More than 65 million Americans will soon be bombarded with ads for Medicare health care plans whose open enrollment period begins Oct. 15 and runs through Dec. 7.
Each year, Medicare health and drug plans can change things like cost, coverage, and what providers and pharmacies are in their networks. During open enrollment, people with Medicare can change their health plans and prescription drug coverage for the following year to better meet their needs – whether dictated by health changes, finances, or something else.
The options, though, seem endless.
You can choose the federal government’s original Medicare and its drug supplement, or pick from a growing number of Medicare Advantage plans offered by private insurers approved by Medicare. Last year, nearly 4,000 Medicare Advantage plans were available nationwide, according to the nonprofit KFF, which focuses on health care policy. The average Medicare beneficiary could choose from 43 of those plans, more than double the average number available in 2018 and the highest since KFF began tracking options in 2010.
No wonder choosing a health care plan can feel overwhelming and confusing. Nevertheless, it’s an important decision that can hit your budget hard if you’re not careful.
With so much at stake, here’s what you need to know to make the right decision.
What’s the difference between original Medicare and Medicare Advantage?
Original or traditional Medicare:
◾ Includes Medicare Part A, which covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
◾ Includes Medicare Part B, which covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
◾ An option to buy Medicare Part D, a separate prescription drug plan that you must choose as soon as you start receiving Medicare. If you wait, you may have to pay more.
◾ Access to any doctor or hospital that takes Medicare in the U.S. and usually doesn’t require a referral to see a specialist.
◾ An option to buy supplemental coverage (also called Medigap) from a private insurer within six months of having Medicare Part B if you’re 65 or older. This coverage helps pay your out-of-pocket costs in Original Medicare (like your 20% coinsurance). The supplement is a one-time enrollment, and if you don’t buy it within this window, you may not be able to add it later, or you’ll have to pay more for it.
Medicare Advantage (also known as Part C):
◾ A “bundled” plan that includes Part A, Part B, and usually Part D.
◾ Usually, you must use doctors within the plan’s network.
◾ Plans may have lower out-of-pocket costs than Original Medicare.
◾ Plans may offer some extra benefits that Original Medicare doesn’t cover – like vision, hearing, and dental services.
◾ Plans may offer nonemergency coverage out of network, but typically at a higher cost.
◾ May need to get a referral to see a specialist.
What if I don’t do anything during Medicare open enrollment?
If you’re satisfied with your health care plan, you don’t need to do anything. You’ll automatically be reenrolled as long as it’s still offered. Only about one-third of Medicare beneficiaries compare plans during the open enrollment period, KFF said.
However, experts strongly encourage you to review your coverage because plans often change, especially drug coverage, and you may end up paying more.
“It doesn’t hurt to look to see what other plans have,” said Louise Norris, health policy analyst for medicareresources.org, which provides consumers with Medicare information. “The worst is to ignore it and do nothing.”
How do I know if I should change my Medicare plan?
To determine if you should switch plans, experts say you need to review what you have and determine if it still suits you.
There are three main things you should review because they often change, experts say:
- Drugs: Know what drugs you’re taking, their dosages, and whether they’re branded or generic. See if your plan will still cover them and how much they’ll cost. The best way to check this, experts say, is with the government’s Medicare plan finder, a tool that lists which plans cover your drugs and their costs at different pharmacies.
- Doctors: If you’re in an advantage plan, make sure your doctors are still in your network. This isn’t necessary for traditional Medicare because all doctors who accept Medicare are covered.
- Costs: Check premiums and out-of-pocket maximums. A word of caution: Medicare Advantage plans often tout $0 premiums or low premiums. But those figures should be balanced with out-of-pocket expenses, which can be higher than in Medicare supplement plans used with original Medicare, said Diane Omdahl, founder of 65 Inc., which provides Medicare enrollment guidance through fee-for-service, one-on-one consultations. Also, a $0 premium isn’t the same as no premium. Everyone must pay for Medicare Part B, and if you have a higher income, you may have to pay a higher Part B premium.
Tips:Want to get the most from Medicare? An expert shares key advice
How much does a retiree pay for health care?
For the median retiree, 12% of their total retirement income went toward medical expenses, the Center for Retirement Research at Boston College said in 2018. For the median retiree, 25% of their Social Security benefits went towards medical costs. In total, the median retiree spent $4,311 on medical expenses, with most of that money going toward Medicare premiums.
Monthly Medicare Part B premiums in 2023 cost $164.90, with an annual deductible of $226. The Centers for Medicare & Medicaid Services hasn’t said yet how much Part B will cost in 2024, but the annual Medicare Trustees report in March forecast the monthly price to rise to $174.80 in 2024.
The average total monthly Part D premium is projected to decrease to $55.50 in 2024 from $56.49 in 2023, according to the centers.
Is there anything I should avoid?
Yes.
◾ Don’t select a plan based on advertisements.
“It’s easy for people to be attracted to advertisements that say they may be eligible for free dental or a grocery card,” said Anthony Kavouras, chief executive at OpenMedicare, which helps seniors find the right coverage plan. “Don’t make a decision based on that. Oftentimes, marketing firms will lead with those benefits freebies.”
Instead, examine the plan and the fine print to make sure it’s from a reputable company, he said.
◾ Don’t wait too long.
“Do it in October,” Kavouras said. “It leaves enough time so you’re not under pressure. It allows you to absorb information and come back. Also, after Thanksgiving, there’s usually a mad rush and you can’t get anyone on the phone. You may have to wait two to three hours to get through. There’s a sweet spot. Not the first few days (after open enrollment begins). Wait a week and then until Thanksgiving.”
◾ Beware of coinsurance vs. copay. Coinsurance is the percentage of the cost you pay after meeting a deductible, but a copay is a set dollar amount you pay. Sometimes coinsurance can end up costing you more, Omdahl said. For example, if your plan changes your drug copay of $47 to 25% coinsurance and the cost of your drug rises to $200, you’re now paying $50, $3 more than your old copay.
Still stumped?
Contact the Centers for Medicare & Medicaid Services, your local State Health Insurance Assistance Program, or a broker and ask questions and see what they recommend. Be prepared with your drug information and list of doctors you see.
If you have a Medicare Advantage plan, you’ll have one last chance to switch plans from Jan. 1 through March 31 during the Medicare Advantage open enrollment period.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
