Millions of Americans May Get Their Medicare Advantage Benefits Cut

Millions of Americans on Humana's Medicare Advantage plans could see their health care benefits cut after the company makes major profit-boosting adjustments to its plans.

Humana said it would be ending some plans and cutting benefits for patients in 2025 as it hopes to boost its financial performance. Altogether, 6 million Americans are insured through Humana's Medicare Advantage.

"The insurer recently warned that rising health care costs are squeezing their business model, forcing them to slash benefits and potentially exit some markets altogether in 2025," Michael Ryan, a finance expert and the founder of michaelryanmoney.com, told Newsweek. "And with over 6 million enrollees, Humana's moves will ripple across the entire Medicare Advantage market."

A few weeks ago, Humana warned that its 2025 profit targets were down due to the upcoming payments by the federal government to Medicare Advantage plans.

Humana joins several other insurers who have said Medicare Advantage payments likely won't keep up with the surging costs the plans take on as more seniors use their insurance for hospital and outpatient treatment.

"We acknowledge that the industry is experiencing a dynamic and challenging time that we must navigate," CEO Bruce Broussard told investment analysts during a quarterly call Wednesday.

Humana is feeling the hits from the federal government's low reimbursement rates because of how many people are insured through its Medicare Advantage programs. The company said more than 80 percent of its $106 billion revenue comes from the federal program.

But as more baby boomers become eligible for Medicare and profits become slimmer, Humana said patients should prepare for cuts as soon as 2025.

"We are anticipating that membership declines for 2025 largely because we do intend to exit certain plans in counties," chief financial officer Susan Diamond said.

UnitedHealth has also struggled amid dwindling Medicare Advantage profits.

"Our strategy continues to focus on providing as much stability as possible in the reduced funding environment," UnitedHealth CEO Andrew Witty said during last month's investor call.

Ryan said insurers like Humana and UnitedHealth are getting pinched on both sides as reimbursement rates fail to keep up with medical expenses and the larger Medicare Advantage market becomes increasingly competitive.

"Humana isn't the only one feeling the squeeze," Ryan said. "Their competitors at UnitedHealth and others have issued similar warnings about escalating costs straining their Medicare Advantage businesses. That means we could be staring down an industry-wide contraction in supplemental benefits like vision, dental and prescription drug coverage."

Mutual of Omaha recently stopped offering their standalone Medicare prescription drug plans due to the higher cost related to higher paid claims, inflation and the Inflation Reduction Act.

If retirees on fixed incomes can't lean on Medicare Advantage to manage chronic conditions, Ryan said seniors will be facing thousands more in out-of-pocket costs yearly and severe health ramifications if they opt out of treatment.

For seniors bracing for this fall's Medicare Advantage enrollment period, Ryan said they need to keep close attention and keep up to date with any communication from their individual insurer.

"If major cuts are looming, it may be time to reevaluate your options, whether that's shopping for a better Medicare Advantage plan or transitioning to traditional Medicare with supplemental coverage," Ryan said.