Seniors face a mess with Medicare

A couple of hundred thousand Minnesota seniors are finding out bad news when they open their mail and learn Medicare advantage plans are being discontinued. 

For many, it will be an inconvenience, of being switched to a new plan. 

But for those in Steele County, and other parts of Southeast Minnesota, it will have devastating effects. 

Sarah Schmidt, owner of A Family First Insurance Agency, said according to data from the Centers for Medicare & Medicaid Services, just over 4,000 people have Medicare Advantage plans in Steele County.

But 3,458 seniors will be losing their Medicare Advantage plan on Dec. 31, due to the discontinuation of plans offered by companies. 

“There will be new plans to choose from, but the options are complicated,” Schmidt said. 

Steele County has seen a rapid decline in the number of insurance companies who offer Medicare Advantage plans. 

Schmidt said in 2024, there were six. By Jan. 1 there will be two, with only one providing access to Mayo Clinic. 

Schmidt explained the particular problem for the region is that Medicare Advantage plans are not profitable in southern Minnesota. 

"It's not because our citizens are sicker or over utilize care,” she said. “One reason is the way Advantage plans get federal funding or reimbursements.”

Schmidt said southern Minnesota “is unique due to our rural classification but our medical costs are not typical rural costs.”

“Mayo Clinic is renowned for many things, but low prices or discount care is not one of them,” she said. 

This leads to higher medical costs, being much higher “but the federal government does not reimburse the Advantage plans enough to cover the higher cost of care.”

“Then add the complexity of medical inflation increasing far beyond standard inflation markers and the math does not work,” Schmidt said. “Insurance companies don’t want to stay where they are losing money.” 

In a letter announcing the restructuring of its Medicare plans in the state, Blue Cross and Blue Shield of Minnesota President and CEO Dana Erickson said. “Blue Cross will still offer a Medicare option for every eligible senior in Minnesota, including new Medicare Advantage choices for more than 80% of our current Medicare Advantage members.” 

This is not the case for those in Steele County, Schmidt said. 

Schmidt explained that anyone who is losing their Medicare Advantage Plan, will have two options, they can go to Medigap, or pick one of the two Medicare Advantage plans. 

“Medigap allows seniors to go to any doctor that accepts Medicare in the US,” she said. “The Basic Medigap plans are more expensive up front but with no or low deductible may be the right choice for some seniors.”

She said people need to compare it to Advantage plans “that have a network of where you can doctor.”

“Mayo plainly states they do not take most Advantage Plans,” Schmidt said. “The Advantage plan premiums are less up front, but the maximum out of pockets are high for 2027.”

Schmidt said “Medigap insurance companies offer several different types of Medigap plans,” but said insurance companies in Minnesota “have restricted the “Guarantee Issue” to the people who lost Medicare Advantage plans.”

“The “switchers” will be offered their most expensive plans,” she said. “Most Medigap companies are not offering all the options for the “switchers” or people losing their plans.”

Schmidt said that she believes that is something the state could act on. 

“We should not restrict Medigap plans when seniors need this most,” she said. 

As an example, she said in 2026, CMS data shows the most purchased Advantage plans in Steele County were around $50 a month. 

“Advantage plans in 2027 have higher monthly premiums and higher maximum out of pocket cost - making these expensive for people who use medical care frequently,” Schmidt said. 

Schmidt said the Guaranteed Issue Basic Supplement cost over $300 per month, per month, per person. 

“So, the impact to a fixed income budget is real, especially for a couple,” she said. 

Schmidt said she has reached out to Gov. Tim Walz, both candidates for governors, and other elected officials, and candidates, and has not received a call back yet. 

She said seniors losing their plans have to make a choice. 

One option, is to do nothing “and go back on original Medicare -pay the Medicare deductibles, co-insurance, have no maximum limit out of pocket.”

“This option leaves seniors with unlimited risk,” Schmidt said. 

Another option, is to choose a new Advantage plan for 2027, before the Dec. 31 deadline, if coverage is needed by Jan. 1, 2027, “noting the network, and understanding the maximum out of pockets.”

Those losing their plan, can also choose a Medigap plan. 

They can choose a “Guarantee Issue” with no medical questions. 

“They will need to provide a copy of their letter showing the loss of Coverage,” Schmidt said. “However, if someone is healthy enough to pass the medical questions, they should consider the underwritten Medigap plans for 2027 to potentially save money on premiums. “

 Seniors affected, Schmidt said, should consider working with a local health insurance agent. 

“Many agents are hosting group meetings to share options and assist in signing you up,” she said. “It is very important to have someone knowledgeable in our local community.”

She also said seniors could consider Minnesota Aging Pathways, as an option, or the Medicare.gov website or phone number. 

“I am obviously biased but local matters for this stuff and having agents who know the local networks from chiropractors to dermatology to cardiology really matters,” Schmidt said. “Our Steele County seniors are faced with hard decisions.”