Hi, my name is John Barkett.
I’m the Senior Director of Policy Affairs at Willis Towers Watson and an expert on Medicare.
In 2020, Medicare Advantage premiums are dropping around the country. On an average, they’re going down by about 14%. And while everyone may not see their plan premiums go down, what we do know is that more carriers are entering the market, many of them are offering $0 coverage, and the markets haven’t been this competitive since 2007.
Why are Medicare Advantage premiums going down in 2020? This is a good question.
To understand why, you’ve got to know a couple of things about Medicare Advantage plans.
First is, they work really hard to coordinate care for Medicare beneficiaries. They are asking sick patients, “How can we help you best get care, get home, stay healthy?” And studies have shown that they do a really good job at this. It helps explain why costs are coming down, but it’s not the whole story.
Other parts of the story include the following: Medicare is paying these plans a little bit more, and Medicare Advantage plans are passing on those increased payments in the form of lower premiums.
Another part of the story – and this one is a little in the weeds, but follow me here for a second – has to do with Part D coverage (that’s drug coverage for Medicare beneficiaries, and it’s integrated often into Medicare Advantage plans).
In 2020, how generous that drug coverage has to be is actually not as much as it had to be in 2019. That means that as a Medicare beneficiary in 2020, you may have to pay a little bit more to reach the “catastrophic threshold” of your drug plan. As a result, Medicare plans can turn around and not charge you quite as much because you may have to pay a little bit more.
That’s a little bit of a less-good-news story, though it shouldn’t be felt too much by beneficiaries.
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