations and preferred provider organizations, each with its own unique networks, benefits, and cost-sharing structures.

The 2024 open enrollment period, when members can reassess their Medicare coverage options, began October 15. This year, it has brought more than just confusion. In the wake of the Inflation Reduction Act (IRA) and other regulatory changes, MA plans have braced for significant cuts that are forcing them to take a hard look at their product offering.

For those closely following the industry, the impending plan disruptions come as no surprise. An analysis of the combined MA Part D (MAPD) plans reveals the scale of the upheaval: Approximately 1.38 million members, or 4% of the total MAPD population, will lose access to their current plan. Even more alarming, an additional 4.56 million members, representing more than 13% of MAPD enrollees, will find themselves automatically transitioned to a different plan, according to an analysis conducted by Mimilabs.

Prior to the annual enrollment period (also known as the AEP) major insurers were also signaling benefit reductions; while it’s too early to report on nationwide average cuts—analyzing the public plan data is a complex task that typically takes through the end of Q4—working with Mimilabs and others we can start to get a preview of what the beneficiary impact will be.

We can already tell that one of the biggest sources of change is from Part D (pharmacy) deductibles—the amount a member has to spend before their co-pays kick in—with an average increase in deductible between $91.26 and $114.02 per member. For those who had a $0 Part D deductible in 2024, about 9 million will experience an increase to their deductible, with an average increase between $168.13 and $189.77. As a specific example, Aetna has introduced a $590 annual Part D deductible for its largest contract. On the medical/Part C side, according to Deft Research, 5.7% will experience an increase from $0 with an average increase of $384.²

Oliver Wyman has recently analyzed some of the key changes and reported that supplemental benefits are where we’re also seeing some of the most significant changes, including the following negative impact on supplement benefit categories³:

Based on an example plan comparison between 2024 and 2025 benefits and annual benefit usage (shown here), the annual decrease in coverage could be close to $2000 based on a sample set of modest medical costs for a member. This level of benefit reduction and cost increase could have a meaningfully negative impact on some of society’s most vulnerable members.

Seniors typically face higher health care expenses on lower incomes. Half of Medicare beneficiaries live on less than $36,000 a year, with 25% bringing in less than $21,000 a year. Average health-related expenses represent 13.6% of total spending for Medicare beneficiaries, compared with just 6.5% for those under 65, according to KFF.¹

These health care cost dynamics are leading to 1 in 5 people 65 years and older reporting having debt resulting from medical or dental bills⁴ and a staggering 14% of low-income Medicare Advantage members being underwater on their monthly expenses (according to Uno Health, based on telephonic survey of 14,000 Medicare Advantage members across 6 Medicare Advantage plans in 5 states), before any potential cuts. With these cuts, combined with overall inflation, it could push another 3% of individuals into the red each month—so that their monthly income does not cover all basic living expenses, such as housing, food, or electricity.

The disruptive benefit changes during this open enrollment period are the result of a combination of regulatory changes that are designed to both reduce costs for consumers, and create long-term sustainability for the MA program. So why do we find ourselves bracing for the reverse?

First came the IRA’s provision capping annual out-of-pocket prescription drug costs at $2000 starting in 2025,⁵ down from the approximately $3300 in 2024.⁶ While this will help Medicare members taking multiple or high-cost drugs, the cap places increased financial pressure on MA plans already grappling with immense financial pressure from a number of recent MA regulatory changes.⁷ These include the v28 Risk Adjustment model, which aims to stem MA coding intensity and has historically contributed to revenue growth for MA plans, and changes to the revenue-generating Stars program.

On top of legislative and regulatory changes to MA, sustained elevated cost trends have, in many markets and/or categories, surpassed MA benchmark payment rate trends. In other words, programs designed to reduce cost for the end consumer, and create better incentives, have come together too quickly for MA plans to absorb them without a large hit to the product they can ultimately put on the market.

A last-minute reprieve from CMS⁸ in the form of a voluntary demonstration program may soften the blow for stand-alone Part D plans, but many beneficiaries will likely still experience a significant increase in premiums, a compression of benefit offerings, or a combination of both.

With so many unknowns, it’s wise for consumers to prepare for significant disruption.

Insurers, facing conflicting incentives, may not offer enough help to seniors trying to navigate this year's tumultuous landscape. Plans losing money in certain markets may seek to shed unprofitable blocks of business.

We’re out of time for further policy changes. But there is still an opportunity to ensure that everyone who can support a MA member understand changes to their benefits, is equipped to do so. A good place to start is the Medicare Advantage AEP Checklist, a list of practical questions for members created by plan experts at Medicare Choice Group.

Medicare Advantage AEP 2024 Checklist

We recommend all members take the following steps, and below are some specific questions to ask:

Review changes to their current plan — these will likely have been mailed out on Oct. 15.
Run through the helpful list of questions (see below) created by plan experts at Medicare Choice Group.
If changes do not meet their needs, contact an external licensed agent to discuss options, or use Medicare.gov to explore alternatives. We recommend Medicare Choice Group as a brokerage that represents all plans nationally.

Questions to ask:

Has my plan premium increased year over year?

Have key benefits changed within my plan? The most common benefits changes are implemented in the following categories:

Primary Care Physician
Specialist
Maximum Out of Pocket (MOOP)
Labs / X-rays
Emergency Room
Outpatient Surgery
Inpatient Hospitalization
Prescription Deductible

Are my medications covered on my plan’s formulary and within the same tier?

Are my medications subject to step therapy, quantity limitations or prior approval?

Do my preferred doctors, hospital and pharmacy participate with my current health plan?

Does my plan cover important value-added programs such as dental, vision, hearing and fitness? Has that value increased or decreased from last year?

Have I experienced any access to care issues due my plan’s approval processes?

In addition, there’s an opportunity for additional state and federal income-based programs to “fill in the gaps” caused by reduced coverage: Nearly 50% of Medicare beneficiaries are potentially eligible for at least 1 of approximately 7 state- and federal income-based programs that can give individuals an average of $4500 in co-pay reductions and savings every year. Yet up to half of eligible individuals remain unenrolled.

Income-based programs like these can play a vital role in cushioning seniors from “cost shocks” like the loss of a spouse's income, new medication costs, or unexpected health plan changes. By providing an average of $375 in additional monthly resources, benefits like Medicaid, Supplemental Nutrition Assistance Program, and housing assistance can help seniors afford basic needs.

Amid continuing MA market turmoil, connecting low-income beneficiaries to these programs is more critical than ever.