Will Medicare Advantage go away? How Medicare Advantage Plans are Changing in 2023

Medicare Advantage Plans have become increasingly popular over the past decade, with over half of all Medicare beneficiaries now enrolled in a private Medicare Advantage Plan rather than traditional Medicare. However, 2023 is bringing some significant changes to Medicare Advantage that may impact plan availability and costs for enrollees.

Higher Premiums and Reduced Benefits for Medicare Advantage Enrollees 2023 

As health care and drug costs continue rising each year, Medicare Advantage Plans have had to seek various means to keep premiums and cost-sharing affordable for enrollees while still remaining financially viable. Starting in 2023, the Centers for Medicare and Medicaid Services (CMS) will be reducing the annual payments made to Medicare Advantage Plans per enrollee. This payment reduction is aimed at addressing a problem where Medicare Advantage Plans have been able to offer lower premiums and richer benefits than Original Medicare due to higher government payments.

While reducing overpayments to plans is reasonable, it also means Medicare Advantage enrollees should expect to see higher premiums and/or reduced benefits beginning in 2023. Plans may cut back on supplemental benefits like dental, vision, hearing or telehealth coverage that are not covered by traditional Medicare. They may also charge higher deductibles, copays or coinsurance for services that are covered. Plan availability could also contract as some insurers decide particular counties or states are no longer financially viable to offer Medicare Advantage Plans.

Important Changes to Drug Plan

Prescription drug coverage offered as a part of most Medicare Advantage Plans is also changing considerably for 2023. The annual drug deductible is increasing to $505 for many plans. Maximum out-of-pocket spending is also rising to $7,550 for drug coverage alone. These changes will impact all that are eligible for Medicare Advantage enrollees utilizing their prescription drug benefits. Some lower income beneficiaries may qualify for extra help from Medicare to pay for rising drug costs.

One positive improvement is that people with Medicare Advantage Plans will now have to include all drugs covered under traditional Medicare Part D Plan during the plan year rather than removing certain drugs mid-year as some plans have done. This provides more stability and assurance of coverage for expensive specialty drugs. Telehealth benefits for behavioral health services are also now required to be included as an essential health benefit.

Will These Changes Cause Enrollees to Leave Medicare Part C?

While no one can say for certain how Medicare Advantage enrollment may change as a result of 2020 payment cuts and premium/benefit changes, experts anticipate many enrollees will reevaluate their plan choices carefully during open enrollment this fall. Costs are consistently one of the most important factors for seniors choosing health plans. If Advantage Plans end up significantly raising costs, some beneficiaries who want to avoid those premium hikes may opt to switch back to traditional Medicare and supplement it with a stand-alone prescription drug plan or Medigap Plan instead.

However, Medicare Advantage Plans tend to still offer more robust networks and a lower overall cost structure than purchasing individual Medigap/Part D Plans for most enrollees. As long as Advantage Plans can still deliver quality health/drug coverage within a similar price range to traditional Medicare after 2023 changes, enrollment turbulence may remain moderate. But higher financial burdens on enrollees may accelerate the return of some beneficiaries, especially higher-income individuals, to traditional Medicare instead of Medicare Advantage programs.

Conclusion

While no one expects Medicare Advantage to disappear entirely, changes taking effect in 2023 stand to make these private plans less financially advantageous to enroll in for many Medicare beneficiaries compared to previous years. Careful consideration of plan options and potential new out-of-pocket costs will be important during open enrollment as seniors with Medicare decide whether to stay in their existing Advantage Plan or consider alternative approaches under traditional Medicare program instead. Availability of affordable, comprehensive health insurance remains crucial as medical costs continue skyrocketing for Americans of all ages.

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