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Medicare is the federal government’s health insurance program for adults 65 and older. There’s a seven-month period when you can sign up for Medicare that begins three months before your 65th birthday, your birth month and three months after your birth month. Fortunately, if you’re not happy about the Medicare plan you choose, you may be able to make changes to your coverage.
Each year, there is an annual enrollment period—often called Medicare open enrollment—from October 15 through December 7 when you can join, switch or drop a plan. If you signed up only for original Medicare (Medicare Parts A and B) you have the option to join a Part D prescription plan or a Medicare Advantage plan—both of which are offered through private insurance companies. If you already have a prescription drug plan or a Medicare Advantage plan, you can switch plans or drop your plan and revert back to original Medicare.
It’s important to review your Medicare options during open enrollment for a variety of reasons. However, the process can be confusing. To get advice on the annual enrollment process, Carefull family finance expert Cameron Huddleston reached out to Ari Parker, co-founder of Chapter, an independent Medicare advisory service. Below is an edited version of their interview. To see the full interview, visit the Carefull Community.
What is Medicare open enrollment?
Cameron Huddleston: What is Medicare open enrollment?
Ari Parker: It's the annual enrollment period. The annual enrollment period is when you have maximum flexibility to adjust and confirm your coverage for 2022. The annual enrollment period runs between October 15 to December 7.
What you might want to keep in mind when considering your options is that plans change every single year. So even if you have a plan that you're perfectly happy on, you might want to confirm whether it's the best fitting plan for next year and whether it's going to operate in the way that you anticipate to do that.
Our team of advisors looks across your doctors, your prescriptions, and any other factors that might be important to you in a one-on-one consultation in order to review and confirm your coverage. You can make an email@example.com.
What are the various Medicare plans?
Cameron: Let's say you have just signed up for Medicare Part A and Medicare Part B, which is pretty much the basic plan that you can get from the government. What changes can you make if you are just enrolled in those plans?
Ari: Original Medicare has two components: Part A hospital, Part B outpatient services. What people don't know about original Medicare is that it doesn't cover all of your costs. In fact, it only covers at most 80% of your costs and that's just your medical costs. It doesn't come with additional benefits.
It also doesn't have an out-of-pocket maximum. In fact, you can have hundreds of thousands of dollars in medical bills. If you're on original Medicare, many are surprised to learn there's no out-of-pocket maximum to Medicare. There's also no long-term care component, which covers the activities of daily living like bathing or dressing.
What many people do—about 70% to 75%—is they choose some type of additional coverage to make Medicare comprehensive. In fact, there are only two types of additional coverage. There is Medicare Supplement, which is also known as Medigap, and Medicare Advantage, which is also known as a Part C or cost plan.
Medigap vs. Medicare Advantage
Medicare Supplement retains original Medicare's network. There is no network restriction on original Medicare. About 94% of doctors nationwide accept original Medicare. According to a study from the Kaiser Foundation, you can see any of those doctors, as long as they're accepting new patients. What's more is a supplement covers the same exact services as original Medicare. So the way that it works is if Medicare covers 80%, then the remainder is sent to your Medicare supplement insurance carrier.
For example, if you have a Medicare Supplement Plan G, as in George, as long as you've met your annual deductible, you won't even see a bill for any Medicare-approved expense.
A Medicare Advantage plan is administered through a private insurance company. It's a replacement for original Medicare. What people really like about Medicare Advantage is that it comes with additional benefits that original Medicare doesn't cover—things like dental, hearing, even prescriptions are typically bundled in. What's more, people find that they sometimes really like the cost of a Medicare Advantage plan. There are many Medicare advantage plans, for example, that have premiums as low as $0.
What changes can be made during Medicare annual enrollment?
Cameron: Say you just have the original Medicare during the open enrollment season. Do you have the option to switch to a Medicare Advantage plan or to get a Medicare Supplement plan during the open enrollment period?
Ari: The annual enrollment period, which is October 15 to December 7, is when you can leave original Medicare and choose a Medicare Advantage plan. The deadline does not apply to someone who wants a supplement.
Someone who wants a supplement can choose to try to get a supplement. I say try because it varies by state as to the eligibility and enrollment conditions. In 46 states, normally, if you're on original Medicare and you're outside of your window for guaranteed issue, there would be some type of health history questions about your health history that might apply. They're not scary. There are only seven to 10 questions typically. But that said, you do need to answer them in order to obtain a supplement, if interested. And that annual enrollment period does not apply to a supplement.
The annual enrollment period does apply, however, to those who want a stand alone prescription drug plan. So Medicare Advantage, stand alone prescription drug plan— annual enrollment period applies. The annual enrollment period is October 15 to December 7.
Can you switch Medicare Advantage plans?
Cameron: Let's say you already are enrolled in a Medicare Advantage plan, but you're not happy with your plan. Can you switch plans during the open enrollment period?
Ari: Yes. That's something we help many, many clients with. Many clients find that they're unhappy with their plan, and there are things that they'd like to improve about it. Or there are plans that have entered their county that they weren't aware of. These are great conversations to have with an advisor, and it's something that an independent advisory likChapter can really help you with.
Can you switch Medicare prescription drug plans?
Cameron: And I'm assuming that the same thing goes for Part D plans. Let's say you have your Part D prescription drug coverage plan. You're not happy with it. You have that option to switch during open enrollment, also?
Ari: Great point. These plans are changing each and every year. A plan that you might have been perfectly happy with for this year might have different benefits for next year. We see it all the time.
So it's important to reconfirm your coverage. Just as your medications are changing, your pharmacy preferences are changing, your healthcare needs are changing, and your plan is also changing. So it's for those reasons that it's important to reconfirm your coverage.
How to compare Medicare Advantage and prescription drug plans
Cameron: If you're thinking about switching plans, or even you just want to review what's out there and what is available to you, what are some things that you need to consider as you're comparing plans?
Ari: There are four things that we typically discuss when comparing plans.
Four things to consider:
- The first is cost preferences. Do you prefer to have a higher premium upfront, but more protection on the backend? Or are you comfortable with copays and a larger maximum out-of-pocket? In which case a $0 premium Medicare Advantage plan might appeal to you if one is available in your county.
- The second factor we talk about with clients is their doctors: what doctors they're seeing, what doctors they anticipate seeing for next year. We want to make sure that their doctor accepts original Medicare or, if they go the Medicare Advantage route, would be covered in network.
- The third thing we speak about with clients is their prescriptions, their dosage frequency—these all affect costs, including pharmacy preference.
- Then finally location and lifestyle factors. Some people want no restrictions on their choice of doctor. In which case, we typically recommend Medicare Supplement. Perhaps they only see a doctor for an annual physical. If that doctor is in network with a MedicareAadvantage plan, a Medicare Advantage plan might work perfectly well.
What is the benefit of reviewing Medicare options annually?
Cameron: Maybe you could explain some of those benefits of actually taking the time and comparing plans because people might think, “Well, why do I want to invest the time and effort into this? I've already got a plan. Why do I need to see what else is out there? How can that help me?”
Ari: It's really important to make sure that you review your coverage every year so that it doesn't fall to someone else to do that in the event that you get sick or need more care than you anticipated. That really is something an independent advisor can help with and start the discussion around what are your healthcare needs.
Now, there are additional benefits to consider, too, because there are things that original Medicare just doesn't touch. Original Medicare doesn't cover prescriptions, vision, dental, and hearing. So if any of those are important to you, then doing a coverage review would really be to your benefit.
How to compare Medicare plan costs
Cameron: Chapter is an independent advisor. Do people have to pay for this service?
Ari: There is no charge. We are 100% free to you.
Cameron: I would also assume that one of the big benefits of working with someone who is knowledgeable, that person can help point you not only to the plan that's going to fit your needs, but is going to be the most affordable for you.You would be familiar about the costs and could steer people into the right plan that will fit with their budget.
Ari: It's important to break cost into a few buckets. It's not just the premium for the plan. It's also what you might pay for copays when you see the providers of your choosing, when you fill your prescriptions and have copays for them, or when you have services like an outpatient surgery, for example. So it's important to speak about costs in a way that's both premium but also considers the care that you might need during 2022.
What I would suggest doing is starting with your doctors, your prescriptions, and then working with an independent advisor because there is no charge to work with an advisory that can search across each and every plan that is available to you.
Frequently Asked Questions
What is the Medicare annual enrollment period? The Medicare annual enrollment period, also known as Medicare open enrollment, is a time when you can join, switch or drop a Medicare prescription drug plan or Medicare Advantage plan.
When is the Medicare annual enrollment period? Medicare open enrollment is October 15 through December 7.
Why should I change Medicare plans? If you only have Medicare Parts A and B that provide hospital and outpatient coverage, you might want to add prescription drug coverage through Medicare Part D or get more comprehensive coverage through a Medicare Advantage plan. If you have a Medicare prescription drug plan or a Medicare Advantage plan, your plan can make changes to what it covers and the premium it charges each year. You might want to switch plans if the premium increases, your prescriptions are no longer covered or your doctors are no longer part of the plan’s network.
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