Medicare Open Enrollment: A Timely Review

 

We are just a week away from the start of the annual Medicare enrollment period, a time when Medicare recipients can make changes to their coverage for a start date of January 1, 2023. Ending December 7th, this is the time each year when you are allowed to change from Medicare to a Medicare Advantage program, or back to traditional Medicare from an advantage plan. You can change from one supplemental policy or company to another, and change your Part D drug coverage. 

An important note: If you have a Medicare Advantage program you are given another period to switch to another Advantage plan, or back to the original Medicare. This do-over is called the Medicare Advantage Open Enrollment Period which occurs from January 1st to March 31st. 

In essence, you are allowed to change your decision during the standard open enrollment period or the Advantage open period Because there are some extra considerations beyond the scope of this post, I urge you to check for all the information about what you can and cannot do,.

Back to the original open enrollment period, does it pay to switch? Not always, but looking at options every year is a wise decision. Betty and I switched to a different Part D coverage plan two years ago, for example. The plan we had was set to impose a 100% rate increase...yep, double. Instead, we picked one that covers the drugs we take, at the pharmacy we use, for 50% less than the new monthly premium. Just by spending 20 minutes online, we saved nearly $1,000 in premium costs. For 2023 our plan is raising the monthly cost by 25%, but it is still our best option.

So, this post has a dual purpose: urge you to do some comparison shopping, and for those approaching Medicare age, a brief review of what can be a complicated system. I am covering Medicare, not Medicaid which is an entirely different animal. As with most federal programs and health insurance coverage, there are enough exemptions and differences to fill 20 posts. I will only attempt to explain the usual, most common situations.

Medicare is a federal program that pays for certain health-related expenses for people 65 and older (and younger in certain situations). While many costs are covered, an individual enrolled in Medicare is responsible for certain deductibles and copays. Some services are not covered at all and others are for only a limited period of time.

There are four parts of Medicare:

Part A is hospital insurance. Copays and deductibles will determine what you will pay. Usually, there is no premium for Part A.

Part B is medical insurance that helps pay for doctor visits, outpatient care, preventive health care, and equipment. There is a monthly premium for Part B. For 2023 the government is projecting a modest decrease in the monthly cost for most of us, after a significant increase in 2022.

Part C is better known as Medicare Advantage. This is coverage provided by Medicare-approved private insurance companies.

Part D is prescription drug coverage. This is also run by Medicare-approved private insurance companies.

Most folks get Part A and Part B automatically. If you receive benefits from Social Security you will automatically get Part A & B coverage starting the first day of the month you turn 65.  If you aren't yet receiving Social Security, because you are still working, or waiting until your full retirement age, there is something called the Initial Enrollment Period which is the period from 3 months before until 3 months after your 65th birthday. If you miss this window your benefits will be delayed.

If you decide to wait until after the Initial Enrollment Period, there is a general Enrollment Period during the first three months of each year. However, if you use this option, realize your part B premiums will be higher for the rest of your life.

If you are covered by a group health plan at your place of employment and then want to start Medicare, there is another time period, called the Special Enrollment Period that generally allows you to avoid the higher premiums for a late signup.

With me so far?


Other Factors to Consider

Medicare does not pay 100% of most services. The Affordable Care Act has put in place several free screening tests for those on Medicare, like colonoscopies and mammograms. Free vaccines for protection against several diseases and infections are also available.

Most doctor visits, tests, drugs, and equipment are going to cost you money...usually, something approaching 20% of the total, discounted rate. That's where Medigap or supplemental coverage enters the picture. This is a policy, sold by a private insurance company, that acts as secondary coverage to Medicare. 

It pays what is left over after Medicare pays what it will. As a point of reference, our Medigap, or supplemental policy, has worked perfectly for the last several years. We have had to pay nothing for any service or procedure after Medicare and the supplemental policy have taken care of all charges.

Just like the rest of Medicare, there is a specific enrollment period for Medigap coverage. You can buy any policy that is offered for sale in your state, regardless of your health status. The amount of supplemental coverage, the monthly cost, and any deductibles are different for each policy offered. You decide how much supplemental help you want and can afford. 

A word to the wise, though: if you decide to buy a less expensive policy at some point in the future from the same company you may be prevented from doing so due to pre-existing conditions, at least for a period of time. 

Speaking of costs, Part A Medicare coverage costs you nothing since you already paid into the Medicare fund while you were working. Part B coverage does carry a monthly cost. For 2023 most will pay $164.90 per month. There is also a $226 yearly deductible. 

Part D prescription coverage costs vary depending on the plan you select and the level of drug coverage. A recent change has shrunk the "donut" hole," or the amount you must pay after you and your Part D company has spent $4,660 on prescription drugs in a calendar year. Even so, there are various limits on what you are required to cover on your own until you emerge from this coverage gap. 

What is Covered?

There is no simple answer to that question. Medicare publishes a booklet that is an excellent resource. In general, here is what you can expect:


Part A pays part or all of inpatient hospital care, inpatient care at a skilled nursing facility, hospice care services, and home health care services for a defined period of time. As you might guess there are all sorts of qualifications and exclusions for this list but this is the primary purpose of Part A coverage.

Part B helps cover medically necessary services like doctor visits, outpatient care, durable medical equipment, and several preventive services and screenings.

Part C is the designation of Medicare-approved private insurance companies that has various coverage options and costs. You still have Part A and Part B coverage, but the specifics are likely to be different from the original Medicare. Generally, coverage is more complete and the costs tend to be lower. But, that comes with network restrictions and gives the company the ability to deny coverage for certain procedures or tests.

Part D covers some of your prescription drug costs. If you don't need a lot of drugs now, it still may be wise to take this coverage because of late enrollment penalties. Part D is provided by private insurance companies and varies widely in costs and coverage. As my example above notes, rates can vary widely and change dramatically from year to year. 


Importantly, these items are not covered by Medicare (not a complete list...some of these services are covered by some Medicare Advantage Plans):

• Routine Dental care
• Dentures
• Cosmetic surgery
• Hearing Aids
• Exams for fitting hearing aids
• Long term care

If you'd like more detailed information or see if specific services are covered, this government website should be your first stop.

On a personal note, Medicare, along with a supplemental policy and Part D drug coverage, has been a blessing for us. While we are still spending just over $680 a month for premiums and prescriptions, the process is so simple: no paperwork, no claim forms, and no hassle. Before both of us reached coverage age we were spending close to $1,100 a month, just for the insurance coverage. Today I am sure we would be forced to pay almost double that for much poorer coverage through the private insurance market if we weren't Medicare-qualified.

Another reminder: this post is for informational and general guidelines only.  Check with Medicare,gov, or your Medicare Advantage plan, supplemental, or Part D coverage company to obtain the latest info.

There are some advantages to turning 65, but one of the most cherished is Medicare coverage. It is a life-changer!

Questions? Feel free to ask. Comments? Feel free to type away!