3 Reasons to Consider Making Changes During Medicare Open Enrollment
Between Oct. 15 and Dec. 7, Medicare participants can make changes to their plan(s). Here are a few reasons you may want to take advantage of this open enrollment period.
Every fall, Medicare health and drug plan providers publish information on changes that will take effect the following year. As a result, people on Medicare have the opportunity to make the following types of changes to their plans during the open enrollment period, which runs from Oct. 15 to Dec. 7:
- Switch from Original (Traditional) Medicare (Parts A and B) to Medicare Advantage (Part C), or vice versa.
- Switch from one Medicare Advantage plan to another.
- Switch from one drug plan (Part D) to another.
You’ll notice this list does not mention Medicare Supplement (Medigap) policy changes. The open enrollment period for Medigap is the six months following your enrollment in Medicare Part B. After this period, insurance companies generally are not required to sell you a Medigap policy. If they do offer coverage after your open enrollment period, they may charge you higher premiums. Keep in mind that Medigap policies are only available to people who have Medicare Parts A and B, not those with Medicare Advantage.
There is also an open enrollment period from Jan. 1 to March 31, when you can change your Medicare Advantage plan. During that period, however, you can’t switch from Original Medicare to Medicare Advantage, or make changes regarding drug plans. For complete details, go right to the source — the Medicare website.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Every Medicare participant should review their coverage at least annually. Here are three reasons you may want to seriously consider making changes:
1. You have Original Medicare and want to save money.
People enrolled in Medicare Advantage plans, on average, spend less on health care than those with Original Medicare. This includes a combination of premiums and out-of-pocket costs, along with drug coverage.
Estimated Annual Health Care Expenses for Individuals Ages 65 and Above
Header Cell - Column 0 | Original Medicare (Parts A and B) and a Prescription Drug Plan (Part D) | Medicare Advantage HMO Plan That Includes Prescription Drug Coverage | Original Medicare (Parts A and B), a Prescription Drug Plan (Part D), and Medigap |
---|---|---|---|
25th Percentile | $2,500 | $2,200 | $4,700 |
50th Percentile | $3,200 | $2,900 | $5,800 |
75th Percentile | $5,000 | $4,300 | $7,300 |
90th Percentile | $7,300 | $6,400 | $10,200 |
Source: Sudipto Banerjee. “A New Way to Calculate Retirement Health Care Costs,” T. Rowe Price, February 2019. Estimates based on projected 2019 Medicare premiums and data from the Health and Retirement Study (HRS). All costs are rounded to the nearest hundred. Percentile refers to the percentage of individuals with estimated expenses below these levels. For example, the 90th percentile line indicates that only 1 in 10 retirees with Medicare Advantage has estimated annual health care expenses above $6,400.
Medicare Advantage plans aren’t for everyone. Availability and costs vary widely by geographical area. Medicare Advantage plans generally restrict your choice of service providers. It’s also important to note that the expense differences above may reflect different levels of health care consumption across the three groups. Even considering these caveats, enrollment in Medicare Advantage plans has increased sharply in recent years because of the associated potential cost savings. If available in your area, they are worth considering.
2. You enrolled in a Medicare Advantage plan and realize you made a mistake.
As mentioned earlier, the downside to a Medicare Advantage plan is the limited provider network. You may not have fully appreciated the limitations when you chose your plan. Or you may have developed a new medical issue that requires specialists who aren’t available under your plan. Out-of-network medical care can be very expensive.
If you find yourself in this situation, open enrollment will give you the opportunity to consider other insurers’ Medicare Advantage plans, which may have better network options. In addition, if you switched from Original Medicare and Medigap within the past year, you have the option to switch back to your old Medigap plan. Just don’t wait more than a year — there’s no guarantee the Medigap insurance company will offer you a policy, especially if your health has worsened.
3. Your drug prescriptions (or coverage) have changed.
It is surprising how different the cost for a specific drug can be in two different drug plans. A plan that worked well for your prescription needs a year ago may be far costlier if you’ve added a new drug to your list. In addition, the plan can change its drug list (called a formulary). Formulary changes can take effect the next year, or sooner, such as when a generic equivalent is introduced. One positive change heading into 2020 is that the Part D “doughnut hole,” a confusing and potentially expensive coverage gap, will be completely eliminated.
The Medicare website offers a Plan Finder to help you shop for drug plans (Part D) and Medicare Advantage plans. It enables you to compare costs based on your specific prescriptions. You can also see what pharmacies are in-network, as well as plan “star ratings.” There’s a lot of information on the Medicare site, so be sure to set time aside to digest it all.
Medicare is a complex topic, and it’s important to understand your options. If you’re approaching Medicare eligibility age, or just want a refresher on your choices, check out our Planning for Medicare video.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Roger Young is Vice President and senior financial planner with T. Rowe Price Associates in Owings Mills, Md. Roger draws upon his previous experience as a financial adviser to share practical insights on retirement and personal finance topics of interest to individuals and advisers. He has master's degrees from Carnegie Mellon University and the University of Maryland, as well as a BBA in accounting from Loyola College (Md.).
-
Earn Delta SkyMiles Worth Up to $1,800 with an AMEX Business Card
Delta SkyMiles and American Express offer 150,000 on business credit card for new cardholders.
By Ellen Kennedy Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
How Annuities Can Help You Retire Early and Delay Social Security
Waiting until 70 to claim Social Security benefits can pay off, so how do you bridge the gap between giving up your paycheck and filing for benefits?
By Ken Nuss Published
-
How to Get Your Kids to Step Off the Gravy Train
A surprising number of young adults live with their parents. Setting some financial ground rules could get the kids out on their own faster.
By Neale Godfrey, Financial Literacy Expert Published
-
Spring Is a Good Time to Clean Up Your Finances, Too
While you’re decluttering your home for spring, consider also taking a crack at cleaning up your finances and old paperwork.
By Tony Drake, CFP®, Investment Advisor Representative Published
-
Is Your Retirement Solution Hiding in Plain Sight?
Here’s how to use your home equity in combination with an annuity contract to produce late-in-life income.
By Jerry Golden, Investment Adviser Representative Published
-
How to Choose Your Trustee or Executor of Your Will
Above all, you should choose someone you trust, keeping in mind that acting as a trustee or executor can be a complex, thankless and sometimes long-term job.
By John M. Goralka Published
-
Three Steps for Women to Take Control of Their Finances
These strategies are especially for women who are new to managing their money because of divorce or the death of a spouse.
By Emily Glassman Published
-
Navigating the Finances of Fertility Choices and Adoption
Before embarking on the journey to parenthood, knowing what to expect financially for the different options is a good starting point.
By Julia Pham, CFP®, AIF®, CDFA® Published
-
Four Tips to Make Your Sales Presentation a Winner
Being prepared and not being boring can go a long way toward persuading a potential customer to buy into what you’re offering.
By H. Dennis Beaver, Esq. Published