It’s that time of year again. If you’re one of the roughly 50 million Americans enrolled in Medicare, get ready for some year-end shopping. Medicare open enrollment for Medicare Advantage and Medicare prescription drug coverage runs from October 15th until December 7th, and presents a great opportunity for seniors to manage their health care costs for the coming year. On offer are prescription-drug and Medicare Advantage plans, as well as the opportunity to switch plan types.
“It’s like Deja-vu, all over again”
Despite a well-orchestrated advertising blitz from the insurance industry, most seniors retain their plan for years without shopping for new options. As a result, Medicare beneficiaries may remain locked into plans that no longer meet their needs- this is especially true for prescription drug plans whose pricing and coverage may change dramatically from year to year. Click here to preview 2017 Medicare, Part D premiums.
Where to Begin?
Medicare health insurance plans are required to provide an Annual Notice of Change (ANOC) to participants in Medicare prescription-drug and Advantage plans each year. These are mailed in late September and detail any material changes in coverage for the coming year. The notice contains information specific to your plan and serves as a good baseline for comparison shopping.
Next, compile a list of medical providers and medications and compare it to the ANOC. If coverage for a medication you take is not included, or a physician has dropped out of your Advantage plan network, the statement will reflect this. For those seniors that are shopping for a stand alone drug plan- with or without a Medigap plan- make use of the Plan Finder tool on Medicare.gov. This tool compares plans based on the drugs you take and the local pharmacy of your choice, including mail order pharmacies.
Review the Basics
- Original Medicare: is a fee-for-service model where the government pays your health care providers directly for your Part A (hospitalization) and/or Part B (medical) services. Most people receive Part A benefits without paying a premium and have their Part B premiums deducted directly from their Social Security check. While premiums are modest- $121.80 per month for most Part B recipients- Original Medicare includes deductibles and coinsurance costs that quickly add up. For this reason, many people enroll in a Medicare Supplement Insurance or Medicare Advantage plan to defray these costs.
- Medicare Supplement Insurance (also referred to as Medigap insurance), is a supplemental plan of insurance designed to work in conjunction with Original Medicare by covering the cost of deductibles and co-payments that you would otherwise be responsible for paying. Medigap policies are governed by federal and state law and insurers must provide a standardized list of benefits for each plan. There are currently ten plan options and consumers shop for plans by comparing each plan’s price with its covered benefits. Medigap policies work with any physician that accepts payment from Medicare, but do not provide prescription drug, vision or dental benefits. Most enrollees purchase a separate standalone prescription drug plan.
- Medicare Advantage plans, which are sometimes called “Part C” plans, are offered by private insurance companies approved by Medicare. Participants are still enrolled in Medicare, but receive their coverage from the Advantage plan and not Original Medicare. These plans are structured as Health Maintenance (HMO), Medical Savings Accounts (MSA), local or regional Preferred Provider Organization (PPO) and Private Fee for Service (PFFS) plans, and must offer at least the same benefits as Original Medicare. Unlike Medigap plans, they are not standardized and will typically provide additional benefits such as prescription drugs, dental and vision care that are not covered under Original Medicare.
Know Your Options
Enrollees in Original Medicare can purchase a Medicare Supplement (Medigap) plan, and/or stand alone drug plan, and those with an Advantage Plan can switch plans. Those with Original Medicare may also switch to an Advantage plan. It’s important to note that Medicare Supplement (Medigap) and Medicare Advantage plans are not designed to work together and federal law does not provide you the right to purchase a Medigap insurance policy. In other words, you shouldn’t have both plans and your health may preclude you from purchasing a Medigap policy. For those with Advantage plans that wish to switch to Original Medicare, you may do so during the Medicare Advantage Disenrollment Period (MADP) that runs from January 1st to February 14th. Moving from an Advantage plan to Original Medicare can be tricky, so to avoid gaps in coverage you should contact 1- 800-MEDICARE (1-800-633-4227). The representatives can help you confirm the rules in your state and the enrollment period that should be used. Finally, those that wish to enroll in a Medicare Advantage Medical Savings Account (MSA), are generally only able to do so during Fall open enrollment.
Checklist for Fall Open Enrollment
- Review your Annual Notice Of Change (ANOC) and note any material changes in prescription drug or medical coverage.
- If you plan to join a Medicare Advantage or stand-alone prescription drug plan, verify that you are eligible to participate in the plan. Confirm that you have Medicare Part A and Part B coverage and live within the geographic service area that the plan covers. Note that those with end-stage renal disease generally cannot join an Advantage plan.
- Decide if your current plan works for you. Those with Original Medicare might find the expanded services and potentially lower costs available in an Advantage plan to be very attractive. Balance the expanded services, the network of providers offered, and out-of-pocket costs versus those associated with retaining Original Medicare and purchasing a Medigap and/or stand-alone drug plan.
- Confirm how Medicare integrates with retiree or veterans benefits. Speak with your organization’s benefits administrator to discuss how your insurance works with Medicare. Most plans require you to enroll in Medicare, but enrollment in Medicare Advantage or stand-alone drug plans may cause you to lose coverage under your retiree plan. Ask for any restrictions in writing.
- Know your timeline. For those switching between Medigap, Medicare Advantage or stand-alone drug plans this is more straightforward, but those switching from an Advantage plan to Original Medicare should confirm what, if any, changes to make during Fall open enrollment and what should wait until the Medicare Advantage Disenrollment Period (MADP).
- Crunch the numbers. Plan premiums are only one consideration. Out of pocket costs such as co-payments and deductibles may add up quickly. Avail yourself to preventative-care visits and screening procedures that are offered at little or no cost.
- Remember that those newly eligible Medicare recipients are subject to an initial enrollment period that is based on your birth date, while those leaving employment may be subject to a Special Enrollment Period.
Medicare and your state’s Health Insurance Assistance Program (SHIP) can be reached by calling 1-800 MEDICARE (1-800-633-4227). Enrollment is generally best done by calling Medicare directly, or enrolling online. Be sure to print your confirmation number and summary of choices.
The Medicare Rights Center maintains a free telephone line (1-800-333-4114) and can explain the differences between Original Medicare and Medicare Advantage plans, and help in selecting an appropriate plan type.
Medicare.gov provides a variety of tools such as the Medicare Plan Finder and a Medigap policy comparison tool. The process of shopping for a new plan doesn’t need to be a daunting task if you do a little research first. In our next post we’ll delve further into the topic by comparing Medicare Supplement Insurance and Medicare Advantage plans. Happy shopping.
John Male, CFP®, RICP®
The Gassman Financial Group
G&G Planning Concepts, Inc
9 East 40th Street, 5th Floor
New York, NY 10016
T| (212) 221-7067
F| (585) 625-0830