Some Medicare Advantage Freebies Might Disappear Soon

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Senior man working out in the gym.
LightField Studios /

Millions of retirees with Medicare Advantage plans enjoy many freebies that they would have to pay for if they had chosen traditional Medicare coverage. But that gravy train might be slowing down.

The Wall Street Journal reports that insurers may soon cut back on these perks — which include everything from dental and vision coverage to gym memberships — in order to boost profit margins.

Two headwinds in particular have insurers scrambling to find ways to boost profitability, according to the WSJ:

  • During the COVID-19 pandemic, many seniors delayed care. Now, they are making up for lost time, which is increasing insurer costs.
  • The Biden administration has proposed new curbs on federal payments to Medicare Advantage plans.

Medicare Advantage plans are one of two main types of Medicare coverage.

Traditional Medicare, also known as Original Medicare, is coverage offered directly by the federal government’s Medicare program. Medicare Advantage plans, on the other hand, are offered by private insurers such as UnitedHealthcare and Humana that contract with the government.

Traditional Medicare is fee-for-service coverage, meaning that when you see a health care provider, the federal Medicare program pays the provider an amount of money that is based on the cost of the care you received.

In the case of Medicare Advantage plans, however, the government pays insurers a fixed amount per plan participant per month, a payment system known as capitation.

The federal government recently proposed changes to the capitation system, however. If finalized, the changes would translate to a projected decline in payments to insurers of 3.12%.

The Medicare trust fund is expected to save $11 billion in 2024 as a result of the changes. Still, that savings would come at the expense of insurance companies that offer Medicare Advantage plans, thus adding pressure to their bottom line.

If you are unsure about whether to sign up for Medicare Advantage — or to go with traditional Medicare instead — check out “The 9 Biggest Reasons People Choose Medicare Advantage Plans.”

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