Medicare Open Enrollment for 2018 runs from Oct. 15 through Dec. 7, 2017. During this period seniors who are already covered by Medicare have an opportunity to make changes to their plan benefits. If you’re thinking about adjusting your coverage this year, it's in your best interest to understand how the process works so you can sidestep any costly mistakes.
"People make many mistakes, but it all comes down to not knowing everything that is important. The first is that marketing works really well. That means when you call an 800 number from a mailing, TV commercial or whatever else, the person you speak to only represents one company and cannot discuss whether another company may be a better fit for you," says Allan Katz, CFP, ChFC, CLU, president, Comprehensive Wealth Management Group, LLC, Staten Island, N.Y. "The best advice I can give is to seek out an independent agent who doesn’t work for any one company and can review your options to help choose what is best for you." (For more, see Medicare 101: Do You Need All 4 Parts?)
Even if you're happy with your plan now, you still should check that next year it will offer what it provided in 2017.
Medicare Open Enrollment: What Can You Change?
One thing many seniors often learn the hard way about Medicare is that its health and drug plans can change throughout the year. In some cases these changes can make the cost of visiting a doctor or picking up your prescriptions more expensive. Medicare Open Enrollment affords you a chance to tweak your benefits for the next year, so you have the coverage you need at a reasonable price. (For more, see What Does Medicare Cover?)
You can pick a new Medicare Advantage or Medicare Part D plan, for example. Medicare Advantage plans are offered by private companies that contract with Medicare to offer you Medicare Part A and B benefits. "Once you are under a Medicare Advantage plan, you can only change your coverage during an Open Enrollment period," says Patrick Traverse, founder of MoneyCoach, Mt. Pleasant, S.C. These plans are designed to cover most Medicare services (including hospital and medical services); many also include a prescription-drug component. Medicare Part D covers prescription drugs only. (For more, see How to Choose the Best Medicare Advantage Plan.)
If you’re already enrolled in a Medicare Advantage plan, you can use Open Enrollment to switch to another Advantage plan or to Original Medicare. Original Medicare is managed directly by the federal government, and your out-of-pocket costs are determined by whether you have Part A coverage, Part B or both. Most prescription drugs aren’t covered by Original Medicare, so if you’re making the transition, you’ll need to sign up for Part D at the same time. It's also best to sign up for Medicare Supplement Insurance at the same time (see below).
How Seniors Get Open Enrollment Wrong
Medicare can be tricky to navigate, even for seniors who’ve been enrolled for years. This quick rundown highlights some of the most common errors to watch out for.
- Not understanding the difference between Original Medicare and Medicare Advantage. With Original Medicare you’ll pay a monthly premium for Part B coverage; Part A coverage is typically premium-free if you or your spouse paid Medicare taxes while you were working. You can visit virtually any doctor or specialist you like (as long as they take Medicare) and your claims are usually filed for you. Medicare Advantage is a different story. Your monthly costs, co-pays and deductible vary based on what the plan charges. You’re also limited to visiting doctors, hospitals and specialists that are part of the plan’s network. Moving to Medicare Advantage from Original Medicare – or vice versa – without being clear on the details could be problematic later on if it bumps up your out-of-pocket costs or you’re not able to see your preferred doctor.
- Thinking Medicare Advantage and Medicare Supplement Insurance are the same thing. While Original Medicare offers more flexibility in choosing healthcare providers, it doesn’t cover everything. Adding on Medicare Supplement Insurance, also known as a Medigap plan, is one way to fill the holes in your coverage. Where people often go wrong is thinking that the supplemental plans are the equivalent of Medicare Advantage. Another error is switching from Original Medicare to Medicare Advantage and dropping your Medigap plan without understanding the implications. Once you make that move, you may not be eligible to get a Medigap plan again if you decide to go back to Original Medicare. What's more, "Medigap plans are governed by the state in which you are offered coverage. In some states, such as Illinois, you can change Medigap plans every year with no questions asked. In most other states, you cannot change Medigap plans without going through medical underwriting, which means if you have pre-existing conditions, you can’t change plans at all! " says Chris Cooper, MSFS, CFP®, EA, president of Chris Cooper & Company, San Diego, Calif. (For more, see Medigap Vs. Medicare Advantage: Which Is Better?)
- Not taking the time to compare Medicare Advantage options. Original Medicare is more or less a one-size-fits-all proposition, but Medicare Advantage allows you some wiggle room when it comes to choosing a plan that’s tailored to your needs. Medicare Advantage providers can vary greatly in terms of how their plans are structured, so you could be selling yourself short if you’re not shopping around. Taking a look at which prescription drugs you’re currently taking, where your doctors are located, which pharmacies you use, your existing health conditions and any other health insurance you already have can help you pin down a plan that’s suited to your situation.
- Overlooking financial assistance. Even with Medicare Part D, prescription-drug costs can still be astronomical. If you’re working with a smaller budget because you weren’t able to build up a large enough nest egg, there is help available, but you have to act to take advantage of it. You can apply for the Extra Help program through the Social Security Administration, which estimates that the benefits are worth around $4,000 per year. You have to be enrolled in Part D to be eligible, so if you haven’t signed up for that yet, you’ll need to do that first.
The Bottom Line
The very worst thing you can do during Open Enrollment is to get frustrated and choose a plan without thinking things through. The best way to avoid that is by penciling Open Enrollment in on your calendar each year, so you have plenty of time to prepare. The more thought you put into your Medicare needs beforehand, the greater the likelihood of ending up with a plan that’s going to save you the most over the long term.