Does Your Retiree Health Care Strategy Include Medicare Advantage?

Does Your Retiree Health Care Strategy Include Medicare Advantage?

November 01, 2023

A rising number of employers are contracting with Medicare Advantage plans for retiree health coverage, according to a report from the Kaiser Family Foundation.

The report found 50% of employers with 200 or more employees offer retiree health benefits through a Medicare Advantage contract. That’s up from 26% in 2017. And it jumps to 60% for organizations with more than 2,000 employees.

Managing costs

Many employers have reduced or eliminated retiree health care benefits because of cost concerns. Medicare Advantage plans may be a way to lower your retiree health care expenses. Doing so could help you:

  • Maintain retiree health benefits as part of your recruitment and retention strategies
  • Avoid reducing or eliminating retiree benefits
  • Avoid shifting costs to retirees

Medicare Advantage isn’t just growing in popularity with employers. These plans are also gaining traction with individuals. In 2007, only 19% of Medicare-eligible individuals enrolled in a Medicare Advantage plan. That percentage has grown every year since. In 2023, more than 50% of Medicare-eligible beneficiaries enrolled in a Medicare Advantage plan. This marks the first time Medicare Advantage represents a majority of enrollees.

Taking advantage of unique benefits

A study by the Kaiser Family Foundation found similar levels of quality, care coordination and member satisfaction between Medicare Advantage and Original Medicare (Medicare Part A and Part B). 

But Medicare Advantage plans can offer some unique advantages, including:

  • Dental, vision and hearing benefits
  • Simplified access to prescription drug coverage
  • Lower premiums
  • Lower out-of-pocket costs for in-network providers

Understanding limitations

Plan members need to be engaged to get the most out of Medicare Advantage plans. Unlike Original Medicare, these plans often require prior authorizations and referrals to see specialists.

Medicare Advantage plans also typically have more restrictive provider networks. Smaller networks can create obstacles to care by limiting access to hospitals and health care providers. This can disproportionately affect plan members in rural areas. And in all locales, limited networks can lead to higher out-of-pocket costs for those receiving out-of-network care.

Despite these limitations, satisfaction with Medicare Advantage plans remains high. Nearly 90% of Medicare Advantage enrollees report being happy with their coverage, according to a March 2023 survey by eHealth.

For more information

To learn more about incorporating Medicare Advantage into your retiree health care strategy, talk with your insurance broker or benefits adviser. They can work with you to examine benefits that fit your workforce and business goals. They can also provide information to help employees better understand their Medicare options.