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Under the current Medicare program, beneficiaries may enroll in either the traditional Medicare fee-for-service program, or in a private plan, such as an HMO or preferred provider organization (PPO), in what is now known as the Medicare Advantage program. Medicare Advantage plans receive funds from the federal government (Medicare) to provide Medicare-covered benefits to enrollees. As of September 2013, 15 million Medicare beneficiaries (29%) were enrolled in a Medicare Advantage plan. The Affordable Care Act of 2010 (ACA) enacted reductions in payments to Medicare Advantage plans with the goal of creating greater parity in payments between the traditional Medicare program and Medicare Advantage.

Beneficiaries will see limited changes in the number of plans offered in 2014. Our analysis finds that beneficiaries will be able to choose from 18 plans, on average, in 2014, down from an average of 20 plans in 2013. While some plans will leave the market in 2014, others are coming in or expanding. A small share of enrollees will have to find new plans because their 2013 plan will no longer be available to them in 2014. Almost all will be able to stay in a similar type plan, often with the same company. Beneficiaries will continue to have access to plans with relatively low premiums. Beneficiaries who remain in the same Medicare Advantage plan in 2013 and 2014 are likely to see modest increases in premiums, on average, but could avoid higher premiums by changing plans, although there are other tradeoffs to consider when switching plans. Of note, out-of-pocket limits are expected to be higher in 2014 than in 2013, on average, providing less financial protection to enrollees.

This Data Spotlight, like those prepared by us in previous years, reviews trends in Medicare Advantage plan choices available to beneficiaries, premiums and other plan characteristics in 2014. The brief does not, however, analyze changes in benefits or cost sharing requirements for individual services, which could be major factors in an enrollee’s out of pocket expenses, nor does it examine changes in provider networks that could affect beneficiaries’ access to preferred physicians and other health care providers. This spotlight is part of a series of spotlights tracking key changes in the Medicare Advantage program. The analysis is based on publicly available data from the Centers for Medicare and Medicaid Services (CMS).