Switching to Medicare Advantage from Traditional Medicare is Growing

Switching to Medicare Advantage from Traditional Medicare is growing. Experts predict total Medicare Advantage (MA) enrollment will exceed 50% of all Medicare participants by 2023 or 2024. A recent analysis examines switching trends by demographic groups.

The growth is associated with two factors. First, new enrollees, those turning 65, are choosing MA plan options.

Second, current enrollees in Traditional Medicare (TM) are switching to MA. That’s people with just Medicare Part A and B. Both of these segments are the people targeted by the onslaught of television ads featuring celebrity spokespeople. You’ve no doubt seen the ads multiple times.

If you are considering switching, here’s some important information not typically mentioned in many of the online articles that focus on Medicare Advantage. We’ll also share data from the latest reports on switching (see below).

Facts About Medicare Advantage (MA) Plans

1. Medicare Advantage plans are private (not run by Medicare).
2. There is a vast difference between MA plans and benefits offered.
3. While ads promote free benefits, there are (always) costs.
4. Care access can be limited (a reason some people switch out).
5. The typical senior will have 43 MA plans to choose from.
6. Call centers (toll-free numbers) often promote just one or two.

What Do You Mean ‘Medicare Advantage Plans Are Not Medicare’?

Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. Medicare pays these companies to cover your Medicare benefits. While Medicare appears in the name, it’s actually NOT Medicare. It’s private insurance or coverage.

They may be insurance companies such as Humana, UnitedHealthcare, Aetna or Cigna. Or they may be health care entities, such as Kaiser. Their goals are to provide quality care … but at the same time to make a profit.

The private insurers receive a fixed amount each month to provide Medicare Advantage plan care. In exchange, these companies can charge out-of-pocket costs to policyholders. They can establish their own rules for service. For example, they may require use of provider networks for both non-urgent care and emergency services. They may require pre-approval for specialists.

To be profitable, the private companies must ‘manage’ your health care. For example, if they get paid $1,000-per-month for you, that’s $12,000 a year. They get that amount for each participant. Some will need very little care. They are profitable.

Others will need lots of care.  That is typical as one gets older. Your last year(s) of life are going to be when you need more care, more costly care. That’s when MA plans could face losing money. Thus, they face a problem making money if they have too many “high need” individuals.

There are always pros and cons. That’s where being an educated consumer comes into play.

MA plans certainly have some negative consequences. The good news is that Medicare gives you opportunities to drop your MA plan. You can switch back to Traditional Medicare. Be certain, however, to understand the rules and important dates when this is allowed.

Many people love their MA plan. Most plans cover benefits that Original Medicare doesn’t offer. For example, prescription drugs, vision, hearing, and dental. That’s why MA plans are growing and expect to cover 50 million people by 2024.

Data: Switching To Medicare Advantage from Traditional Medicare?

Data from “Beneficiary Switching Between Traditional Medicare (TM) and Medicare Advantage (MA) Between 2016 and 2020”, Journal of the American Medical Association, December 29, 2022.

In 2020, TM-to-MA switching rates were almost 4 and 2.5 times higher than switching rates from MA to TM for Medicare only and Medicare-Medicaid enrollees, respectively.

Switching accounted for a growing share of new MA enrollment growth, increasing from 49% in 2016 to 67% in 2020.

In 2017, 5.3 percent of Medicare beneficiaries switched from traditional Medicare to Medicare Advantage. Only 3.7 percent switched from MA to traditional Medicare.

In 2020, 6.8 percent went from traditional to MA. Only 2 percent switched from Medicare Advantage to traditional Medicare.

For Medicare-only beneficiaries (not on Medicaid), the Traditional Medicare to Medicare Advantage switch rate was almost four times higher than the MA to traditional Medicare switch rate (6.1 percent versus 1.6 percent).

 Dual Eligibles (those with Medicare-Medicaid coverage) it was even higher (11.2 percent versus 4.5 percent).

Data: People Who Switch From MA to Traditional Medicare?

The study reports what many Medicare insurance experts anecdotally knew.

When people have serious health conditions, an MA plan may limit their access to care (such as specialists). Or, the costs for longer, serious care can be significantly more than if they were back on Medicare. These are called “high need” individuals.

The 2022 JAMA report found that in 2016, beneficiaries in their last year of life were more than twice as likely to disenroll from MA than from TM (5.4% vs 2.6%). By 2020, the trend had reversed (3.1% vs 5.1%).

A February 2019 report from JAMA (Journal of the American Medical Association) looked at data for 13.9 million Medicare Advantage enrollees.

They found that among high-need enrollees, 4.6% of Medicare-only and 14.8% of Medicare-Medicaid beneficiaries switched to traditional Medicare. That compared with 3.3% and 4.6%, respectively, among non–high-need enrollees.

Simply explained, those who had high medical needs (often associated with end-of-life conditions) found it better to switch back. So did Medicare-Medicaid beneficiaries; those who are poor and on Medicaid.

Switch Rates Vary Among Different Populations

The 2022 study found that rates at which people switched varied among certain populations.

Black and Hispanic beneficiaries had higher switching rates compared to White beneficiaries. These beneficiaries were more likely to switch from Traditional Medicare to Medicare Advantage in 2016 and 2020.

In 2020, Black (13.4 percent) and Hispanic (13.5 percent) beneficiaries were more than twice as likely to disenroll from traditional Medicare compared to White beneficiaries (5.9 percent).

Want More Information – Find Local Medicare Advantage Agents

Use the Associations free (and private) online directory to find local Medicare Advantage agents. Agents who sell both MA and Medigap will say so as part of their description.

Click Above to Use The Association’s Directory Listing Medicare Brokers In Your Zip Code

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