It’s that time of year again: time for Medicare open enrollment. For the vast majority of people, traditional Medicare parts A (hospital coverage) and B (physician coverage) are not sufficient, since neither covers the cost of prescription drugs and they tend to have extremely high co-pays and deductibles. Almost 90 percent of Medicare recipients have either a supplemental Medigap plan or a Medicare Advantage plan.
Open enrollment for Medicare Advantage (Part C) and prescription drug (Part D) plans runs from October 15 to December 7 this year. (Open enrollment for Medigap runs for six months from the month you turn 65, which means you are enrolled in Medicare Part B. You can enroll any time after that, but there may be restrictions on your coverage)
Picking the right plan may not be the most thrilling task, but for those concerned about health care costs, it’s among the most important financial decisions they’ll make each year. There are slightly fewer plans to pick from this year, thanks to a redundancy in reductions and company consolidations, but experts say consumers will still have enough options.
Even if you’re happy with your plan, it’s worth reviewing it to make sure your costs or benefits haven’t significantly changed. “You want to go back and look at your plan again and make sure it’s the right one for you,” says Amanda Starc, an assistant professor of healthcare management at the University of Pennsylvania’s Wharton School.
Your insurer should have sent you a letter outlining any changes by September 30. If you didn’t receive the letter or have misplaced it, request a new one. Here’s what you need to know.
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Medicare Advantage vs. Medigap
Most people buy either a Medigap plan, which can provide additional benefits and help with out-of-pocket costs and a Part D plan, or a Medicare Advantage (part C) plan, which is typically either an HMO or a PPO and provides extra coverage for things like prescription drugs and vision or dental.
A Medicare Advantage plan offers the convenience of having just one plan and could cost less than combining a Medigap plan with Part D coverage, but they often have narrower networks and require co-payments. The plans replace the traditional Medicare plan, and you don’t use your Medicare card for service.
You can compare both Medicare Advantage and Medigap plans at Medicare.gov or get live, local assistance via the State Health Insurance Assistance Programs. For a fee, a broker can also help you evaluate your Medicare supplemental plan options.
Plan quality
It's not quite the Michelin Guide, but Medicare.gov has a five-star rating system in place on the quality of Medicare plans and the Part D prescription drug offerings. Ratings are based on consumer reviews, management of chronic conditions, and other factors, but some experts say the ratings don’t give a complete picture.
“It’s something to be attended to, but not to be slavishly followed,” says Henry Aaron, a senior fellow, economic studies, at the Brookings Institution, who focused on Medicare and Medicaid and the reform of health care financing.
In addition to looking at the plans’ premium price, consumers should consider the additional cost of co-pays and deductibles to get a sense of the true expense of a plan.
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Prescription drugs
If you opt for a Medigap plan, you’ll need additional coverage for prescriptions via a Medicare Part D plan. If you’re on a specific drug regimen, be sure that the Part D plan you select will cover the medicines you need, or talk to your doctor to see whether you can switch to generic drugs to maximize savings.
Some insurers change their formulary (list of covered drugs) or partner pharmacy from year to year, so even if you’re happy with your prescription plan, you should make sure it’s not going to change next year.
The number of standalone prescription drug plans will decline by 14 percent next year, thanks to a consolidation of offerings, but prices will also go down as well. The average plan will cost about $39 next year, one dollar less than this year, according to an analysis by Avalere Health.
Networks matter
Online listings for Medicare Advantage plans are not always updated as quickly as they should be and it’s not uncommon to find physicians listed as providers who are no longer in that network. “Before people sign up for any plan, they should talk to their physician and find out whether he or she is in and will continue to be in that network,” Aaron says.
Typically the plans with the narrowest networks have the lowest prices, so you’ll have to weigh the benefit of the cost saving with giving up your trusted doctor. If you’re paying for a Medigap plan there is no network component, so anyone who accepts traditional Medicare will also take your Medigap insurance.
Beware of fraudsters
Like tax season, open enrollment is also open season for scams and ID theft. Remember that no one working for Medicare will ever call you unsolicited and request your bank account information or your Social Security number.
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