Millions of Seniors Lose Their Medicare Advantage Coverage

Millions of seniors will lose access to their Medicare Advantage plans after major insurer cuts in the aftermath of the Inflation Reduction Act. Experts spoke with Newsweek about what’s going on and what steps seniors can take to get the coverage they need.

Medicare Advantage is the privatized version of Medicare, and seniors can typically get a myriad of benefits from such plans, including lower monthly premiums and extra vision and dental coverage.

However, millions of seniors have been told they’ll need to find new plans this fall after private insurers cut several plans amid changes under the Inflation Reduction Act (IRA).

“Insurers are finding it difficult to offer the same plans when reimbursement rates do not cover the increased cost of care,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek.

“The IRA put pressure on providers by lowering their reimbursement rates which has led insurers to pull out of markets they feel are no longer economically feasible by which to operate.”

In part as a response to some of the prescription drug caps enacted by the IRA as well as a reduction in base payments to Medicare Advantage insurers, Humana said it would cut the plans for a few hundred thousand customers. This is after the major insurer posted profits of $679 million in the second quarter, a decrease of 29 percent year over year.

Roughly 13 markets will be impacted, affecting around 560,000 members.

HealthPartners also will be ending Medicare Advantage plans provided by UnitedHealthcare next year. The company made this decision due to payment delays and MA coverage denials, and roughly 30,000 patients will be forced to find a new plan.

Centene Corp also announced it would be ending Medicare Advantage plans in at least six states due to cost pressures. Those changes are set to impact around 40,000 seniors in Alabama, Massachusetts, New Hampshire, Rhode Island, New Mexico and Vermont.

“We’ve said before that we expect to shrink in 2025 as we think about what business is going to serve this well in the long run,” Centene CFO Andrew Asher said during the company’s second-quarter earnings call. “First we’ve got to chip away at the degree of run rate negative margin and push towards break even and then we can talk about what the margin opportunity is in Medicare.”

Some more niche markets, like the MVP Medicare Advantage plan through Vermont’s UVM Health Network, will also be hit by plan cuts. But even this smaller reduction is set to affect 25,000 seniors in Vermont.

Current Medicare Advantage plans continue until December 31, but if the impacted seniors don’t switch to a new plan before that date, they’ll be automatically enrolled in traditional Medicare. This typically offers less coverage than the privatized Medicare Advantage plans.

Open enrollment officially begins tomorrow, October 15.

Michael Ryan, a finance expert and the founder of michaelryanmoney.com, said the mass exodus of Medicare Advantage plans is a “perfect storm” of rising healthcare costs, changing federal policies and insurers tightening their businesses.

“UVM Health, Humana, Centene, they’re all feeling the squeeze,” Ryan told Newsweek. “The Inflation Reduction Act is playing its part too, though it’s a bit of a double-edged sword.”

While the Inflation Reduction Act lowered drug costs and expanded benefits for many, it also put the heat on insurers to keep their profits up, and that resulted in the loss of many healthcare plans.

“For seniors, this is more than just an inconvenience,” Ryan said. “It’s a potential financial gut punch. I’ve had clients who relied on their Advantage plans for dental work, vision care, you name it.”

For seniors who find themselves impacted by the cuts, Ryan urged them to use the enrollment period wisely and reach out to state health insurance assistance programs for guidance.

“This Medicare Advantage exodus is a big deal, but it’s not the end of the world,” Ryan said. “With some planning and a willingness to adapt, you can navigate these choppy waters. And remember, you’re not alone in this. There are resources and experts out there ready to help.”

Chris Fong, a Medicare expert and the CEO of Smile Insurance Group, said the impact on seniors will be far-reaching next year due to the sheer number of plans terminating. Still, there are silver linings.

“That being said, the termination of a member’s plan can be seen as a positive for those who want to enroll into a Medicare Supplement plan,” Fong told Newsweek.

“Typically, someone who is outside of their Medicare Supplement Open Enrollment Period or Medicare Advantage Trial Period will need to go through medical underwriting to determine acceptance and premium. This usually makes it nearly impossible for people who have medical conditions to qualify for a Medicare Supplement plan at a reasonable premium. The termination of a member’s plan grants them a guaranteed acceptance to a Medicare Supplement.”

According to Louise Norris, health policy analyst for healthinsurance.org, somewhere under 2 million people are currently enrolled in Medicare Advantage plans that will no longer be available in 2025. That number is out of 34 million people who currently are under a Medicare Advantage plan.

“Most people with Medicare Advantage will have the option to just renew their current coverage for 2025,” Norris told Newsweek. “They should still comparison shop during open enrollment, however, and be aware of any changes to their current plan for the coming year.”