Retirement insights from a Colorado PERA perspective

A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.

As enrollment in Medicare Advantage plans continues to grow, evidence is mounting that these comprehensive plans offer better outcomes and can even cost less for retirees than traditional Medicare.



In its annual <a href="https://bettermedicarealliance.org/wp-content/uploads/2022/07/BMA-State-of-MA-2022-FIN.pdf" target="_blank" rel="noreferrer noopener">“State of Medicare Advantage” report</a>, the Better Medicare Alliance states Medicare Advantage enrollees spend almost $2,000 less per year on plan premiums and out-of-pocket costs than those enrolled in original Medicare.



<h2 class="wp-block-heading">Medicare Advantage vs. Traditional Medicare</h2>



Medicare Advantage plans are offered by private insurers and serve as “all-in-one” or “package” plans. They combine the benefits of Medicare Parts A (hospital insurance) and B (medical insurance) with Part D (prescription coverage) into one comprehensive plan. These plans also usually cover extra services that aren’t covered by original Medicare, like dental and vision and even gym memberships. They also have yearly limits on out-of-pocket spending on services that Part A and Part B cover, while original Medicare doesn’t.



Over the past decade, enrollment in Medicare Advantage plans has doubled to more than 28 million people, which amounts to 45% of all Medicare beneficiaries. In Colorado, that number is nearly 48%.



With a focus on preventive and primary care, Medicare Advantage plans help ensure that enrollees receive regular screenings and care so that any medical problems can be addressed before they become more serious and costly. The report from Better Medicare Alliance finds Medicare Advantage plans cover all Medicare-covered services for 24% less than traditional Medicare.



In addition to cost savings, the report also found patients enrolled in Medicare Advantage plans often have better health outcomes, including higher rates of vaccination and cancer screenings, lower rates of hospitalization, and higher rates of follow-up care.



With regard to COVID-19, Medicare Advantage enrollees were hospitalized at a nearly 19% lower rate in 2020 and had a lower mortality rate, according to the report.



<h2 class="wp-block-heading">Medicare Advantage and PERACare</h2>



Colorado PERA offers Medicare Advantage plans through its health benefits program, <a href="https://www.copera.org/health-benefits-peracare" target="_blank" rel="noreferrer noopener">PERACare</a>. PERACare includes <a href="https://www.copera.org/over-age-65-medicare" target="_blank" rel="noreferrer noopener">three Medicare Advantage plans</a>: two national PPO plans with UnitedHealthcare and a regional HMO plan with Kaiser Permanente of Colorado.



PERACare also includes a subsidy, based on years of service, to help offset the cost of plan premiums. The maximum subsidy in 2021 was $115, which, depending on the plan chosen, could result in a $0 premium for PERACare coverage.



“We chose to offer Medicare Advantage plans because we could offer plans with lower premiums and a more coordinated approach that delivers better health outcomes,” said Jessica Linart, PERA’s director of insurance. “We’re glad to see the information in this report supports our efforts.”



The open enrollment period for PERACare begins on Oct. 17 and continues through Nov. 17.



To learn more about PERACare’s Medicare Advantage plans, visit <a href="https://www.copera.org/peracare" target="_blank" rel="noreferrer noopener" class="broken_link">copera.org/peracare</a>.

Report: Medicare Advantage Plans Cost Less, Provide Better Outcomes Than Traditional Medicare

Prices for many prescription drugs have been rising for years. According to <a href="https://www.aarp.org/politics-society/advocacy/info-2021/prescription-price-increase-report.html" target="_blank" rel="noreferrer noopener">a 2021 report from AARP</a>, many of those prices have been rising faster than inflation, and that can be particularly challenging for retirees living on fixed incomes.



Colorado PERA, which offers pre-Medicare and Medicare coverage to public sector benefit recipients and their families, is joining other public plan administrators across the United States in urging Congress to take action and address the rising costs of prescription drugs.



The <a href="https://www.healthcareroundtable.org/" target="_blank" rel="noreferrer noopener">Public Sector HealthCare Roundtable</a>, a nonprofit, nonpartisan group of which PERA is a member, <a href="https://www.copera.org/pera-on-the-issues/pera-joins-other-public-plans-urging-action-on-drug-prices">sent </a><a href="https://www.copera.org/pera-on-the-issues/pera-joins-other-public-plans-urging-action-on-drug-prices" target="_blank" rel="noreferrer noopener">a</a><a href="https://www.copera.org/pera-on-the-issues/pera-joins-other-public-plans-urging-action-on-drug-prices"> letter</a> to congressional leadership in mid-March requesting lawmakers support a number of drug pricing recommendations put forth by the Senate Finance Committee.



Those recommendations include:



<ul>
<li>Allowing Medicare to negotiate Part B and Part D drug prices: Under current federal law, Medicare is not allowed to negotiate prices directly with drug manufacturers, so the government has to pay whatever price manufacturers set. By allowing direct negotiation, Medicare could secure lower prices for many expensive, name-brand medications.</li>



<li>Penalizing drug manufacturers when a medication’s price rises faster than inflation: This proposal would require pharmaceutical companies to pay a rebate to Medicare when the price of a drug rises faster than the Consumer Price Index, a widely used measure of inflation.</li>



<li>Capping out-of-pocket expenses for Part D prescription coverage: There is currently no hard cap on out-of-pocket drug spending in Medicare Part D plans, so retirees can end up spending thousands of dollars a year. This proposal would set the out-of-pocket maximum at $2,000 a year.</li>
</ul>



PERA Director of Insurance Jessica Linart said prescription drug prices are among the fastest-rising costs associated with health care, and changes are needed to ensure programs like PERACare can continue offering coverage that’s within an affordable range.



“We often hear from PERACare enrollees who say the cost of medication is one of their biggest challenges in retirement,” Linart said. “We’re urging Congress to take up this issue and pass these much-needed reforms as soon as possible.”



Learn more about <a href="https://www.copera.org/retirees/health-benefits-peracare" target="_blank" rel="noreferrer noopener">PERACare coverage</a>.

PERA Joins Other Public Plans Urging Action on Drug Prices

In this story:



<ul>
<li>Retirees enrolled in PERACare pre-Medicare plans will see higher monthly premiums in 2022</li>



<li>PERACare plans operate under different circumstances than plans on the individual marketplace</li>



<li>PERA is working to lower costs wherever possible</li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



Colorado Gov. Jared Polis announced last month that Colorado residents can expect to see <a href="https://stateofreform.com/featured/2021/10/colorado-reinsurance-savings/" target="_blank" rel="noreferrer noopener">big savings on individual insurance premiums in 2022</a> — about 24 percent, on average. That’s great news for people who don’t receive health insurance through an employer and have to purchase coverage on their own. For retirees enrolled in PERACare’s pre-Medicare plans, it likely came as a surprise that their premiums would instead be going up next year.



PERACare plans operate under slightly different circumstances than those on the individual marketplace, which in Colorado is called <a href="https://connectforhealthco.com/" target="_blank" rel="noreferrer noopener">Connect for Health Colorado</a>. While those differences can have an impact on a plan’s premium, there are a number of other important factors to consider when shopping for health insurance.



<h2 class="wp-block-heading">Connect for Health Colorado and PERACare</h2>



Insurance premiums — the amount insurance companies charge each month for coverage — are driven primarily by the cost of services and prescription drugs. Those costs have been rising across the country for years, and premiums have largely followed suit.



Colorado lawmakers have made multiple attempts to rein in premium increases in recent years, but they don’t always apply to all plans. In 2020, the legislature established the state’s <a href="https://doi.colorado.gov/insurance-products/health-insurance/health-insurance-initiatives/reinsurance-program" target="_blank" rel="noreferrer noopener">reinsurance program</a>, which helps cover the cost of expensive claims to keep plan costs down. That program is the key factor in reducing individual premiums for 2022, but it only applies to plans in the individual marketplace and not group plans like those offered by PERACare.



Demographics can also play a big role in the cost of health insurance — think of how a large number of younger people in a group brings down the average age of that group, for example. Insurance plans sold on Connect for Health Colorado are open to the general public and therefore cover people across a wide range of ages and circumstances. PERACare’s pre-Medicare plans, on the other hand, cover only retirees who aren’t yet eligible for Medicare — ages 50 to 64.



Older Americans are more likely to use more medical services than other sections of the population, so plans that only cover aging patients can be more expensive to administer. In addition, the prices for many services, in particular hospital and ER costs, are higher in Colorado than in other areas of the country.



<h2 class="wp-block-heading">What PERA is doing to lower costs</h2>



PERA’s Director of Insurance, Jessica Linart, said PERA understands the challenge of rising health care costs for retirees, and her team negotiates with PERACare insurance carriers to lower costs wherever possible. That can include administrative fees, which are a small portion of the overall cost of a plan. Other costs, like prescription drug prices, can be harder to control because carriers have already negotiated those prices with manufacturers and providers.



One area where PERA can help lower costs is by encouraging retirees to choose less expensive care options.



“PERACare plans have lower copays for higher quality doctors, lower copays for generic drugs versus brand names, and lower costs for outpatient surgeries versus surgeries performed at a hospital,” Linart said. “All of this can help bring down the overall claims costs, which can ultimately lead to lower premiums.”



PERACare plans also cover preventive care at 100 percent and include a fitness center benefit and weight loss programs to help retirees maintain their health, which can reduce overall costs long-term.



<h2 class="wp-block-heading">Other factors to consider</h2>



Premiums aren’t the only cost to consider when shopping for health insurance. Plans can have vastly different out-of-pocket costs like co-pays, coinsurance and deductibles. Then there’s a plan’s out-of-pocket maximum, which is the most a person will pay in a year. There can often be a trade-off with these costs: higher out-of-pocket costs in exchange for lower premiums.



It’s also important to check a plan’s network of providers and formulary, which is the list of covered drugs. Plans will sometimes opt for a small network and formulary to keep prices down. Linart said PERA usually opts for a broader network and formulary, which can be more expensive but provides retirees with more options.



“We encourage retirees to compare their options in PERACare and on the individual marketplace, to find the coverage that best suits their needs for provider and medication access, benefits and monthly premium,” Linart said.



Open enrollment for PERACare’s pre-Medicare and Medicare plans <a href="https://content.copera.org/peracare-working-to-cut-costs-as-medicare-advantage-enrollment-grows/" target="_blank" rel="noreferrer noopener">runs through Nov. 17</a>. Open enrollment for Connect for Health Colorado runs through Jan. 15.

What’s in a Health Insurance Premium? Comparing Retiree Health Care Costs

In this story:



<ul>
<li>Enrollment in Medicare Advantage plans has grown steadily in recent years</li>



<li>PERACare is changing providers for PPO Medicare Advantage plans in 2022</li>



<li>UnitedHealthcare will offer same plan benefits, lower premiums</li>
</ul>



<hr class="wp-block-separator has-css-opacity"/>



More people than ever are enrolled in Medicare Advantage plans, and PERACare is making some changes in 2022 to make its plans more affordable and convenient for retirees.



A <a href="https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/" target="_blank" rel="noreferrer noopener">data analysis by the Kaiser Family Foundation</a> found that enrollment in Medicare Advantage plans – like those offered by <a href="https://www.copera.org/peracare" target="_blank" rel="noreferrer noopener" class="broken_link">PERACare</a> – has been steadily increasing since the early 2000s. In 2020, nearly 40 percent of all Medicare beneficiaries were enrolled in a Medicare Advantage plan rather than traditional Medicare, KFF found.



Colorado was one of 19 states where more than 40 percent of Medicare beneficiaries were enrolled in a Medicare Advantage plan in 2020.



<h2 class="wp-block-heading">The advantages of Medicare Advantage</h2>



Medicare Advantage plans are offered by private insurers and serve as “all-in-one” or “package” plans. They combine the benefits of Medicare Parts A (hospital insurance) and B (medical insurance) with Part D (prescription coverage) into one comprehensive plan. These plans also usually cover extra services that aren’t covered by original Medicare, like dental and vision and even gym memberships.



While Medicare Advantage enrollees pay a premium on top of the Medicare Part B premium, Medicare Advantage plans may have lower out-of-pocket costs for some services. They also have yearly limits on out-of-pocket spending on services that Part A and Part B cover, while original Medicare doesn’t have any limits.



Medicare Advantage plans differ from Medicare Supplement Insurance, also known as Medigap, which supplements the coverage provided by original Medicare. Medigap plans typically don’t offer as much coverage as Medicare Advantage plans and they don’t include prescription drug coverage. A retiree cannot have both Medigap and Medicare Advantage.



PERACare offers three Medicare Advantage plans for PERA retirees, in addition to four pre-Medicare plans for retirees who aren’t yet eligible for Medicare.



<h2 class="wp-block-heading">Cost-saving changes coming to PERACare</h2>



In 2022, PERACare is making some changes to the providers who administer PERACare’s Medicare Advantage plans. UnitedHealthcare will replace Anthem Blue Cross Blue Shield and Silverscript.



One reason for the change is that UnitedHealthcare is able to offer lower plan premiums than Anthem. The new plans will also combine medical and prescription coverage under one company, making for a more streamlined process for enrollees and their providers.



“We have designed the new UnitedHealthcare plans to mirror the current plans as closely as possible; if there are changes to benefits, they are upgrades, not downgrades,” said PERA Director of Insurance Jessica Linart. “Plus, UnitedHealthcare brings an expanded fitness center benefit with access to more gyms, the Real Appeal weight loss program, and a commitment to delivering our retirees a high level of customer service.”



Retirees enrolled in an Anthem plan will be automatically enrolled in a corresponding UnitedHealthcare plan and recently received a letter in the mail with details on their new, lower premiums. Most copays for the new plans will be the same, though some copays will be lower with UnitedHealthcare. Like Anthem, UnitedHealthcare offers nationwide coverage.



Enrollees in PERACare’s Kaiser Permanente HMO plan will also see a reduction in their premiums for 2022.



PERACare open enrollment began Oct. 11 and retirees will be able to sign up for coverage for the first time, or make changes to their existing coverage through Nov. 17.

Tag Archives:

Report: Medicare Advantage Plans Cost Less, Provide Better Outcomes Than Traditional Medicare

PERA Joins Other Public Plans Urging Action on Drug Prices

What’s in a Health Insurance Premium? Comparing Retiree Health Care Costs

PERACare Working to Cut Costs as Medicare Advantage Enrollment Grows

Subscribe to PERA On The Issues