Older Beneficiaries Choose Medicare Advantage for Enhanced Benefits

As Medicare Advantage enrollment is expected to rise in the coming years, a new survey from the Commonwealth Fund revealed that beneficiaries are choosing the private program over traditional Medicare due to its enhanced benefits and out-of-pocket cost limits.

According to Kaiser Family Foundation (KFF) data, 48 percent of eligible Medicare beneficiaries are enrolled in Medicare Advantage. Experts predict this figure will grow to more than 50 percent by 2025.

The Commonwealth Fund’s 2022 Biennial Health Insurance Survey asked Medicare beneficiaries 65 and older why they chose Medicare Advantage or traditional Medicare and what resources helped them choose. The analysis reflects responses from 1,605 beneficiaries gathered between March 28 and July 4, 2022.

Nearly a quarter (24 percent) of Medicare Advantage beneficiaries chose the private program for its additional benefits, such as vision and dental coverage. Individuals with incomes below 100 percent of the federal poverty level (FPL) were more likely to cite the enhanced benefits compared to those with incomes over 400 percent of FPL, the survey noted.

One in five enrollees cited the out-of-pocket spending limits as the main reason for their choice. This was more common among beneficiaries who were not dually eligible for Medicare and Medicaid.

Beneficiaries also reported choosing Medicare Advantage over traditional Medicare because it was recommended by trusted people (15 percent), it was offered by their or their partner’s former employer (11 percent), and it allowed them to maintain their same insurer (9 percent).

Among beneficiaries who chose traditional Medicare, 40 percent did so because of the more choices in doctors, hospitals, and healthcare providers offered by the public program. Beneficiaries with supplemental coverage were more likely to cite provider choice as a reason compared to those without it (50 percent versus 22 percent).

Almost 10 percent of traditional Medicare beneficiaries chose their coverage because of a recommendation from trusted people, while 7 percent chose traditional Medicare to continue coverage from an employer.

Medicare Advantage (31 percent) and traditional Medicare beneficiaries (30 percent) used insurance brokers to help select their plan choice. Notably, brokers are paid commissions by insurers, which may influence the information they offer, the analysis noted.

Twenty percent of Medicare Advantage enrollees and 14 percent of traditional Medicare beneficiaries had friends and family help.

Beneficiaries were less likely to utilize Medicare.gov, the Medicare hotline, or state health insurance assistance programs (SHIPs). SHIPs offer unbiased, one-on-one help but rely heavily on volunteers and may lack the capacity to reach beneficiaries. Similarly, the low utilization of Medicare.gov and the Medicare hotline may indicate that beneficiaries are unaware of the resources.

Around 40 percent of people did not receive any help making their decision.

Between 3 and 7 percent of beneficiaries relied on advertisements to guide their plan selection. This source of information was more common among Black (12 percent), low-income (12 percent), and older beneficiaries (12 percent). This finding highlights the importance of addressing the growing number of complaints about false or misleading marketing against Medicare plans over the last few years.

Providing accurate tools that are easy to use may help beneficiaries clearly understand all their options when choosing healthcare coverage, the analysis suggested.

Health literacy is especially important during open enrollment season. As October is National Health Literacy Month, Sunflower Health Plan shared definitions of basic health insurance terms to help members understand their options.

When choosing between Medicare Advantage and traditional Medicare, research has shown both benefits and drawbacks of the two programs.

For example, KFF data found that Medicare Advantage and traditional Medicare beneficiaries reported similar satisfaction rates, but Medicare Advantage enrollees were more likely to have a usual source of care. Meanwhile, traditional Medicare beneficiaries experienced fewer cost-related issues.