Group vs. Individual Medicare Advantage: What is the Difference?

Understanding the difference between group vs. individual Medicare Advantage (MA) is critical to the decision-making process regarding the types of plans your organization will offer.

Group Medicare Advantage, or Employer Group Waiver Plans (EGWP), is one of the most challenging markets within Medicare, igniting interest and questions from health plan executives as this market grows. In 2018, there were 4.1 million retirees in EGWPs out of nearly 20 million Medicare Advantage beneficiaries making this a highly valuable business for health plans to target.

Understanding EGWPs, and the differences between group vs. individual Medicare Advantage plans will be critical to ensuring success should your organization be considering this business segment.

First, what are Employer Group Waiver Plans (EGWP)?

EGWPs are insurance plans offered by employers or unions to their retired or retiring employees, provided by private insurance companies that manage a company’s retiree Medicare benefits.

There are two basic categories of EGWPs–the “800 series” and the Direct Contract EGWPs or “E contracts.”

“800 series” EGWPs are plans offered by third parties (Part D sponsors and MA organizations) to employer and union group sponsors. Employers contract with a third party that bears the insurance risk and functions as the plan sponsor. The “800 series” represents most EGWPs.

The second basic category is Direct Contract EGWPs (“E contracts”). Employers or unions that directly contract with CMS to become Prescription Drug Plan (PDP) sponsors or Medicare Advantage Organizations (MAO) for their members offer this type of plan. The employer is self-insured and assumes most of the risk.

• • • Advantages: Employers can provide group medical, drug, and supplemental coverage to their retiree population at a reduced cost and / or increased benefits because of the prospective payment and management opportunities found in high performing MA plans.
    • Disadvantages: The disadvantages are relatively significant. One such administrative challenge found in supporting EGWP is the complex billing and reporting arrangements. These typically require customizations and additional expenses due to lack of adequate solutions. Moreover, the common absence of subject matter experts within health plan operations poses additional risks to business relationships with employers.

High-Level Considerations & Requirements: Comparing Group vs. Individual Medicare Advantage

Discipline is essential to manage EGWP accounts effectively. Because of the complexities of operating successful EGWPs, there are high-level considerations to keep in mind when determining the value of managing group vs. individual Medicare Advantage plans. For example, the following are fundamental operational differences to consider:

Annual Election Period

• • • • Individual Plan: Open Enrollment is from October to December only.
      • Employer Group Waiver Plan: EGWPs may have different annual open enrollment periods depending upon the employer's requirements.
      • • •  

Failure to Pay

• • • • Individual Plan: If the individual is paying the premium directly, you must follow the traditional rules for Medicare non-payment.
      • Employer Group Waiver Plan: If the employer group is paying the premium, there are no particular disenrollment criteria.

Mid-year Benefit Customizations

• • • • Individual Plan: Changes to individual plan benefits are only allowed during MA Open Enrollment.
      • Employer Group Waiver Plan: For EGWP, Medicare Advantage Organization (MAOs) can offer customized Group MA plans at any time during the contract year. MAOs can offer enhanced benefits packages.

Premium Requirements

• • • • Individual Plan: Individual health plans must charge the same premium to all beneficiaries throughout a given region / area.
      • Employer Group Waiver Plan: CMS waives the uniform premium requirement for EGWPs, meaning that Group MAOs can vary premium amounts by class of retiree.

Marketing & Communication

• • • • Individual Plan: Individual plans require CMS approval for all marketing materials.
      • Employer Group Waiver Plan: For EGWPs, CMS waives prior review requirements for marketing materials. Plans may communicate with eligible beneficiaries before October 1.

Service Area Rules

• • • • Individual Plan: Individual plans must file specific service areas and adequacy (at the county level) with CMS to offer products.
      • Employer Group Waiver Plan: MAO can provide expanded service area for EGWP products beyond its individual plan service area. The MAO is responsible for ensuring provider network adequacy, but it is at a different level of adequacy consideration for expanded areas.

Network Requirements

• • • • Individual Plan: For individual plans, PPOs must furnish all services in-network and out-of-network but may charge higher cost sharing for plan-covered services obtained out-of-network.
      • Employer Group Waiver Plan: MA-EGWPs are established using a network of contracted providers and can also be customized to have no differential between in-and out-of-network benefits.

Bidding

• • • • Individual Plan: Individual plans must submit Part C and Part D bids.
      • Employer Group Waiver Plan: MA-EGWPs do not submit bids to CMS, and their offerings do not have to meet CMS’ meaningful difference requirements.

Next Steps: Exploring Group vs. Individual Medicare Advantage

While exploring and comparing group vs. individual Medicare Advantage, there are many matters that your organization will need to consider when evaluating the decision to administer employer group waiver plans. While the information provided above is not an exhaustive list for organizations looking to include EGWPs as part of their offerings, it is important to note the differences and understand the complexities of administering these programs.

Effectively managing EGWP accounts requires a level of discipline, both technically and operationally, that some organizations may not be equipped to handle. Taking on these programs without preparing or understanding all the needs to support EGWP effectively can also place your existing MA operation at risk. Gaining the trust of the employer where the commercial business is being administered, but not successfully managing their employer group waiver plan(s) could jeopardize that client long term. Besides this, operational problems or compliance issues within an EGWP operation could cause an impact to a plan’s Star ratings or sanctions from CMS. These are reasons to make the investments into your organization—people, processes, and technology—in order to ensure EGWP success.

Convey offers comprehensive end-to-end member management solutions for Medicare. Our EGWP solutions and services can manage groups of any size or scale, currently serving some of the largest, most complex EGWP programs in the industry today.