A critical Medicare window opens in just two days...
Every year, October 15 is the start of Medicare's open-enrollment period, which runs through December 7.
Open enrollment is the time each year when folks can make changes to their Medicare plans...
For example, you can change from original Medicare to a private-insurance Medicare Advantage plan or vice versa. If you already have an Advantage plan, you can switch to another Advantage plan. You can also add Part D (prescription drug coverage) or opt into another prescription plan.
The only thing you can't do is opt into a Medigap plan if you already have Medicare. You can only do that at the time of initial enrollment.
Medicare enrollment is something most Americans have to face around the age of 65, unless they still work and prefer to keep their health insurance through their employer.
But navigating Medicare is one of the most confusing financial decisions Americans will have to make...
Here in the U.S., Medicare is federal health insurance for people 65 and over, younger folks with certain disabilities, and those with end-stage renal disease.
Today, we'll provide an overview of Medicare plans and supplemental coverage that you'll want to consider during this open-enrollment period...
There are four different types of Medicare plans:
Part A: This version of traditional Medicare covers only hospital costs and care, including drugs you take while in a hospital.
Part B: This version of traditional Medicare covers doctors' visits, outpatient care, medical equipment, ambulance services, and similar services.
Part C: Also known as Advantage Plans, this plan combines Parts A and B through a private insurance company. You enroll in a plan through a company like a Health Maintenance Organization ("HMO") or Preferred Provider Organization ("PPO"), which manages your coverage.
Part D: This version of traditional Medicare covers only prescription drugs.
You can select as many of the plans as you'd like. (But remember... there is a copay for each.) Most folks opt to receive Parts A and B to cover their hospital and doctors' visits. Some get A, B, and the additional benefit of D to receive prescription-drug coverage as well.
Many seniors also buy two other insurance products: a Medicare Supplemental plan sold by insurance companies and a Medicare Prescription Drug Plan, or PDP. Medicare Supplemental is often called Medigap because it tries to fill in the "gaps" of your regular Medicare coverage. A PDP provides prescription-drug coverage only.
Around the time you turn 65, you have a seven-month period around your birthday in which you need to sign up for Medicare, known as the initial enrollment period. Say you turn 65 on June 1... Based on your birthday, you have from March 1 through October 1 to enroll. Mark it on your calendar. Because if you miss your October 1 deadline, you could face some big fines.
Missing the enrollment deadline for Part A results in a flat 10% penalty that you pay for twice the number of years you neglected to sign up. So if you put it off for two years, you pay 10% of the plan's premium for four years.
Missing the enrollment deadline for Part B is a penalty that adds 10% for each 12-month period you put off signing up – but you pay it for as long as you are on Medicare. So put it off for two years, you'll be paying a penalty worth 20% of the plan's premium for the rest of your life.
Once you've signed up for Medicare, you might find it's not meeting your needs. For example, you might have started a prescription that you didn't need before you were using Medicare. So now you've realized you need a drug plan. Well, the open-enrollment period is an opportunity to add that coverage.
Your health needs and the costs of different plans can vary year to year. If you haven't shopped around to make sure your plan is still the best for both price and coverage, now is the time to do that.
Health care costs are among our biggest expenses as we age. You want to make sure you're getting what you need for the best price available. So we have some additional resources for you to check out to help you do just that...
Each year, HealthMetrix Research releases its CostShare Report (available here). It provides a good look at the average out-of-pocket costs based on the plan and your overall health condition.
You can also reach out to your state's health insurance assistance program here. These programs provide individual guidance for navigating Medicare plans within their state.
Finally, whether you're just signing up or you're reevaluating your Medicare plan, we recommend the website Medicare Rights Center. It has an interactive tool to help you navigate the complexities of Medicare. It also features a National Helpline to help with your Medicare questions: 800-333-4114.
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Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
October 13, 2022