Many people on Medicare have concerns about whether there will be any future cuts to their plans.
With medical costs on the rise, some recent insurance company earnings reports have included statements from executives that they are closely watching costs.
READ MORE: Will You Lose Benefits in Your Medicare Advantage Plan?
It’s worth taking note of what specific pieces of Medicare are being discussed with respect to these worries.
Medicare Part A — funded primarily through payroll taxes paid by employers and employees — usually has no premium for those who have paid Medicare taxes for at least 10 years.
Part B is funded through monthly premiums paid by beneficiaries and general revenue from the federal government.
It’s Medicare Part C (called Medicare Advantage) that is the source of concern.
Part C is offered by private insurance companies that are approved by Medicare. These companies receive payments from Medicare to provide Part A and Part B benefits, and beneficiaries often pay additional premiums for extra coverage.
In April, a Humana (HUM) earnings call included CEO Bruce Broussard issuing a cautionary outlook on the viability of its Medicare Advantage plans.
“As we look ahead, we acknowledge that the industry is experiencing a dynamic and challenging time we must navigate,” Broussard said.
But he also added a statement about his confidence in Humana’s ability to weather the storm.
“And while the current environment will create disruption for the industry in the near term, we continue to believe in the strong core fundamentals and growth outlook of the MA industry and our ability to effectively compete in MA market remains intact,” Broussard said.
The effect of rising medical costs and whether any cuts to Medicare Advantage will be necessary in 2025 is the source of some discussion.
Reports of Medicare Advantage cuts may be overblown
Some have suggested that concerns about cuts to Medicare Advantage in 2025 are premature.
Author Marcia Mantell, writing for TheStreet’s Retirement Daily, thinks drawing conclusions based on statements from insurance company CEOs is a stretch.
“There’s nothing fundamentally different today than at any other time in the last 50 years,” Mantell wrote. “Companies always need to find a way to manage rising costs and maintain profits. It’s called business.”
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Mantell sought the opinion of Michele Lepore, a Medicare Advantage expert who is a retired health insurance industry executive.
“It is certainly premature to link earnings reports with rising medical costs and conclude benefits are in danger,” Lepore said.
Lepore emphasized another point. Medicare benefits simply can’t be downsized because insurance companies find costs on the rise.
Medicare Advantage plans are required by regulations to provide all Medicare benefits.
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Medicare beneficiaries never lose Part A or Part B benefits
Medicare Part A covers hospitalization costs, skilled nursing and some home health care.
Part B covers doctor visits, preventive care, outpatient care, hospitals and some home health care.
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“The vast majority of costs a retiree with an MA plan would incur are covered benefits,” Mantel wrote.
“They are specifically written in the Medicare law and heavily regulated by the Center for Medicare and Medicaid Services,” she added. “There simply is no option for a Medicare Advantage plan to opt out of the benefits offered. It MUST provide all benefits of original Medicare.”
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