Why are gym memberships and other perks only available for Advantage Plan members?

Question from Sue: Why do Advantage Plans provide dental and vision coverage, gym memberships and other free stuff, while those of us who choose Original Medicare and a Supplement don’t get any of those benefits? It doesn’t seem fair to me. 

Answer: It isn’t fair at all and should be rectified in my opinion. Especially considering that it costs US taxpayers far more money to insure people on Advantage Plans than Original Medicare. It’s been estimated by several well-respected organizations that the federal government pays Medicare Advantage companies an average of around 17% more per person than it costs for Original Medicare. The total additional expenditure to taxpayers for the 35 million Americans on Advantage Plans is around $80 billion dollars annually, around $2,300 per person. 

Costs of the Advantage Plan program will continue to rise

As 10,000 people turn 65 every single day in the US, and payments to Advantage Plan companies increase each year (5% in 2026 and 2.5% in 2027), that annual cost difference to taxpayers will reach $100 billion before long. 

I find this huge gap disturbing because it never should have happened. I got into the Medicare insurance field not long after the Medicare Modernization Act, which greatly expanded access to Advantage Plans, went into effect in 2006. One of the selling points laid out to the public by the politicians who introduced the law was that it would actually save taxpayers money because cost of insuring someone on an Advantage Plan back then was 10% less than if they remained on Original Medicare. On paper it was a genius concept; taxpayers saved money while seniors on Medicare got more robust benefits with less out of pocket costs for $0 or low monthly premiums!

However, it didn’t take long for the savings to disappear, go in the other direction, and ultimately get out of control. Let me repeat this again. It’s currently costing taxpayers $80 billion more per year to insure the 35 million people on Advantage Plans than if they were on Original Medicare. 

I was literally just lamenting how unfair it is to those who choose to stay on Original Medicare and buy a Supplement. Seniors were, and still are, paying taxes to fund the more expensive Advantage Plan program they aren’t using, while getting none of the extra benefits. 

How to make things equal for those who choose Original Medicare

A fair solution would be to discount the Part B premium $2,300 per year for those who choose Original Medicare instead of an Advantage Plan and allow people to use that money to buy their own dental and vision, spend or save it however they want. But the challenge here is how to fit another $100 billion into the federal budget when the US is already $39 trillion in debt and counting. There actually have been multiple proposals over the past 10 years to add dental coverage to Original Medicare benefits, but each time it’s died before ever coming to vote in Congress due to the cost. 

Currently, Advantage Plan insurance companies, on average, receive about $14,000 annually for every person who enrolls in one of their plans. Another solution to make things fair, and the cost to taxpayers the same as it is for Original Medicare, would be to reduce the annual payments to Advantage Plan companies by $2,300 per person. The problem with that idea is not only would dental and vision benefits be drastically reduced or disappear, in addition, premiums and co-pays for Advantage Plans would go up significantly. We’re already seeing this happen even as payments to the insurance companies are increasing. With a 16% cut in funding, Advantage Plans would look drastically different than they do today, which would be extremely unpopular with 35 million seniors, who as a percentage are more likely to vote in elections than any other age group.  

My outlook on creating equality for those on Original Medicare

I don’t anticipate any cuts to Advantage Plan companies anytime soon. Making plans more expensive while taking away benefits from seniors on fixed incomes would be a nightmare for politicians running for reelection. 

I also don’t see any scenario where those who choose to remain on Original Medicare will be given any dental or relief on Part B premiums.  

However, I do believe there will be a gradual reduction in the annual payment increases to Advantage Plan companies that won’t keep up with medical inflation. And as that happens, the extra benefits on Advantage Plans will be reduced to the point where they were prior to 2018 when dental coverage was very limited and only included discounted teeth cleanings and X-rays, an annual routine eye exam along with $100 allowance for a pair of glasses, and a no-cost gym membership. Prior to 2018 there was no comprehensive dental coverage for fillings, crowns, root canals, or dentures, nor Over the Counter benefits, grocery allowances, or other extras that are included with Advantage Plans today. If companies do decide to keep more robust dental benefits and other extras in the coming years, monthly premiums and co-pays for medical services will have to be increased. This is certainly a possibility because many on Advantage Plans value the extras more than lower out of pocket medical costs. 

Don’t misunderstand me, Medicare Advantage Plans is a vital program

People may read today’s column and think I don’t like Advantage Plans! That’s absolutely not true. I’m a huge proponent of the program and believe it’s a vital part of Medicare as a choice for those who can’t afford a Supplement or don’t want to pay those higher premiums. I estimate that 35% of our Medicare clients are on Advantage Plans. But as you can see, the issue of what they cost taxpayers, including those who don’t want or can’t have an Advantage Plan, is extremely unfair. 

Choice of Advantage Plan or Supplement is not cut and dry

At the end of the day, everyone still needs to weigh their option of choosing a Supplement or an Advantage Plan, which includes understanding the many differences, pros and cons, risks versus rewards of both. Although it should be a factor in a final decision, there’s far more to consider than the inclusion of dental or other extra benefits and monthly premium. We make sure this is all explained to those who seek out our help and advice in making what is a very important decision, especially considering that once a choice in Advantage Plan is made, there’s a good chance that moving back to Original Medicare and a Supplement may not be possible. 

With questions, or if to make an appointment for a no cost consultation with one of our licensed and experienced agents, give us a call, 724-603-3403, or email me personally, Aaron@GetYourBestPlan.com.