YOUNGSTOWN, Ohio – The Inflation Reduction Act led to higher costs for insurance companies, and those companies are altering Medicare plans to make up the expenses.
Bill Wilson, vice president of sales for Morris Financial Group in Salem, points to the Inflation Reduction Act and the elimination of the doughnut hole, or the coverage gap, as changes. Elimination of the doughnut hole means that the most a Medicare recipient will spend on prescriptions is $2,000 per year, beginning in 2025.
“So those are the two big things that impact Medicare Part D plans, which are prescription drug plans, and Medicare Advantage plans, because Medicare Advantage plans include prescription drug coverage in them,” Wilson says.
While that’s good for consumers, it causes insurance companies to pay more, leading to changes in insurance plans.
And that’s why consumers see so many television commercials about Medicare changes and Medicare Advantage.
Baby Boomers
The aging population exacerbates these issues.
“The baby boomer population has been turning 65 for a number of years now,” Wilson says. “Just the increase of people turning 65 ultimately – it’s causing this growth in the Medicare world.”
The Medicare enrollment period, which started Oct. 15, runs through Dec. 7. That’s the time when Medicare recipients can change their coverage for the following year.
And television ads bombard viewers.
“Really you have two avenues when you turn 65,” Wilson says. “It’s Medicare supplement with a Part D or Medicare Advantage.”
And there are differences that may make one a better fit for a one recipient than the other.
“Basically [Medicare Advantage plans] cover everything that original Medicare covers, plus extra,” says Samantha Centobene, a Medicare specialist at The Agent, which has offices in Boardman and Salem. “So, original Medicare does not cover dental, hearing or vision. Medicare Advantage does.”
While the open enrollment occurs at this time each year, Annik Matteson, an agent at R. Kashmiry & Associates Inc. in Boardman, points to changes planned for next year regarding coverage by some plans.
“If you picked up any new drugs, got rid of any drugs – anything – always call your agent and ask. Because the government passed what’s called the inflation Reduction Act, which is phenomenal for a lot of people. But for other people, [it’s] not so great,” she says. “It has caused a lot of these plans to change.”
Those changes could be in the plans themselves or in the cost of particular medications.
“So, even if, for the past 15 years, they have said, ‘Yeah, I’m good where I’m at. Just roll it over next year,’ this year, you’ll want to check,” Matteson adds.
As an example, she points to Eliquis, a drug used to reduce the risk of strokes and blood clots.
“It’s a pretty expensive drug,” Matteson says. “It retails between $500 to $600 a month. So previous years, including this current one, the first six to eight months typically you’re in a co-pay scenario. You pay $42 to $47 for a 30-day supply.”
Doughnut Hole
But you would hit what’s called the doughnut hole, or the coverage gap, where the rest of the year you’re paying 25% of the retail cost.
“You would be paying about $150 for a 30-day supply,” she says. “Next year they’re getting rid of the doughnut hole.”
So those people who are using Eliquis would pay the $42 copay the whole year, bringing down their cost.
“For other people that are on maybe a few generic medications, they might be burned on the backend of just the premium side of it,” Matteson says. She’s seen plans go to $40 from $5 for next year.
There are pros and cons to both options. It depends on an individual and his specific needs, Matteson says.
When someone first enrolls in Medicare, he may choose either Medicare Advantage or Medigap with a standalone drug plan.
“Medigap. Think of it as you’re paying for your plan. You’re not really paying for your medical bills,” she says. “Whereas a Medicare Advantage, you’re not paying for your plan – or you’re paying very little – but you are paying for your medical bills.” She likens Medicare Advantage to a traditional insurance plan available from an employer. With Medigap, however, enrollees pay a monthly amount.
“There’s different plans, obviously. But the most common being a Part G where you’re paying your Part B deductible, which for this current year is $240. And once you’ve paid that $240 … and then you stop paying,” Matteson says. “And Medigap pays the rest of the year.”
Underwriting
It’s important to review options before picking a plan. If an individual moves from Medigap to Medicare Advantage, he has 12 months within which he can return to Medigap without complication. However, if he wants to return to Medigap after that 12 months, he’s subject to underwriting.
“They look at your medical history and they base your rate off of that,” Matteson says. “They could deny you. I’ve seen it more than once.”
Wilson says Medicare Advantage plans aren’t new.
“This is the first time that they’ve eclipsed sales of Medicare supplement plans,” he says. “So now there are more people in the U.S. that have Medicare Advantage plans than have Medicare supplements.”
The changes, the television commercials and everything mailed to seniors can be confusing. “They need to reach out to somebody like me – somebody that is a licensed Medicare agent that sells both Medicare supplement and Medicare Advantage plans,” Wilson says. “And they will be able to sit somebody down and explain the differences between the two.”
There’s no cost to Medicare recipients to work with an agent.
While Medicare Advantage plans include dental, hearing and vision coverage, because of the change in the prescription costs, some companies have whittled down some of those benefits.
Centobene from The Agent believes Medicare Advantage offers a good deal for most people.
“Original Medicare is great but it is not the end-all,” she says. “You need that additional coverage, whether it’s through a supplement or through an advantage plan. That extra additional coverage is going to give you that dental, vision and health and eye care or hearing that you’re not going to get in original Medicare.”
Medicare Advantage does, however, lock members into a network while a supplement doesn’t.
Getting Older
The proliferation of advertising about Medicare Advantage may be linked to the aging population too. Last January, CBS News reported that about 4.1 million Americans would turn 65 each year through 2027.
In Ohio, 17% of the population was at least 65 in 2020. By 2050, that number is projected to grow to nearly 20%, according to the Scripps Gerontology Center at Miami University in Oxford, Ohio. In Mahoning, Columbiana and Trumbull counties, the numbers for 2020 hover around 21%. The projected amounts for 2050 are 20% for each of those counties.
Wilson has seen the changes during his career in insurance.
Each July, insurance carriers gather agents in a room to review changes for the upcoming year.
“And 20 years ago, there used to be 10 of us in a room,” Wilson says. “Now, there could be 150 agents in the room. So there’s a lot more agents selling Medicare plans now than there were 20 years ago. And that, I think, is a result of the sheer numbers of people turning 65 this year and next year. We have more people actually turning 65 than previous years because that boomer population is starting to age.”
Pictured at top: Samantha Centobene from The Agent believes Medicare Advantage offers a good deal for most people.