It’s Open Enrollment Time for Medicare

| November 5, 2022 | 0 Comments

Every year, those enrolled in Medicare can switch their insurance coverage. Whether you have Original Medicare with a Medicare Supplement (“Medigap”) and a prescription drug policy or Medicare Advantage, this is when you can review your policy and possibly make a change. This annual Open Enrollment period lasts from October 15 through December 7 each year.

First, a quick review of the basics:

  • Original Medicare includes:
    • Medicare Part A which is free and covers most hospital care.
    • Medicare Part B which carries a monthly premium and covers most outpatient care.
  • Medicare Part C, also called Medicare Advantage, provides similar coverage to Original Medicare, but does it with private insurance rather than the government provided coverage
  • Medicare Part D is separate prescription drug coverage obtained from an insurance company for those using Original Medicare.
  • Medicare Supplement policies, or “Medigap” coverage, fill in some of the gaps in coverage or copays of Medicare Part B, and is often purchased by those on Original Medicare.

When it comes to open enrollment, you have the option to either sign up for brand new coverage or switch between your current coverage and a new provider. So, what are some of the questions you should ask yourself?

Do you travel split time between two homes? If you move around a lot within the United States, then Medicare Advantage may not work for you. The reason is that it is limited to specific provider networks that are commonly geographically restricted. If, for example, you spend time in Arizona and California, your provider networks may not cover both regions.

Is there a medical provider you prefer? If so, review your plan every year. Medicare Advantage plans occasionally change their provider networks, which may remove a preferred provider from your insurance coverage. By comparison, any provider who accepts Medicare is available to those on original Medicare.

Do you keep using out-of-network providers? Medicare Advantage plans are often structured as HMOs or PPOs, so if you keep ending up with out-of-network specialists, you may want to consider switching to Original Medicare or changing your Medicare Advantage plan.   

Will your drugs be covered next year? This is important for both Medicare Advantage AND Medicare Part D participants. Insurance companies regularly change the drugs they will cover, so you need to review your plan every year to make sure that it still covers a prescription medication that you use. If the plan formulary (the list of covered medicines) changes, you may need to change your plan to keep taking that medication.

Have you developed a serious illness?  This represents the most significant challenge, especially for Medicare Advantage patients. When you originally enrolled in Medicare, either Advantage or Original, it was guaranteed issue – you could not be turned down for any reason. Unfortunately, if your diagnosis occurs later, participants often find their costs soar under Medicare Advantage plans due to copayments and out-of-pocket expenses. But switching back to Original Medicare – and the all-important Medigap policy – may not be an option later because the Medigap plans are only guaranteed in that initial enrollment. Underwriting may limit your ability to switch later in life.  

As you review your health coverage during open enrollment, don’t just assume that you’ll continue with the same coverage. Check to be sure that your preferred providers and medications will still be available next year. Think about your travel plans and whether your existing coverage will be available where you are going to be. How much have you spent this year on premiums and other out-of-pocket expenses, and will next year be similar?

These are just a few of the questions you should be considering as you select your Medicare (or really any health insurance) plan for next year.

This column is prepared by Rick Brooks, CFA®, CFP®. Brooks is director/investment management with Blankinship & Foster, LLC, a financial coach specializing in financial health for physicians and people in or preparing for retirement. Brooks can be reached at (858) 755-5166, or by email at Brooks and his family live in Mission Hills.

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