Some Seniors Must Give Up Retiree Benefits to Get Medicare: Report

Seniors in some states might be forced to go without previously offered employer-based benefits that served as a supplement to traditional Medicare benefits, a new report has found.

Historically, employers who have offered health benefits to retirees typically did so in a way that supplemented traditional Medicare offerings, but in a number of states, retirees will "forfeit their retiree health benefits in perpetuity if they choose coverage under traditional Medicare," according to a Kaiser Family Foundation Report.

Those states have moved toward Medicare Advantage being the "only option for retiree health coverage," according to the report. If a senior wishes to keep an employer-based plan, they must choose a Medicare Advantage plan over traditional Medicare.

Medicare Advantage is a privatized version of traditional Medicare and can have several pros, namely lower upfront out-of-pocket costs and bonus coverage options that can include dental, vision or even gym memberships.

However, according to the report, under Medicare Advantage seniors may be forced to pick between a more narrow selection of preapproved health care providers and sometimes struggle to get certain treatments authorized.

According to the report, 48 states and Washington, D.C., offer their state employees retiree health benefits.

In 12 states those seniors would "forfeit" their retiree health benefits if they choose a traditional Medicare plan instead of Medicare Advantage.

These are: Alabama, Arizona, Colorado, Connecticut, Georgia, Illinois, Kentucky, Maine, Missouri, New Hampshire, Pennsylvania and West Virginia.

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That number is up from eight states who followed the same practice in 2016.
"It's a lot to ask someone potentially to consider giving up their retiree benefits," Meredith Freed, a senior policy manager with the Program on Medicare Policy at KFF, told Fortune.

Meanwhile 22 states and D.C. retirees are offered both Medicare Advantage and supplemental plans that "wrap around" traditional Medicare, according to the report.

And in 14 states, supplemental plans are offered with traditional Medicare, but not with Medicare advantage.

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States may choose to only offer Medicare Advantage to reduce their overall health care costs, according to the report.

"The switch to it in many states has resulted in cost savings in the hundreds of millions of dollars," Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

"However, for seniors, it's more of a mixed bag. Medicare Advantage can offer lower premiums and be more comprehensive in terms of what it will cover. At the same point, it sometimes carries with it more limited options with the number of providers and, if a senior encounters the need to get services out-of-network, the rise in out-of-pocket expenses can be dramatic."

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Seniors have reported various problems with Medicare Advantage plans, according to KFF.

Medicare Advantage also typically relies on prior authorization, according to the report. meaning many seniors could have to wait to get specific procedures they need.

"If you're a senior and being shifted onto Medicare Advantage, be sure to read the fine print. If you're going out-of-network often, you may want to invest in additional insurance options to shield yourself from sticker shock," Beene said.

Correction 6/11/2024 at 6:00 p.m. ET: The headline and story have been updated to clarify what plans are available to seniors.