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Top 4 Reasons Medicare Advantage Plans Are Popular

Eligible seniors may opt to receive their health benefits through Original Medicare or a Medicare Advantage (MA) Plan. The rate of seniors who are choosing Medicare Advantage Plans has been growing the last several years. In 2019, about 34% of seniors opted to receive their Medicare benefits through a Medicare Advantage Plan. The share increased to 39% in 2020 and is projected to grow to 47% by 2029. It’s no wonder their popularity is growing; Medicare Advantage Plans offer their members many additional perks and advantages over Original Medicare.

Top 4 reasons Medicare Advantage Plans are popular

1. Higher quality of care

Medicare Advantage Plans are part of a Star Ratings system that gives providers an incentive to offer quality service over quantity. They do this by coordinating care with health providers and local health systems; the result is better health outcomes and lower costs. On a practical level, this means doctors are less likely to order unnecessary tests and procedures that lead to unnecessary hospitalizations.

Since Medicare Advantage Plans were launched in 2003, significant progress has been made on quality of care. Today, 78% of MA Plans have a rating of four or more stars compared to 52% just eight years ago. Member are happy too: 99% of MA Plan members are happy with their health insurance, compared to 85% of seniors on Original Medicare.

2. All-in-one prescription drug coverage

Most Medicare Advantage Plans include prescription drug coverage – often with little to no monthly premium. Seniors on Original Medicare must choose a separate Medicare drug plan to avoid a Late Enrollment Penalty.

3. Lower-out-of-pocket healthcare expenses

Yes, it’s true. Seniors can save money by choosing a MA Plan. Seniors may be surprised to know that six in ten MA beneficiaries have no monthly premium! In addition, many seniors have lower overall health care expenses on a MA Plan and a report by the UnitedHealth Group found that 3.5 percent of Original Medicare enrollees spent more on healthcare expenses. The main reasons for the financial advantage are the out-of-pocket healthcare spending cap and extra benefits provided by MA Plans. There is no spending cap on Original Medicare so costs can add up quickly if you experience a serious illness.

A study also found that Medicare Advantage plans cost the Medicare program 9.5 percent less than traditional Medicare did (even with the cost of the extra benefits that come with MA Plans) and had a lower percentage of “improper” payments.

4. Increasing options

Medicare Advantage Plans were launched in 2003 and since then the number of plans available from a variety of providers has increased exponentially. In the last nine years, the number of plans available to choose from grew by 161 percent. This could explain why Medicare Advantage experienced an enrollment growth rate of 60 percent between 2013 and 2020 and is expected to keep growing.

Medicare Advantage Plans Serve a diverse population

Compared to Original Medicare, Medicare Advantage Plans serve a higher percentage of minority populations and the percentage of minorities served by MA Plans has been growing. In 2020, these groups of seniors were represented in the following percentages:

  • 60% of MA enrollees were women

  • 35% of all Asian Americans chose Medicare Advantage Plans

  • 52% of Hispanic Americans chose Medicare Advantage Plans

  • 49% of African Americans chose Medicare Advantage Plans

In addition to diversity, MA Plans are popular among low-income seniors with just over 50% of MA enrollees earning less than $30,000 per year.

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.

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