Why some retirees are wary of employer Medicare Advantage plans

After a yearslong bureaucratic battle, New York City officials approved an Aetna Medicare Advantage plan for its retired municipal employees, though the plan could be headed for more court battles. 

Some retirees hoped to persuade the city to allow them the option to receive their benefits through traditional Medicare. Under this option, the city would pay a fee to Aetna for each retiree that opts out of its plan. 

The New York Daily News reported March 22 that New York City Mayor Eric Adams will not keep the option open, because it would undermine the savings the city plans to gain from switching to Medicare Advantage, Mr. Adams' aides said. 

Mr. Adams' administration estimates Medicare Advantage can save the city $600 million annually, according to the Daily News. 

The city's Medicare Advantage plan, set to take effect later this year, has been in the works since 2021 and has faced fierce opposition from many retirees. 

Courts blocked the first version of the plan, which would have charged retirees who wanted to remain on traditional Medicare a $191 monthly premium. 

The New York Daily News reported the NYC Organization of Public Service Retirees, which mounted the previous court challenge, plans to challenge the city's new plan in court as well. 

Marianne Pizzitola, a retired EMT who leads the organization, told the Daily News the shift to Medicare Advantage has "always been about maximizing savings for the city and screwing retirees at the same time." 

Why some retirees are wary of MA 

Just 13 percent of employers offer health benefits to their retired employees. Among those that do, around 50 percent offer Medicare Advantage programs, up from 26 percent in 2017, according to a Kaiser Family Foundation report. 

Though Medicare Advantage plans can often save employers money, and potentially allow them to offer more benefits to former employees, according to Kaiser Family Foundation, retirees have concerns about plan networks and prior authorization. 

In an op-ed published in September 2022 in the New York Daily News, Ms. Pizzitola wrote that many retirees were concerned their physicians would not be in a Medicare Advantage plan's network. 

"And, all 250,000 retirees would suddenly be subjected to the insurer's 'prior authorization' protocols and hurdles — often dangerously delaying and denying care — something they never had to worry about in traditional Medicare," Ms. Pizzitola wrote. 

Federal regulations require retirees to be able to opt out of any employer-provided coverage for traditional Medicare — but they may have to pay for any supplemental benefits on their own, The New York Times reported March 10. 

In addition to worries about networks and prior authorization, some retirees worry the terms of the Medicare Advantage plan they sign on to with their employer now will not be the same in five or 10 years. 

It can be difficult to transition from Medicare Advantage to traditional Medicare with supplemental coverage, The New York Times reported. After the first six months of Medicare eligibility, Medigap plans can reject beneficiaries or charge higher premiums for preexisting conditions in most states. 

Of the employers that offer Medicare Advantage to employees, 44 percent offer just MA plans, while 56 percent offer MA and traditional Medicare options, according to Kaiser Family Foundation. 

Not just NYC 

In other areas of the country, retiree groups have also decried proposed Medicare Advantage plans. 

In October 2022, Delaware's Employee Benefits Committee paused implementing a three-year Medicare Advantage contract for state retiree benefits with Highmark Blue Cross Blue Shield of Delaware, after a judge blocked the state from moving forward. 

Retiree association RiseDelaware mounted the court challenge, arguing the state's pension benefit committee did not adequately collect input from lawmakers and retirees.

In Washington, the state's Public Employees Benefits Board decided to pause a decision on a potential Medicare Advantage plan until 2024 after hundreds of retirees voiced opposition to the plan, the Olympian reported in June 2022. 

In Vermont, retirees have taken to the state's capital to protest a proposed Medicare Advantage plan. Vermont Gov. Phil Scott has pushed to shift retirement benefits for state  retirees to a Cigna Medicare Advantage plan, VTDigger reported Feb. 8 

"I can't risk my life with Cigna healthcare or some professional prevaricator hired by the administration," former Vermont State Employees' Association Director Dave Bellini told VTDigger. "This is a big no. And it's personal."

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