Understanding Medicare Open Enrollment
It's that time of year again. No, I don't mean that time when we begin dreading Thanksgiving dinner at the in-laws. It is Medicare's Open Enrollment Period; and it's going on right now. This is one time every year that Medicare beneficiaries have an opportunity to modify their coverage. The rules regarding Medicare, the government’s health insurance program for senior citizens or those who have special needs, are confusing enough. Unfortunately, the open enrollment period just adds another layer of uncertainty for those who need the services offered.
Why Should I Care About Open Enrollment?
I often am asked, "Why do I have to pay attention to Open Enrollment? I am happy with my current Medicare plan." The big reason is that each January 1st marks the start of a new plan year. And with each new plan year comes the ability for insurance companies to make changes to their plans. It's a fact that they often do change their plans; and that can cost you. If you do not pay attention and simply let your plan renew, these changes will become something that you will have to live with for better or worse in the new year. Here are some important things that insurance companies can change in your coverage each year.
For prescription drug (Part D) plans:
- the monthly premium
- the annual deductible
- your out-of-pocket co-pay amounts
- the drug formulary (the list of medications that the plan covers). For example, if just one medication leaves your plan's formulary, it could cost you thousands of dollars over the course of the year.
- the network of pharmacies
- the pharmacy cost-sharing
- coverage rules for medications (quantity limit, step therapy, prior authorization, etc)
- coverage of medications in the Coverage Gap, commonly known as the Medicare "donut hole".
For Medicare Advantage health plans:
- the monthly premium
- your out-of-pocket co-pays and coinsurance
- the annual out-of-pocket spending limit. Each year these limits continue to creep up. Is your plan's limit going up?
- the network of providers
As you can see, there are quite a few reasons to pay attention to the Open Enrollment Period. But did you know that it is estimated that only 13% of Medicare beneficiaries actually review their plan options during Open Enrollment? That's just one in every ten people! Even more alarming is the fact that beneficiaries who do not review their drug coverage, overpay on average $368 per year! It is very likely that spending the time to review your coverage could be well worth it.
The Open Enrollment Period
Prior to each new plan year, the Medicare open enrollment period takes place between October 15th and December 7th. This is the period when you are eligible to change your Medicare coverage, and depending on the type of coverage that you have now, you may also have the option to switch between different Medicare plans.
If you currently have Original Medicare (Parts A & B), during this period you can:
- drop this coverage and enroll in a new Medicare Advantage plan
- if you have Part D prescription drug coverage, you can change drug plans or drop the prescription drug coverage entirely. (IMPORTANT: Think very carefully about dropping this coverage because there can be expensive repercussions.)
- if you don’t have drug coverage, you can join a Medicare Part D prescription drug plan.
If you currently have a Medicare Advantage plan with prescription drug coverage (known as an MA-PD plan), during this period you can:
- switch from that plan to another MA-PD plan
- switch to a Medicare Advantage plan without drug coverage. (IMPORTANT: Remember, there can be expensive repercussions.)
If you currently have a Medicare Advantage plan without prescription drug coverage, during this period you can:
- switch from that plan to another Medicare Advantage plan without drug coverage
- add drug coverage through an MA-PD plan.
Anyone with a Medicare Advantage plan (with or without drug coverage) can decide to drop that plan and change back to Original Medicare. However, this could be an expensive path to take, as people who make this switch may not be able to purchase a Medigap policy.
Review Your Medical Coverage During Open Enrollment
So how do you know whether or not any of the above courses of action make sense in your particular situation. Prior to the Open Enrollment Period, your Medicare Advantage or drug plan must send you information about changes in your benefits and costs for the upcoming plan year. You should review this information and take the opportunity given in the Open Enrollment Period to review your current plan and look at other plans. Are there other plans that may be more beneficial for you? Are you getting the coverage that you need? There may be other plans, especially prescription coverage, that pay more benefits and cost less than your current plan.
If you have concerns about your coverage, there are tools available online or by phone to find out about other plans. Medicare offers a Plan Finder tool online or you can call 1-800-MEDICARE to compare plans available in your area. You can also visit the website of the State Health Insurance Assistance Program to find help in your state. Some states have their own website for their program, a call center, and social media pages.
You should always talk directly with a representative from the insurance plan you want to pick before you sign up. They are likely to have the most current information. Call the doctors in those plans to make sure that they do in fact accept the insurance that you are planning to enroll in.
You may already be aware that Medicare doesn’t cover all of your medical expenses. Supplemental health insurance, or Medigap coverage, will help you pay for things that standard Medicare doesn’t cover, like co-pays and deductibles, as well as provide protection against catastrophic expenses for services covered by Medicare. It is important to remember that only four states (CT, MA, ME, and NY) provide their residents with an annual guaranteed issue right. A guaranteed issue right ensures that you can get a Medigap policy without medical underwriting. Insurance companies cannot deny you coverage or raise your premiums based on your medical history or pre-existing conditions in these four states. If you reside in any other state and decide to switch from a Medicare Advantage plan to Original Medicare, you may not be able to get a Medigap policy if you have a pre-existing condition.
Missing the OEP Deadline
If you want to make changes during the Open Enrollment Period, but miss the deadline, you will have to wait until the next Open Enrollment Period to make changes to your plan. You may be eligible to make changes under the Special Enrollment Period under certain circumstances. These circumstances include losing enrollment in an insurance plan that is better than Medicare’s plan or you lose coverage of an employer-sponsored program. Additional circumstances are listed in the government’s guide to special enrollment situations.
Any changes made during the Open Enrollment Period, such as switching to a different MA-PD plan, take effect on January 1st. If you are satisfied with your current coverage and costs, you don’t need to do anything. Your current plan will automatically re-enroll you for next year. However, even if you are satisfied, I recommend that you at least take the time to evaluate the changes in your existing plan. If there are changes in your benefits or costs, do some window-shopping. The Medicare Plan Finder is a useful tool for easily comparing a few different plans.
Health care is expected to be one of the largest expenses during your retirement years. These expenses may cause you to dip deeply into your precious savings. It is beneficial to shop around for the Medicare plan that best meets your needs and does so in the most cost effective manner.
I also have a FREE Medicare Guide that takes the confusion out of Medicare to help you confidently choose the plan that’s right for you. Download this guide now by clicking the button below.
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