The Vermont Blue Advantage will stop offering Medicare Advantage plans in the state by 2026.
On October 1, Blue Cross Blue Shield of Vermont announced that its Vermont Blue Advantage program would cease to provide coverage for 26,000 people in its individual Medicare Advantage plans next year. Additionally, all current employer-sponsored retirement plans will be discontinued.
According to Andrew Garland, the company’s vice president, whether Vermont Blue Advantage reenters the state’s insurance market in the future will hinge on improvements in market conditions or potential opportunities that could enable sustainable and competitive offerings.
The Vermont Blue Advantage currently covers about 7,000 retired teachers in the state. However, a requested contract renewal won’t take effect until 2026, as noted by the state’s Department of Finance. Secretary Mike Pieciak remarked that this change was unexpected but necessary, especially since Vermont Blue Advantage proposed a 50% premium increase back in July.
Moreover, two additional small employers confirm that they too will modify their coverage for retirees through the Vermont Blue Advantage Plan, which will also end in 2026.
Medicare Advantage plans, or Part C plans, are an alternative for individuals eligible for Medicare. These plans are funded by the federal government and managed by private companies, typically covering about 80% of medical expenses while providing broader coverage than traditional Medicare, which often requires a separate plan for prescription drug benefits.
Vermonters losing insurance due to the discontinuation of their Medicare Advantage plans can enroll in Medigap, a private plan designed to supplement traditional Medicare, noted health care advocate Mike Fisher during a recent meeting with lawmakers.
Blue Cross Blue Shield of Vermont has been grappling with significant financial difficulties resulting from an unexpected spike in claims volume and complexity. The nonprofit insurance provider reported a loss of $152 million between 2021 and 2024. According to a state report, losses from the Vermont Blue Advantage have represented at least 20% of those figures since the sales began in 2021. Additionally, Blue Cross and Blue Shield of Vermont operates in tandem with its Michigan counterpart and parent organization.
Meanwhile, across the country, insurance firms have been reducing Medicare benefits due to diminishing profits.
Next year, most Vermonters who purchase their own Medicare plans will lack access to these Advantage plans. In addition to Vermont Blue Advantage’s discontinuation, UnitedHealthcare, a major Medicare Advantage provider, has announced similarly that it will no longer offer plans in Vermont starting October 1. This decision affects around 7,800 residents, according to UnitedHealthcare.
The only remaining options for individual buyers involve a few plans from Humana Advantage, available in specific counties like Bennington, Caledonia, Essex, Orange, Windham, and Windsor.
New Insurance for Vermont Teachers
The Vermont Department of Finance has signed a three-year agreement with Healthspring to provide coverage for the retired teacher plan after Vermont Blue Advantage’s premium hike proposal. HealthSpring also covers retirees from Vermont State University.
Although teachers will see a 16.2% rate increase for their HealthSpring coverage, it is significantly less than the 50% rise proposed by Vermont Blue Advantage.
Pieciak expressed surprise at the steep premium hike, pointing out that recent increases had been around 5-10%. “I think those numbers illustrate the current state of health care,” he observed. “A 16% increase now seems somewhat reasonable.”
Nonetheless, Pieciak believes this shift will save participants hundreds of dollars in annual premiums and could spare the state “tens of millions” on parts of the program. He also mentioned that unfunded pension liabilities would grow by $215 million due to this transition.
When considering the move to HealthSpring, the treasurer’s office weighed factors like benefits, network reach, pricing, and the stability of the carrier. Pieciak noted that HealthSpring provides benefits comparable to or better than those offered by Vermont Blue Advantage.
He remains hopeful that this transition will bring more stability to the state’s insurance landscape, acknowledging that addressing healthcare affordability “[isn’t] something that can be managed alone.” He hinted that partnering with larger, more established companies might yield better outcomes.
Unexpected Benefits
Patient advocates highlight the potential advantages for current Medicare Advantage users who might lose their coverage, particularly if they wish to shift to traditional Medicare.
“It’s not entirely good or bad,” commented health care advocate Mike Fisher during a state legislative committee meeting. “Some people are positively inclined toward Medicare Part C, while others despise it.”
For individuals voluntarily leaving Medicare Advantage for traditional Medicare, they might face challenges in obtaining an additional Medigap policy, which covers costs beyond what traditional Medicare pays. Insurance providers can deny coverage or impose higher premiums based on pre-existing conditions. However, if individuals lose their coverage due to a plan not being offered anymore, federal and state regulations help protect them from increased costs.
That said, Fisher cautioned that many Medigap policies in Vermont remain prohibitively expensive, even with these provisions in place. He is particularly worried that the market changes may increase the number of residents without supplemental coverage, potentially leading to unaffordable expenses for many.
The annual open enrollment for Medicare plans begins on October 15 and runs through December 7, though there is an extended enrollment period for those losing insurance until February 28, 2026. However, with the plans ending at the close of 2025, waiting to enroll could leave gaps in coverage.
Vermont Blue Advantage offers guidance for patients navigating these transitions. Additionally, the State Health Insurance Program is preparing for an influx of requests for assistance as numerous Vermonters will need to modify their Medicare coverage. Resources like the Medicare handbook and 1-800-Medicare are also available to help individuals locate new plans.
