Why People Leave Medicare Advantage Plans And Why It Matters To You

Over half of Medicare beneficiaries opted for Medicare Advantage plans in 2024, and the percentage is expected to climb to 60% by 2030, according to the Kaiser Family Foundation.

Medicare beneficiaries can choose between Medicare Advantage plans (also known as Part C) and original Medicare.

Original Medicare is coverage under Parts A and B of Medicare. Beneficiaries in original Medicare are encouraged to also have Medicare supplement (Medigap) insurance policies and Part D prescription drug policies.

Medicare Advantage plans essentially bundle all that coverage into one plan and typically add benefits such as vision, dental, and hearing care.

Medicare Advantage plans increased in popularity partly because of the additional benefits. Relatively healthy members of Advantage plans also tend to have lower out-of-pocket costs because they aren’t paying premiums for Medigap and Part D policies.

But about half of beneficiaries left their Advantage plans within five years, according to data from 2011-2020 published in the JAMA Health Forum. Some opt for a new Advantage plan while others switch to original Medicare.

Before deciding to sign up for a Medicare Advantage plan, it’s a good idea to know why people leave their Advantage plans.

Some analysts believe the high turnover among Advantage plan members can influence how the plans are operated. If an Advantage plan’s managers know most enrollees won’t stick around for the long term, the plan might have less incentive to address long-term or chronic conditions of beneficiaries.

The quality of an Advantage plan seems to have a significant effect on turnover. Plans that had five-star ratings lost only 23% of members after five years. While plans with four-star ratings lost over 41% of members after five years, and lower-rated plans had even higher turnover rates.

Another study concluded cost wasn’t a major factor in decisions to leave Advantage plans.

Beneficiaries were more likely to be concerned about difficulties in accessing and receiving high-quality medical care.

Another difference between original Medicare and Advantage plans is that an Advantage plan only covers care by a provider in the plan’s network. In addition, some care must be approved by the plan before it will be covered.

In original Medicare, the beneficiary can choose any provider who accepts Medicare and rarely needs approval from Medicare before receiving a treatment or care.

Limits on the medical providers included in a plan’s network as well as required approvals for treatments and care cause dissatisfaction among Advantage plan beneficiaries.

The study found that beneficiaries in poor health were more likely to switch plans because of dissatisfaction about limits on providers and the need for approval of care.

That finding is consistent with anecdotal reports I’ve heard from Medicare insurance agents over the years.

They find that in the early years of retirement when people are relatively healthy, Medicare beneficiaries are happy with Medicare Advantage plans. The plans cost them less, and they don’t need to visit doctors often.

But when serious health conditions arise or more frequent care is needed later in retirement, people are likely to want to switch from an Advantage plan to original Medicare. Once the need for medical care increases, the limits on providers and approval requirements become more important.

Generally, you can switch from an Advantage plan to original Medicare each year during open enrollment. But there’s a catch.

During a person’s initial enrollment period for Medicare, insurers offering Medicare supplement policies are required to sell the policies without regard to a person’s health history. But after the initial enrollment period, insurers generally can review an applicant’s medical history and use it to decline coverage or charge higher premiums.

Though a person legally can switch from an Advantage plan to original Medicare, the absence of guaranteed issue for a Medigap policy after the initial enrollment period might make the change impractical.