By Elizabeth O'Brien

Rising costs are squeezing many Medicare Advantage insurers, causing them to scale back benefits they've used to attract members.

If you're in an Advantage plan that no longer meets your needs, you can switch through March 31 during the annual Medicare Advantage Open Enrollment Period. Given the many changes to plan designs for 2025, it's a particularly important opportunity this year.

Unlike the fall open enrollment period, this one is open only to those who are already on Advantage, the privately run alternative to traditional Medicare that enrolls about 33 million Americans, or more than half of the eligible Medicare population. From Jan. 1 through March 31, enrollees can switch to another Advantage plan or go back to traditional Medicare and buy a stand-alone Part D drug plan.

Also known as Part C, Medicare Advantage provides the same Part A hospital coverage and Part B outpatient coverage as traditional Medicare. Beyond that, Advantage plans typically offer supplemental benefits that aren't included in traditional Medicare, such as dental, vision, and hearing coverage.

While they've long acted as a draw for new members, these ancillary benefits were always relatively limited in nature. Now, some have been reduced even more due to cost pressures the carriers are facing.

In one example, a plan might still offer a set dollar amount of dental benefits -- say, $2,000 a year -- yet cut the denture coverage from 100% to 50%, says Diane Omdahl, president and co-founder of 65 Incorporated, an independent Medicare consultancy.

Those ancillary benefits don't save Advantage enrollees much money anyway, either due to their limited nature or to limited awareness of them. From 2017 to 2021, Advantage beneficiaries paid 9% less out of pocket for eyeglasses than those on traditional Medicare and 9.3% less for dental visits, yet no less for hearing aids, according to a recent study in JAMA Network Open.

In addition to tweaking supplemental benefits, plans might make changes to their network of participating doctors or drug coverage that make them no longer attractive to members.

While any benefit changes for the following year should have been outlined in the Annual Notice of Change that participants receive each fall in the mail, people often don't study that and only become aware of changes when they try to use their coverage in the new year. You can research other options on the government's plan finder tool.

Many Advantage plans have made adjustments to their drug coverage. Some involve changes to the formulary, as the list of covered drugs is called. On top of that, some have added a deductible to their drug coverage or switched from a flat copayment to a coinsurance model, in which beneficiaries are charged a percentage of the drug price, which can increase out-of-pocket costs.

Patients whose out-of-pocket drug costs reach $2,000 in 2025 will benefit from the annual spending cap that took effect this year under the Inflation Reduction Act. The $2,000 limit applies across plans, so any amount you accrue under one will carry over into the next if you decide to switch.

Other outlays, such as out-of-pocket spending toward a plan's annual out-of-pocket maximum, may transfer over if you switch to a similar Advantage plan from the same organization as your current one. If not, you may face a reset if you change, says Juliette Cubanski, deputy director of the program on Medicare Policy at KFF, a health policy nonprofit.

Medicare Advantage plans can make changes to their network of participating medical providers at any time during the year. Patients who learn that their doctor no longer takes their insurance may want to switch to a plan where their doctor is still in-network.

Conversely, enrollees may want to exit Advantage altogether and return to traditional Medicare, which has fewer restrictions. Under traditional Medicare, you can visit any doctor in the country that accepts Medicare, and you generally don't have to get referrals or obtain prior authorization for procedures, as is common under Medicare Advantage.

Another headwind for plans this year is a decline in quality ratings that the government assigns based on factors like customer satisfaction and delivery of preventive care. Only seven Medicare Advantage plans received the top five-star rating for 2025, versus 74 in 2022. Plans with higher ratings receive quality bonuses from the government, and the loss of stars can lead to a revenue decline.

Star ratings are listed in the plan finder tool if you want to explore switching to a higher-rated option.

Beneficiaries returning to traditional Medicare should keep in mind that access to a Medigap supplement plan isn't guaranteed, outside of certain limited circumstances and a handful of states with different rules. That means you will be subject to medical underwriting and can be denied a policy or charged more based on your health status. Coverage criteria differ by insurer, so if you're denied by one, you can try another.

If Medigap insurance is important to you, don't disenroll from your Medicare Advantage plan until you have "the confirmation in hand" that you'll be issued a policy, Omdahl says.

Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com

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(END) Dow Jones Newswires

January 17, 2025 21:30 ET (02:30 GMT)

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