We’re approaching the period every year when Americans over 65 can join, switch, or drop a Medicare plan. Running from October 15 to December 7, Medicare open enrollment is a chance for participants to potentially save money—or preserve access to doctors—by making changes to their coverage (effective January 1). Generally, changes to Medicare plans cannot happen during the other 44 weeks of the year.
If you are enrolled in Medicare, you will first want to assess whether you need to make changes to a Medicare Part D prescription drug plan. Insurance providers change their list of available, favorably priced drugs from year to year. Failure to monitor this can lead to a spike in medical costs if key drugs are suddenly no longer covered.
As a Medicare participant, you should receive an Evidence of Coverage (EOC) document, providing details about your coverage, as well as a Plan Annual Notice of Change (ANOC) by September each year. These documents explain any changes in coverage or costs that will be effective for the following year. (Many participants mistake these documents for junk mail or lose them in a stack of paperwork. If this happens, you can contact your plan to request a new copy.)
Start by going to Medicare Plan Finder to review and compare plan information. Rather than simply looking at costs, make sure you consider a variety of factors:
- Does this plan cover your specific prescription drugs?
- If it does not cover a specific drug you take, does it cover one that will work? (Ask your doctor.)
- What is the total cost of your drug coverage (premiums, deductibles, copayments)?
- Are the pharmacies you use preferred and in-network?
For some older Americans, there is an opportunity to not just switch Part D prescription drug plans, but to change the entire Medicare plan itself—from original Medicare to a Medicare Advantage (Part C) plan, or vice versa.
Understanding Medicare Advantage (Medicare Part C)
Nearly all Medicare participants have the option to enroll in some sort of Medicare Advantage Plan, sometimes referred to as Medicare Part C. Medicare Advantage plans are offered through various private insurance companies (instead of the Federal Government).
Once an insurance company has been approved by Medicare to offer an Advantage plan, the private carrier receives a flat rate from Medicare for each enrollee. The insurer then becomes responsible for paying enrollees’ medical expense claims. Medicare Advantage insurers use their bargaining power to negotiate discounts or other pricing concessions with doctors, hospitals, etc. That savings can be used to provide additional benefits to enrollees, such as vision and dental, or to reduce costs.
Roughly two-thirds of all Medicare Advantage participants are enrolled in HMO-style plans, where care must generally be provided by an in-network provider. (Since not all doctors and hospitals are willing to negotiate rates to the same extent, insurers want participants to use the preferred “in-network” providers with whom they’ve arranged discounts.) Most other Part C plans are PPO-style plans. Participants may receive care from an out-of-network provider but will pay more for it.
Medicare Advantage plans include their own version of Part A coverage, Part B coverage, and integration of Part D prescription drug benefits. Many Medicare Advantage plans also offer additional benefits, such as coverage for hearing aids and dental/vision expenses. These expenses are generally not covered by traditional Medicare, nor are they covered by Medigap policies.
Medicare Advantage enrollees are still responsible for covering their regular Part B premium payments, plus any deductibles or copayments associated with the plan. It can still be a cost-effective decision, however, to pay the premiums; you will receive the full benefits of Part B and Part D, plus some or all Medigap supplemental benefits, and possibly the additional benefits mentioned above.
Should I consider switching to a Medicare Advantage Plan during open enrollment?
Every situation is unique, and a lot will depend on the type and quality of Medicare Advantage Plans available in your area. Here are some common scenarios to consider:
- Are you expecting to incur higher dental, vision, or hearing expenses? If so, now might be an opportune time to switch to a Medicare Advantage plan, which may cover those services.
- Do you want to secure an out-of-pocket maximum? Medicare Advantage plans have the benefit of a built-in out-of-pocket maximum, which can be as high as $7,550 (in 2022) but is lower for some plans. Original Medicare has no out-of-pocket limit (though the purchase of a Medigap policy can provide one).
- Are you moving to a new area? Anytime you relocate, it’s worth checking to see what sort of Medicare Advantage plans are available. Moves often result in a special enrollment period, which allows you to switch from original Medicare to Medicare Advantage without waiting for open enrollment.
Should I consider switching to original Medicare during open enrollment?
If you’re enrolled in Medicare Advantage and wondering if original Medicare is a better fit, consider these factors:
- Are you frustrated by the network/referral process? Medicare Advantage plans require enrollees to get a referral from their primary care doctor, or other eligible providers, before covering payments to any specialist. Medicare participants can generally visit any specialist accepting Medicare without first getting a referral.
- Do you want to see more out-of-network healthcare providers? Medicare has no “network” limitations. Although doctors are not required to accept Medicare, there are generally more covered provider options with original Medicare than there are with any Medicare Advantage plan.
- Are you moving to a new area? When relocating to an area with minimal Medicare Advantage plans or fewer covered provider options, the switch to original Medicare may be optimal.
Scheduling a year-end Medicare check-up (before the end of open enrollment) may be one of the most valuable year-end routines older Americans can establish. This planning could potentially save hundreds (or even thousands) of dollars in unnecessary medical expenses from one year to the next and allow individuals to continue to see their preferred healthcare providers, which, for some, is even more important.
- It is good practice to review your prescription drug plan each year, as some insurance providers change their list of available, favorably priced drugs annually.
- Medicare Advantage plans (Part C) include their own version of Part A coverage, Part B coverage, and integration of Part D prescription drug benefits.
- Medicare Advantage plans have an annual out-of-pocket maximum ($7,550 in 2022) while traditional Medicare has no out-of-pocket limit.