Medicare Advantage plans get 3.5% federal boost

WASHINGTON—The federal government next year will boost average payment rates to Medicare Advantage plans by 3.5%, the Centers for Medicare and Medicaid Services announced Monday.

That payment increase, somewhat higher than industry analysts had expected, is important not only to the plans—typically health maintenance organizations—but also to participants and employers offering retiree health care benefits.

With the government keeping reimbursement rates robust, plans can offer generous benefits and low premiums. That makes the plans attractive to retirees as an alternative to the traditional fee-for-service Medicare program, in which enrollees have a greater choice of medical care providers but also less generous benefits.

As a cost-saving strategy, some employers subsidize all or part of Medicare Advantage plan premiums for retired workers, finding it less expensive than paying for coverage in health plans that supplement Medicare.

More than 8 million individuals now are enrolled in Medicare Advantage plans.