If you’re a senior, listen up! A retirement specialist is waving a flag, hinting that Medicare Advantage cuts might be around the corner in the coming year.
Bob Carlson, the brain behind Retirement Watch, a monthly guide on retirement planning, recently penned a piece in Forbes, predicting that Medicare Advantage plans could face the axe as the government looks to tighten its purse strings.
These plans have gained popularity, with over half of existing Medicare beneficiaries opting for one by 2024. They offer sweet deals like lower out-of-pocket expenses and added perks such as vision and dental coverage, making them an attractive choice for many seniors.
However, as we gear up for this year’s open enrollment season, seniors might want to brace themselves for changes that could make their current Medicare Advantage plan less appealing.
“Heads up, changes are coming,” Carlson warned. “If you’re in or eyeing an Advantage plan, keep an eagle eye out during this fall’s open enrollment. Big modifications might be on the horizon.”
While these plans have been a hit due to lower costs (especially for the healthy bunch) and the ability to bundle insurance and drug coverage, the government is now looking to trim down these options to save some cash.
“Expect the squeeze, with reduced payments nudging up premiums, copays, deductibles, and trimming coverage in 2025,” Carlson cautioned.
Big names like UnitedHealth and CVS Health have already sounded alarms due to the impending changes. Lower than expected earnings in the first quarter and unexpected spikes in Medicare Advantage enrollment for 2024 have put them in a sticky spot.
“Even heavyweights like CVS and Humana are feeling the pinch in their Medicare Advantage business,” Carlson pointed out. “Restoring those profit margins might take a good while.”
Medicare itself has confirmed the belt-tightening, stating that reimbursements to plan providers will be lower than anticipated in 2025.
The effects of the cuts? Brace yourself for reduced coverage, with items like early organ transplant failure detection tests facing the chopping block. Patients might now have to wait for glaring symptoms before getting a biopsy, and more cuts could be on the way.
As the storm brews, Carlson suggests that Medicare Advantage members weigh their options during the upcoming enrollment and understand how rule changes could impact their healthcare. Having a backup plan, like sticking with original Medicare and its supplements, might be a smart move.
“It’s a tough position for both providers and recipients,” Carlson explained. “Providers won’t cover as much as they used to, leaving recipients to foot a larger part of their healthcare bills.”
Chris Fong, CEO of Smile Insurance Group, predicts a shuffle among retirees due to these cuts, especially hitting those on lower incomes or with physical limitations the hardest.