Clients 65 and older may have lots of questions about the annual Medicare open enrollment season, which begins Oct. 15 and ends Dec. 7 each year. The bottom line: What is it and why should they care?
Although financial advisers may not be Medicare experts, they can refer clients to health insurance specialists who can help those nearing their 65th birthday sort through the maze of initial Medicare choices or assure those who are still working that they can delay Medicare enrollment penalty-free if they have health insurance coverage through their current employer.
Medicare’s seven-month initial enrollment period begins three months before an individual’s 65th birthday and offers two options: Enroll in original Medicare or in an all-inclusive Medicare Advantage plan. Older workers with job-based health insurance have up to eight months after they retire or their insurance ends to enroll in Medicare during a special enrollment period.
But even those who have made their initial Medicare decision may still be confounded by the bombardment of radio, TV and internet ads trumpeting Medicare open enrollment each fall. If they like their current health coverage, they don’t have to change. But if they take the time to review their options, they could save a lot of money, particularly on prescription drug costs.
Original Medicare includes Part A, which is premium-free hospital insurance, and Part B, which covers doctors’ fees and outpatient services for a monthly fee. The coverage can be used anywhere in the country that accepts Medicare.
Most people supplement original Medicare coverage with a Medigap insurance policy to cover deductibles, copayments and certain out-of-pocket costs. Many also purchase a Medicare Part D prescription drug plan for an additional monthly premium unless they have retiree drug coverage through a former employer or union.
Alternatively, an increasing number of Medicare beneficiaries are opting for all-inclusive Medicare Advantage plans that bundle original Medicare and prescription drug coverage, and often offer additional coverage for hearing, vision and dental services, usually for a lower monthly cost than original a la carte Medicare. Medicare Advantage members must pay the Medicare Part B monthly premium, but often little or no additional monthly costs in exchange for using a specific provider network.
During this fall’s open enrollment season, Medicare beneficiaries can make changes to their Medicare Advantage plan or Medicare Part D prescription drug plans for next year, with coverage beginning on Jan. 1. They can join a new Medicare Advantage plan, join a new Part D prescription drug plan, switch from original Medicare to a Medicare Advantage plan, or switch from a Medicare Advantage Plan to original Medicare with or without a Part D plan.
Clients enrolled in a Medicare Advantage Plan or a Part D plan should receive an annual notice of change from their current plan provider by the end of September. They should review it carefully and note any changes to costs or coverage. If their current coverage still meets their needs for 2022, they don’t have to take any action.
But if they are thinking about switching plans, they should focus on what matters most to them, whether it’s access to their preferred doctors, lower monthly premiums or the inclusion of specific benefits and services. They should compare total costs for insurance premiums, deductibles and cost-sharing amounts.
Clients should pay special attention to any changes in prescription drug costs, coverage rules and the list of drugs the plan covers, known as its “formulary,” which can change from year to year. Research shows that people with Medicare prescription drug coverage could lower their costs by shopping among plans each year. There could be another Part D plan in their area that covers the same drugs they take for a lower price.
Medicare beneficiaries can compare drug coverage options through the Medicare Plan Finder tool at Medicare.gov. The Plan Finder tool compares plans based on the drugs they take, the pharmacy they use and drug costs.
If they want to join a Medicare Advantage Plan, they can call 1-800-MEDICARE to find out which plans are in their area or research plans online. Clients should call the plans to confirm that their doctors and hospital are in the network and that the plan covers their drugs and preferred pharmacies. If they want assistance, they can contact their State Health Insurance Assistance Program or call 877-839-2675 for unbiased counseling.
Financial advisers who want to learn more about Medicare costs, rules and deadlines can enroll in the nonprofit Medicare Rights Center’s Medicare Interactive Pro courses for a subscription fee.
(Questions about Social Security rules? Find the answers in Mary Beth Franklin’s 2021 ebook at MaximizingSocialSecurityBenefits.com.)
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.