The popularity of zero-dollar premium plans in Medicare Advantage (MA) is on the decline.
The average monthly premium for MA plans has increased by 50% in 2023 as fewer beneficiaries are choosing plans with lower out-of-pocket costs, according to a report from eHealth.
The online insurance marketplace analyzed more than 160,000 plan applications to eHealth during Medicare's Annual Enrollment Period from October 15 to December 7, 2022 to examine trends cost and plan selection trends among enrollees.
For the second year in a row, eHealth found an increase in average premiums, swelling from $6 per month in 2022 to $9 in 2023.
Part D premiums also went up, increasing 45% from $22 per month in 2022 to $32 in 2023. It was the highest increase eHealth tracked since it began reporting the figure in 2018.
Though the average premiums for MA remain relatively low due to high enrollment in zero-dollar premium plans, demand for those plans is going down, the report stated. For the first time since eHealth's initial report in 2018, popularity dropped as 84% of eHealth enrollees chose MA plans without a monthly premium, compared to 87% in 2022. In 2018, that figure was 63%.
Meanwhile, the report found that the average deductibles for MA and Part D plans decreased while Medicare Supplement increased.
MA plans saw a decrease from $121 in 2022 to $103 in 2023, representing a 15% change. Part D plans experienced a drop of 9% from $427 for 2022 to $389 for 2023. On the other end, Medicare Supplement plans saw deductibles shoot up 33% from $181 in 2022 to $241 in 2023.
"The widespread availability of $0-premium Medicare Advantage plans was a major enrollment driver over the past decade," eHealth CEO Fran Soistman said in a press release. "The avoidance of a monthly premium, coupled with the enriched benefits and value proposition relative to original Medicare has made these plans popular, particularly with seniors on a fixed budget.
"Our findings suggest the market may be fully saturated with zero-dollar premium plans, with more beneficiaries selecting Medicare Advantage premium-bearing plans that provide lower out-of-pocket costs."
A separate report by eHealth found that most MA beneficiaries are satisfied with their plan coverage but are more financially vulnerable than those with Medicare Supplement.
The research revealed that a lower income level for MA enrollees translates to 52% of beneficiaries saying they cannot afford any monthly premiums, while only 37% say they have enough savings to pay for hospitalization.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
New research by eHealth analyzes trends in cost and plan selection among Medicare Advantage beneficiaries.
Of plans selected by eHealth enrollees during Medicare's 2023 Annual Enrollment Period, the report found an increase in average premiums from $6 per month in 2022 to $9 in 2023.
For the first time since eHealth began tracking in 2018, demand in zero-dollar premium plans fell as 84% of eHealth enrollees chose plans without a monthly premium, compared to 87% in 2022.