Medicare

Even If You Already Have Medicare, Don’t You Dare Skip Open Enrollment

It’s the perfect time to think about what’s changed in your life and with your health care plan. After looking at these four issues, you might find there is a better option for you.

Medicare Open Enrollment is here! It's your chance to review your coverage and see if you can save money next year. This is the period when you can make changes to your health care coverage that best suit your needs. While it’s common for seniors to assume they’re fine to keep the same coverage each year, this can be a costly mistake.

Each year, from Oct. 15 until Dec. 7, enrollees can:

  • Switch to an Advantage Plan from original Medicare (Part A hospital coverage and Part B outpatient coverage);
  • Switch to original Medicare from an Advantage Plan;
  • Move from one Advantage Plan to another;
  • Move from one prescription drug plan (Part D) to another, or purchase one if you did not when first eligible (although you could face a penalty for late enrollment).

According to the Centers for Medicare and Medicaid Services, there are 63.3 million people enrolled in Medicare as of July 2021. 

So you may be thinking if you are already enrolled in Medicare, why bother with Open Enrollment?

According to a Kaiser Family Foundation survey, 57% of Medicare beneficiaries do not review or compare their coverage options annually. Not doing so could prove to be costly — especially when you are living on a fixed income in retirement. Changes can affect your premiums, deductibles, co-pays and covered services, along with participating doctors, hospitals, pharmacies and other providers.

Here are four things I encourage my clients to review each Medicare Open Enrollment season:

1. Changes to your Medicare plan

If you’re in a Medicare plan, you’ll get an Annual Notice of Change (ANOC) telling you of any changes in coverage, costs or service area. Note any 2022 changes to your health coverage or any extra help you may get to pay for prescription drugs.

Of course, premiums are not the only factor you should consider. Typically, lower-premium plans may have higher deductibles and copays. Plans with higher premiums tend to have lower deductibles and copays. As you figure out what coverage works best for you, calculate your worst-case scenario so that you can afford the maximum out-of-pocket costs for the plan you choose.

When comparing your current plan to potential new plans, here are a few items to consider:

  • Costs: Look at both premium and out-of-pocket costs.
  • Coverage: Both original Medicare and Medicare Advantage offer comprehensive benefits, but you may find a Medicare Advantage plan with additional benefits.
  • Prescription drugs: See what prescription drugs each plan covers and the costs.
  • Doctor and hospital choice: Not all doctors and facilities accept every Medicare plan. Check to make sure your providers, hospitals and facilities take the plan before choosing it.
  • Quality of care: Medicare ranks each Medicare Advantage plan on quality of care. If you’re comparing Medicare Advantage plans, you want to see their star ratings.
  • Plan design: Medicare Advantage insurers offer multiple plans, such as preferred provider organization (PPO) and health maintenance organization (HMO) plans. PPOs have fewer restrictions but cost more than HMOs, which usually have smaller networks and don’t pay for any out-of-network care.

2. Changes to your health

It might be impossible to predict your health needs or how you would use your coverage. But take time to consider how often you may need health services in the coming year.

If you are going to begin to start visiting a specialist, how much could that cost you per visit? Perhaps you have a surgery on the horizon which could cause you to quickly run through your deductible.

Medicare plans, in general, do not cover dental, hearing or vision needs well. Do you anticipate needing a new hearing aid? Are your glasses or contact lens prescriptions up to date? Will you need a crown on your teeth or even a tooth pulled? Take time to understand what your Medicare Advantage will cover and what you may be responsible for paying for.

Remember, Medicare is individual health coverage. Select the plan that will best cover you and your health needs.

3. Changes to your Medicare MAPD or Part D plan

Most Medicare drug plans (Medicare Part D plans and Medicare Advantage Plans with prescription drug coverage) have their own list of what drugs are covered, called a formulary. Plans will include brand-name prescription drugs and generic drug coverage. All Medicare drug plans must cover at least two drugs per drug category, but plans can choose which drugs covered by Part D that they will offer. The formulary might not include your specific drug. In most cases, a similar drug should be available.

Medicare prescription drug tiers:

  • Tier 1: Covers most generic prescription drugs. You’ll pay the lowest copay.
  • Tier 2: Covers preferred brand-name prescription drugs. You’ll pay a medium copay.
  • Tier 3: Covers non-preferred brand-name prescription drugs. The copay will be higher for these drugs.
  • Specialty Tiers: These drugs have very high costs. You’ll pay the highest copay, and you may have to pay coinsurance as well.

Depending on the plan’s prescription drug formulary and the coverage restrictions in place, the amount you pay for certain drugs could be more in 2022. Review your current prescriptions on the new formulary. New stand-alone prescription drug plans also could be available where you live, which makes it worthwhile to comparison-shop.

4. Changes to your prescription drug needs

Along with reviewing your Prescription Drug plan changes, you should also review your individual drug changes. Will your doctor potentially change a prescription for you this year? Do you anticipate adding any new prescriptions? Consult with your doctor and pharmacy to understand which drugs you may need and the potential costs for those medications.

Health care continues to be one of the largest expenses in retirement. As health care costs grow, they can consume a larger portion of your retirement budget — and you need to plan for that.

Take time to consult a Medicare professional this Medicare Open Enrollment season to ensure you have the best coverage for you in 2022.

About the Author

Curt Arnold, CFF®, CPFA®

Financial Planner, Midwest Financial Group

Curt Arnold helps families and individuals simplify their financial picture. Many times, a lack of understanding or clearly defined goals brings financial stress. He has always had a passion for teaching. His unique background of bank management, financial planning, insurance and Medicare has great appeal to his clients. Curt is a Certified Financial Fiduciary at Midwest Financial Group.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.

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