How Many Medicare Beneficiaries Switch from Traditional Medicare to Medicare Advantage?

Medicare Advantage enrollment has been steadily growing over the past decade. Many Medicare beneficiaries are choosing Medicare Advantage Plans over Original Medicare for the extra benefits and lower out-of-pocket costs these plans can provide. But just how many enrollees are switching from Original Medicare to Medicare Advantage each year during open enrollment periods?

Understanding Original Medicare vs. Medicare Advantage

Before looking at the switching statistics, it helps to understand the key differences between Original Medicare and Medicare Advantage:

What is Original Medicare?

Original Medicare consists of Part A and Part B and is managed directly by the federal government. It offers wide choice of healthcare providers who accept Medicare across the United States. Original Medicare covers medically necessary hospital and medical services with no provider network restrictions. You can see any doctor or hospital that accepts Medicare.

The drawback is that Original Medicare does not cover all healthcare costs. Traditional Medicare beneficiaries pay deductibles, coinsurance and copays for covered services. There is no annual out-of-pocket spending limit. You may need to purchase supplemental coverage.

What are Medicare Advantage Plans?

Medicare Advantage Plans are offered by private insurance companies approved by Medicare. Plans contract with Medicare to provide all Part A and Part B benefits. Most Medicare Advantage Plans also include Part D prescription drug coverage.

These plans have provider networks and offer coordinated care like HMOs and PPOs. Services typically must be received from in-network providers except in emergencies. Many plans offer extra benefits Original Medicare does not cover such as dental, vision and hearing services. Most have annual out-of-pocket limits on medical spending.

Enrollment in Original Medicare and Medicare Advantage

Now let’s look at how Medicare beneficiaries initially enroll in Medicare and Medicare Advantage Plans when they first become eligible:

Becoming Eligible for Medicare

People become eligible for Medicare when they turn 65. Others become eligible if they are under age 65 and have a disability or are diagnosed with ALS or end-stage renal disease.

Initial enrollment in Medicare happens during a 7-month window including the 3 months before, the month of, and 3 months after your 65th birthday. You can sign up for Original Medicare or a Medicare Advantage Plan.

Choosing Initial Medicare Coverage

Of the 59.7 million people enrolled in Medicare as of January 2023, most enroll in Original Medicare when they first become eligible. About 19 million Medicare beneficiaries are enrolled in Medicare Advantage Plans, while around 40 million have Original Medicare.

So when initially enrolling in Medicare, the majority opt for Original Medicare. However, Medicare Advantage enrollment has been steadily increasing over the past several years. More advantage beneficiaries are switching to Medicare Advantage Plans during open enrollment periods after their initial enrollment in Original Medicare.

Why Do Medicare Beneficiaries Switch to Medicare Advantage?

There are several reasons why enrollees in Original Medicare may choose to switch to Medicare Advantage Plans:

Medicare Advantage Benefits

Many Medicare Advantage Plans include extra benefits not covered by Original Medicare like dental, vision, hearing and wellness programs. For retirees needing these services, the extra coverage can be valuable.

Lower Costs

While premiums can vary, Medicare Advantage Plans may offer lower out-of-pocket costs for some enrollees compared to Original Medicare. $0 premium plans are available. Most Medicare Advantage Plans limit annual out-of-pocket spending for medical services, whereas there is no cap with Original Medicare.

Prescription Drug Coverage

Original Medicare does not cover prescription medications. Medication costs must be paid out-of-pocket or through a separate Part D drug plan. Most Medicare Advantage Plans include prescription drug coverage with the medical benefits which can be more convenient for enrollees.

Medicare Enrollment Periods Allowing Plan Changes

Medicare beneficiaries have opportunities each year to switch between Original Medicare and Medicare Advantage Plans during open enrollment periods. Here are the main times changes can be made:

Annual Open Enrollment Period

This open enrollment runs from October 15 to December 7 each year. During this period, Medicare beneficiaries can switch from Original Medicare to a Medicare Advantage Plan, or vice versa. This is the main time when plan changes occur.

Medicare Advantage Open Enrollment Period

From January 1 to March 31 each year, Medicare Advantage enrollees have an opportunity to switch back to Original Medicare or change to a different Medicare Advantage Plan. Switching to Original Medicare also allows them to join a Medicare Part D drug plan.

Statistics on Switching between Medicare Plans

Now let’s look at some key statistics highlighting how many Medicare beneficiaries are switching from Original Medicare to Medicare Advantage Plans each year.

Current Medicare Advantage Switching Rates

Of the 59.7 million Medicare enrollees in 2023, 24.8 million or 42% are projected to be in Medicare Advantage Plans. This is up from 20.9 million Medicare Advantage enrollees in 2022.

Medicare projects that 1.4 million Medicare beneficiaries will newly enroll in Medicare Advantage Plans during the Fall open enrollment period for 2023 coverage. Another 1.8 million enrollees in Original Medicare are expected to switch to Medicare Advantage for the new year.

Projected Growth in Medicare Advantage

Enrollment in Medicare Advantage Plans has grown 40% over the past five years according to the Centers for Medicare and Medicaid Services. The number of beneficiaries in Medicare Advantage Plans is projected to rise to 29.5 million or 47% of all Medicare enrollees by 2025. This continued shift from Original Medicare to Medicare Advantage demonstrates Medicare beneficiaries see value in the plans.

Conclusion

In summary, while the majority of Medicare beneficiaries initially enroll in Original Medicare, enrollment in Medicare Advantage Plans is growing each year. Between 2 to 3 million people on Original Medicare are switching over to Medicare Advantage during open enrollment periods as they discover the extra benefits and cost protections the plans provide. This steady transition from Original Medicare to Medicare Advantage is projected to continue in coming years.

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FAQS

How many Medicare beneficiaries switch from traditional Medicare to Medicare Advantage in 2023?

The exact number of Medicare beneficiaries who will switch from traditional Medicare to Medicare Advantage in 2023 is not known. It depends on various factors such as individual preferences, changes in plan offerings, and open enrollment periods.

What is traditional Medicare?

Traditional Medicare refers to the original fee-for-service program offered by the Medicare program. It includes Medicare Part A (hospital insurance) and Part B (medical insurance).

What is a Medicare Advantage Plan?

A: A Medicare Advantage Plan, also known as Medicare Part C, is an alternative to traditional Medicare. These plans are offered by private insurance companies approved by Medicare and provide all benefits covered by Parts A and B, as well as additional benefits such as prescription drug coverage.

What is open enrollment?

Open enrollment is a specific period during which Medicare beneficiaries can make changes to their health coverage. It typically occurs once a year and allows individuals to switch between Medicare Advantage and traditional Medicare, or change their Medicare Advantage Plans.

Can Medicare beneficiaries switch from traditional Medicare to Medicare Advantage?

Yes, Medicare beneficiaries have the option to switch from traditional Medicare to a Medicare Advantage Plan during specific enrollment periods. This allows individuals to explore different coverage options and potentially access additional benefits offered by Medicare Advantage Plans.

Can Medicare beneficiaries switch from Medicare Advantage to traditional Medicare?

Yes, Medicare beneficiaries enrolled in a Medicare Advantage Plan can choose to switch back to traditional Medicare during certain enrollment periods. It is important to review the available options and consider factors such as cost, coverage, and individual healthcare needs before making a decision.

How do Medicare beneficiaries switch between Medicare Advantage and traditional Medicare?

Medicare beneficiaries who wish to switch between Medicare Advantage and traditional Medicare can do so during the annual open enrollment period or other special enrollment periods. It is advisable to speak with a Medicare representative or seek guidance from licensed insurance agents to understand the process and implications of switching plans.

What are the advantages of Medicare Advantage over traditional Medicare?

Medicare Advantage Plans may offer additional benefits beyond what is covered by traditional Medicare, such as prescription drug coverage, dental and vision care, and wellness programs. These plans often have network restrictions and specific out-of-pocket costs, but they can be appealing to individuals looking for more comprehensive coverage options.

What is the share of Medicare beneficiaries enrolled in Medicare Advantage?

The share of Medicare beneficiaries enrolled in Medicare Advantage Plans varies from year to year and by location. It is influenced by factors such as plan availability, marketing efforts, and individual preferences. The Centers for Medicare and Medicaid Services (CMS) releases annual enrollment data that provide insights into this share.

How does switching from Medicare Advantage to traditional Medicare affect beneficiaries?

Switching from Medicare Advantage to traditional Medicare can impact individual healthcare coverage and costs. Traditional Medicare may provide a wider choice of healthcare providers, but it does not typically include additional benefits like prescription drug coverage. It is important for beneficiaries to compare their options and consider their specific healthcare needs before making a decision.