Aging-in-place upgrades — like grab bars and wheelchair ramps — and basic in-home assistance may soon be widely covered by insurance plans under Medicare Advantage’s new expanded allowances, presenting a potential alternative to reverse mortgages for some older homeowners.
The Centers for Medicare & Medicaid Services (CMS) announced in April that it would allow these services and items to be offered through its affiliated Medicare Advantage health plans.
Under the Medicare Advantage program, insurance providers — the largest being UnitedHealthCare and Humana — can offer basic Medicare benefits along with some supplemental upgrades. These public-private partnerships have seen rising adoption among older Americans, with about a third of all Medicare beneficiaries enrolled in some kind of Medicare Advantage plan in 2017. The Congressional Budget Office predicts that penetration will grow by about 4% each year, but some industry experts believe that the real growth rate could be closer to 6% to 7%.
The plans have also seen broad support under the Trump administration, with CMS administrator Seema Verma trumpeting Medicare Advantage progress in a recent statement.
“The steps that the Trump administration has taken to improve and drive competition in Medicare Advantage means more savings, more benefits, and lower costs for seniors,” Verma said. “The popularity of programs, such as Medicare Advantage, and with the various new supplemental benefits and policy changes that have been adopted, we expect plan choices to be even more robust moving forward.”
The exact proportion of Medicare Advantage beneficiaries varies by region, with Minnesota easily leading the way at 58.4% penetration in the first quarter of 2018, according to a recent analysis by Excel Health. Residents of that state, along with California, Florida, Oregon, and Pennsylvania, account for about 40% of all enrollees nationwide, with more rural states like Alaska, Wyoming, and Vermont bringing up the rear — with 1.5%, 3.9%, and 10.2% uptake, respectively.
But the nationwide numbers are trending upwards, and expanded coverage of in-home services is indicative of the government’s overall public health philosophy.
“What has happened, in addition to dental and vision, you now can cover other services as long as they help to keep Medicare beneficiaries out of the hospital,” Fred Bentley, the vice president of Avalere Health, a Medicare Advantage consultant, told Reverse Mortgage Daily.
Just this week, major Medicare Advantage insurer Anthem announced a new package for next year that covers up to $500 for safety devices like temporary wheelchair ramps, reaching devices, and shower stools, as well as in-home aide care for some chores and light assistance. The package also covers some one-way transportation, food deliveries, and alternative medicine treatments, like acupuncture.
Other insurers that offer Medicare Advantage plans are currently reviewing the costs and benefits of these coverage options, searching for compelling research proving the value of these home upgrades, Bentley said.
Like other industries catering to seniors, the health care industry and Medicare are looking for ways to respond to the rapidly growing boomer population. Just last month, the U.S. Census Bureau reported that by 2035, there will be 78 million people 65 years and older. Keeping people at home and out of the hospital seems to be a cost-effective solution compared to alternatives such as skilled nursing facilities and long-term acute care hospitals, so insurers are taking this time to explore the options, Bentley said.
“They want to say, ‘If we invest in handrails for these beneficiaries, it will result in savings because we will prevent X number of falls and prevent X number of ER visits and hospitalizations,” he said. “They want to know that there will be a financial return in investment. Will it keep people healthy, at home, and out of the hospital?”
Bentley said it’s still early to determine what coverage will look like, as many of these allowances are “moving pretty far from traditional health care.”
“You’re not going to see this happen until next year,” he said. “What we’re talking about — private-duty nursing and home modifications — they could start selling plans in 2019 and going into effect in 2020.”
Aging-in-place upgrades have been a typical use for reverse mortgage funds. But Pete Mendenhall, reverse mortgage loan officer and certified aging in place specialist, said he believes that all of the financial products that can support aging-in-place — whether it be Medicare Advantage benefits or a Home Equity Conversion Mortgage — can work harmoniously.
“The reality is that we’re going to have people living at home because we don’t have enough beds,” he said. “I think there are opportunities for everybody and I think it can be synergistic if we ask the right questions.”
Written by Maggie Callahan
Robert Holly contributed reporting.