Medicare Advantage Beneficiaries Report Lower Cost Burden than Traditional Medicare Beneficiaries

Eligible kupuna can choose between traditional Medicare with or without a Medicare supplement and a Medicare Advantage Plan. More and more seniors are choosing Medicare Advantage Plans each year and it’s easy to see why: there are a growing number of options and plans providing benefits that Original Medicare doesn’t include. Now, we can add another reason to the list: lower out-of-pocket costs.


Better Medicare Alliance, the leading research and advocacy group supporting Medicare Advantage, recently released an analysis* conducted by ATI Advisory showing that Medicare Advantage beneficiaries report spending $1,640 less in their total annual health spending than those who are enrolled in Original Medicare. Medicare Advantage beneficiaries spent on average $3,354 on their out-of-pocket healthcare costs and premium compared to $4,994 for traditional Medicare beneficiaries on the same spending categories. On the other hand, there are similarities in satisfaction with medical care for all Medicare beneficiaries. A study by MCBS found that most Medicare beneficiaries living in the community are generally in good health and very satisfied with their Medicare coverage. Beneficiaries were happy when it came to key metrics such as the cost of Medicare, access to medical care, and the quality of care they receive.


*The analysis is based on 2018 Medicare Current Beneficiary Survey (MCBS) data, the most recent year available.

Why the Cost Burden Matters a lot to Low-Income Americans


For low-income Americans, the Medicare cost burden is especially important. (The cost burden is when someone spends 20% or more of their income on health care expenses). With 52.7% of people enrolled in a Medicare Advantage Plan living below 200% of the federal poverty level compared to 39.1% of traditional Medicare members, it’s a good thing that Medicare Advantage beneficiaries spend less out-of-pocket.


The ATI Advisory study found that the number of people with a high cost burden was lower for those enrolled in a Medicare Advantage Plan than for those enrolled in traditional Medicare even though Medicare Advantage beneficiaries had a slightly higher rate of chronic illness such as diabetes or heart disease. One-fifth of all traditional Medicare beneficiaries had a cost burden compared to 11.8 percent of Medicare Advantage beneficiaries in 2018.


Why do Medicare Advantage Plans have lower cost burden than traditional Medicare plans?


When compared to Original Medicare, Medicare Advantage Plans offer certain cost protections that reduce the cost of healthcare. There are several reasons Medicare Advantage Plans may have a lower cost burden than Original Medicare, including:

  • Medicare Advantage Plans have an out-of-pocket annual maximum, unlike Original Medicare.

  • Medicare Advantage Plans often cover a wider range of services such as dental, hearing aids and vision care that Original Medicare does not cover.

  • Medicare Advantage Plans may cover some of the out-of-pocket costs associated with long-term hospital care or in-home care that Original Medicare does not cover.

  • Medicare Advantage Plans often provide prescription drug benefits, unlike Original Medicare.

  • Medicare Advantage Plans may come with lower co-insurance, deductibles and copays.

This report matches the results of studies from other sources that also found that Medicare Advantage Plans often offer cost savings to their members.


Contact a PBC Agent for Help


Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.


At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.