Nick Byrd is the Medicare and health insurance specialist for the Brady Insurance Group in Kokomo. He is also the rehabilitation director at Silver Birch Assisted Living Facility in Kokomo.
As of April 2024, there were 67 million Americans on Medicare. Of those 67 million, it’s about 50% on Original Medicare with a Medicare Supplement with a Prescription Drug Plan, and 50% on a Medicare Advantage Plan. By 2030 it is expected that 20% of Americans will be over age 65, and 80 million people will be on Medicare.
Anyone who works in health care is already aware of the regular changes to reimbursement for services from Medicare, and continues to work through the constraints placed upon them by the managed-care Medicare Advantage Plans. As someone who has worked as an occupational therapist and rehabilitation manager over the past 25 years, I can assure you the Medicare reimbursements for rehabilitation services have routinely changed over the years, and we currently must wait for prior authorizations from many insurers before beginning rehabilitation services. Prior authorizations are a way for insurers to limit their expenses.
How is Medicare going change going forward? In a recent gathering of health insurance agents in Las Vegas, Ty Wooldridge, the president of Continental Life Insurance Company, which is part of Aetna, says he expects a 1% to 2% decline in the purchasing of Medicare Supplements, but overall, he feels the Medicare Supplement market is still strong. I believe that may be true on a nationwide basis. However, that is not what I’m experiencing as a health care provider and as a Medicare agent in the north-central Indiana area. I see the Medicare Advantage plans slowly becoming more popular as the price of the Medicare supplements continues to increase annually, and the fixed income of seniors has less purchasing power due to the recent rise of inflation.
I also believe the Centers for Medicare & Medicaid Services (CMS) will encourage or incentivize more people to go to the Medicare Advantage Plans. Richard Eisenberg wrote in the April 2024 Fortune magazine that there will be some changes to Medicare coming in 2025 (fortune.com/well/article/medicare-changes-2025). He reports that insurance companies that offer Medicare Advantage Plans will be required to contact their Medicare beneficiaries for a midyear notification reminding them of their unused dental, vision, hearing or fitness benefits. The implication of this requirement is clear; CMS wants people to use these supplemental benefits, which will ultimately lead to more beneficiaries being satisfied with their managed care plan.
Another change coming in 2025 came out of the recently passed Inflation Reduction Act. The out-of-pocket maximum Medicare beneficiaries will spend on Part D prescription drugs will decrease from $3,300 this year to $2,000. This will include stand-alone Prescription Drug Plans and the drug plans embedded within Medicare Advantage Plans. Initially, this may sound good and may likely benefit those who are taking expensive medications. However, to help the insurance companies compensate for their increased costs, insurers may require more prior authorizations, require the use of alternative prescriptions, place other restrictions for some prescriptions, or require copays for the lower-tier routine prescriptions. This may also lead to increased premiums for the stand-alone Prescription Drug Plans, and it may cause some insurance providers to limit their options of plans or stop offering plans altogether. Mutual of Omaha has already announced that they will no longer offer stand-alone prescription drug plans after 2024 due to the changes imposed by the Inflation Reduction Act.
You can see how the potential changes in the Prescription Drug Plans, in addition to the annual increases in Medicare Supplement rate, may be incentives to some to consider a Medicare Advantage Plan that has no monthly premium and a Prescription Drug Plan that is included. The actual changes to the 2025 Prescription Drug Plans and Medicare Advantage Plans won’t be made public until October 1. When the time comes, I will be talking to my clients about the upcoming changes and what they mean to them specifically. I am always available to speak to anyone who wants to discuss their specific Medicare situation.
