Retirees may have to scramble for 2025 Medicare coverage during open enrollment, October 15 to December 7. “I expect this to be the most wild and challenging Annual Election Period in my career of almost 20 years,” said Danielle Kunkle Roberts, founding partner of Boomer Benefits, a Medicare insurance agency based in Ft. Worth.
Providers of Medicare Advantage plans (Medicare Part C) have sharpened their pencils and are trimming benefits, upping premiums, and exiting unprofitable markets accordingly. Advantage heavyweight Humana said in early September it’s leaving 13 markets that currently serve over a half-million enrollees. Aetna, another big player, expects to lose 10% of its Advantage enrollees due to skimpier benefits, according to reports.
“The shakeup is going to be real,” said Roberts, author of 10 Costly Medicare Mistakes You Can't Afford to Make.
For advisors, whether insurance licensed or not, the marketplace dislocation is an opportunity to assist current and prospective clients. Moreover, 4.1 million Americans, a record number, hit age 65 in 2024.
“If you want to provide advice to retirees or someone who’s retiring soon, you need to learn about Medicare,” said planner Jeremy Keil at Keil Financial Partners in New Berlin, Wis.
“One of the biggest questions” new retirees have, Keil said, is whether to enroll in a Medicare Advantage plan or a rival Medicare Supplement plan (or post-retirement health plan from their former employer, if offered).
Weighing Advantage Vs. Supplement
This year, 32.8 million individuals, or about 54% of all Medicare enrollees, are in Advantage plans, according to health-policy research organization KFF. The appeal? No underwriting and streamlined claims processing because medical benefits and drug coverage are bundled, unlike Supplement plans which necessitate buying a separate Medicare Part D policy to cover prescriptions, Keil said.
Also enticing are features not available with Medigap, as Supplement plans are known, such as dental and vision care, hearing coverage and gym memberships. “But I find the actual financial value of these benefits is incredibly low,” Keil said. It is these extras that Advantage providers will prune, observers predict.
Advantage plans’ main draw is their monthly premium. It’s zilch for 75% of enrollees this year, according to KFF. The rest pay a modest $56 on average.
But these fetching premiums, which could change for 2025 as providers seek improved financial performance, come alongside deductibles and co-pays. Inform clients that with an Advantage plan, they could pay out-of-pocket up to the maximum allowed, $8,850 in 2024. (The 2025 maximum will be announced later this year.) If their financial plan can’t absorb that, advise accordingly.
With Medigap, the client might pay $150 to $200 monthly for broad coverage, plus about $55 for a Part D drug plan (more for clients with high incomes), but virtually nothing out-of-pocket.
Regarding the client’s healthcare needs, Advantage plans are HMOs and PPOs with a network that could limit coverage outside the client’s home area. Services received without prior authorization can cost the client, too.
In contrast, Supplement plans don’t require pre-approval and enrollees can use any provider who accepts Medicare. Such flexibility is why Matt Saneholtz recommends Medigap despite higher premiums. Not only are they a good fit for snowbirds and RV road warriors, “I can think of clients on Supplement plans who traveled to different hospitals to get the care that they wanted,” said Saneholtz, senior wealth advisor at Tobias Financial Advisors in Plantation, Fla.
One final point: It’s easier to switch from Medigap to Advantage than vice versa. For this reason Keil recommends that undecided new retirees try Medigap first for one year and then revisit the decision.
As Roberts explained, if an Advantage client develops a health condition that’s costly to treat and wants to get into Medigap to avoid out-of-pocket costs, “They can be denied, or they may get rated up where they have to pay more for that Medigap policy. We see that happen all the time. In most states you get only one opportunity to enroll in a Medigap plan without underwriting, a six month window that starts with your Part B effective date.”
Then There’s Part D
Urge Medigap clients to shop their Part D prescription plan during open enrollment, Saneholtz advised. “Plans have different deductibles and nuances in their coverage, so you’ve got to do your homework.” Point clients to the drug-plan comparison tool at medicare.gov/plan-compare, where they can enter their medications to see the cost under competing plans, he said.
When You Need An Insurance Expert
Before sending clients to a licensed professional, understand that commissions on Advantage plans can be as much as double Medigap commissions.
Then seek out an independent insurance agency representing multiple insurers, said Christopher Fundora, director of retirement planning at Traphagen CPAs & Wealth Advisors, in Oradell, N.J. “From there, look for someone who will retain a relationship with the client and provide administrative support and guidance on an on-going basis.”
Fundora educates clients about Medicare and its cost long before retirement. When they ultimately enroll, “We strongly recommend having a consultation with a Medicare insurance specialist to ensure they receive the proper coverage,” he said, adding that many folks don’t realize such talks are free.
Encourage clients to get help now with their 2025 Medicare needs and avoid the impending crush.