Three Things You Might Not Know About Medicare Coverage

Hakim

Seniors aging into Medicare coverage at age 65 often see a dramatic drop in health insurance costs, saving thousands of dollars per year, in comparison to coverage they may have purchased for themselves in the private health insurance market, according to a new report.

The report, by eHealth, Inc., which operates eHealth.com and eHealthMedicare.com, specifically examined the transition from unsubsidized ACA plans into Medicare. The analysis compared average costs for ACA-compliant health insurance plans selected at eHealth by unsubsidized consumers age 63 and 64 years with average costs for Medicare products selected at eHealth by customers age 65 to 70 years. ACA costs are based on plan selections from November 1, 2017 to June 30, 2018; Medicare costs are based on plan selections from October 15, 2017 to June 25, 2018.

The study was conducted in an effort to identify just how dramatic the cost savings are between ACA coverage and Medicare. ACA plans offer similar coverage to Medicare Advantage, or Medicare with a supplementary plan, which is why eHealth chose to draw a comparison between these plans.

“A common theme among people in their sixties is the concern over the steep cost of health insurance,” says Chris Hakim, eHealth vice president of Medicare Products. “We regularly hear some version of ‘I can’t wait until I’m eligible for Medicare.’ Consumers understand the dramatic savings associated with a shift from the private insurance market to Medicare.”

The growth of high-deductible health plans has made collecting fees from patients a growing challenge, says Hakim. “And out-of-pocket medical costs are also  high for those who purchased ACA-compliant insurance policies, with premium costs highest among pre-retirement age adults. Consumers who don’t qualify for ACA subsidies are dropping out of the individual health insurance market due to the higher out-of-pocket costs and this is having an impact for healthcare organizations”

These dynamics are a great concern to healthcare executives, according to Hakim. “Research shows that higher out-of-pocket costs can lead people to skip needed medical care, creating a potential for conditions to worsen over time and become more costly to treat,” he says. “Health plans have an opportunity to proactively reach out to members to help them manage their care and medical costs, and can retain members by helping to transition them into Medicare plans as they become eligible.”

Other unique findings include:

• $857 is the national average monthly premium for individuals age 63 and 64 buying coverage compliant with the ACA without government subsidies.
• $148 is the national average monthly premium for people age 65-70 with a Medicare Advantage prescription drug plan, a monthly savings of $709 or annual savings of $8,508.
• $161 is the national average monthly premium for people with original Medicare plus Part D coverage.
• $302 is the national average monthly premium for people with original Medicare and Medicare Supplement plus Part D coverage.

Out-of-pocket costs

The study also examined out-of-pocket costs looking at ACA plans versus Medicare Advantage Part D (MADP).

The study found that the national average maximum annual out-of-pocket limit for people age 63 and 64 years covered under an ACA plan purchased at eHealth is $6,696. By contrast, the estimated national average out-of-pocket limit for people between the ages of 65 and 70 who selected an MAPD plan is $5,710, a decrease of 15% compared to ACA coverage. (out-of-pocket costs are utilized in this comparison, rather than deductibles, due to the fact that many of the Medicare Advantage plans selected by eHealth customers have no deductible but may still require other forms of out-of-pocket expenditures.)

The report also compared deductibles.  Below are two scenarios:

• ACA vs. original Medicare who selected a Part D plan. The national average estimated deductible for people age 65 to 70 enrolled in original Medicare who selected a Part D plan at eHealth is $1,823, a 58% reduction compared to the average deductible for ACA coverage for people age 63 and 64. The Medicare deductible in this case is calculated based on the Part A deductible of $1,340 per benefit period, the Part B deductible of $183 and the average deductible of Part D plans selected by consumers at eHealth, which is $300. However, original Medicare places no limit on the number of benefit periods. In addition, other out-of-pocket expenses beyond the deductible may apply, including cost-sharing of 20% for Part B services.
• ACA vs. Original Medicare, a Medicare Supplement and Part D plan. The national average deductible for people between the ages of 65 and 70 enrolled in original Medicare, a Medicare Supplement and Part D plan, is $497, which is 89% lower than the average cost of deductibles for ACA coverage for people age 64 and 65. The Medicare deductible in this case is calculated based on the average deductible of Part D plans selected by consumers at eHealth, which is $300, and the average deductible among Medicare Supplement plans selected at eHealth, which $197.

Hakim offers three takeaways for healthcare executives:

• People transitioning from ACA coverage to Medicare stand to save thousands of dollars in premiums and out-of-pocket costs.
• Insurance costs for people in their 60s just before becoming eligible for Medicare can be punishing if they buy coverage on their own in the private insurance market.
• Health plans can utilize the information they have about pre-Medicare eligible members to help guide them to a best solution for coverage.