money Medicare: Find the right health plan during open enrollment
It’s open enrollment season for Medicare.
That means you can enroll for the first time, switch to a Medicare Advantage Plan from Medicare, or choose a different Medicare Part D prescription plan altogether.
While you have until Dec. 7 to make your changes, it’s important to review the ABC’s of the available health insurance plans before you decide.
“They should be looking at all these types of plans, which can change every year,” said Jane Sung, senior policy advisor at the American Association of Retired Persons, a nonprofit that addresses the needs of elderly Americans. For example, “a drug may still be covered by a plan, but on a different coverage tier.”
Keep in mind you can’t switch from Medicare Advantage to Medicare during this time. That occurs during Medicare Advantage open enrollment, which runs from Jan. 1, 2020 to March 31, 2020.
What’s original Medicare?
If you’re 65 years old and have paid Medicare taxes for 10 years, you are automatically enrolled into original Medicare by the Social Security Administration.
Medicare is administered by the federal government and consists of Part A that covers hospital stays and Part B, which covers doctor’s visits and outpatient services. You must buy a separate Part D plan to cover prescription costs.
You can also qualify for Medicare if you’ve received disability benefits for at least two years or have either end-stage renal disease or amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease.
If you contributed to Medicare taxes for a decade, you won’t have to pay premiums for Part A coverage. But Part B coverage comes with a monthly premium. For 2020, it’s $144.30 a month. If you need help covering the costs associated with Part B, you can get a Medigap plan to cover these costs.
What’s Medigap?
Medigap policies, also known as Medicare Supplement Insurance plans, are sold by private companies and help cover Medicare copayments, coinsurance and deductibles.
There’s not just one Medigap policy. There’s a handful to choose from.
Most plans cover Part B coinsurance or copayment, but Plans K and L only cover 50% and 75, respectively. If you travel frequently, consider Plans D, G, M or N because they cover 80% of your coinsurance while abroad. Plans C, F and high-deductible F won’t be eligible for new enrollees.
You can purchase a Medigap policy during the initial enrollment period, which starts when you’re 65 and enrolled in Part B.
The first seven months you’re eligible for Medicare are vital if you’re considering a Medigap plan. Insurers offering Medigap policies can’t deny coverage or charge more based on preexisting conditions.
“You can be healthy at 65 and go with Medicare Advantage, but at 70 you get a stroke,” said Diane Omadal, president of 65 Incorporated, a for-profit Medicare consultancy service. “People think they can switch and get a Medicare supplemental, but preexisting conditions can affect someone’s ability to get a Medigap policy.”
What’s Medicare Advantage?
On the other side of the health insurance spectrum are Medicare Advantage plans, also known as Medicare Part C. These give you the same protections as Medicare such as being protected from discrimination and the ability to file complaints, but the plans are run by private insurers. These plans often come with Part D plans, which cover prescription drugs.
While Medicare Advantage plans on average have lower monthly premiums than traditional Medicare, you’re typically restricted to a network of healthcare providers. You also must pay for services yourself until you reach the out-of-pocket maximum, an important factor to consider.
“When [people] see the zero premium in Medicare Advantage commercials, they believe it’s great for a fixed budget,” Omadal said. “The assumption is that you do not pay a lot of money, but you pay as you go.”
Currently, there are four types of Medicare Advantage plans:
HMOs: These have low out-of-pocket costs, but require a referral to see a specialist within its network.
PPOs: These have a preferred network of providers, but you can go to any provider without a referral.
SNPS: These are limited to patients with specific diseases, such as HIV/AIDS, chronic heart failure, or dementia.
PFFS: These pay providers on a fee-for-service basis and may use a network.
What is Medicare Part D?
Medicare Part D covers prescription drugs and can be obtained through both Medicare Advantage plans or purchased individually to complement Medicare Parts A and B.
It’s important to sign up for Medicare Part D with original Medicare when you first become eligible; otherwise you’ll be charged a penalty, according to CMS.gov.
If you’re considering a Medicare Advantage plan, research individual plans beforehand. All Part D plans must cover antidepressants, antipsychotics, chemotherapy agents, HIV/AIDS, immunosuppressants and seizure medications. But other drugs may not be covered by every plan.
“Part D is such a complex product you’ll have people wanting to seek an agent and have them sort through the [new] Medicare Plan Finder,” said Danielle Roberts, owner of Boomer Benefits, an agency that sells Medicare-related insurance products.
Which Medicare is best for me?
“It’s very important for someone to evaluate their budget and be realistic about what their retirement budget will allow.” said Desirae Mearns, project director at the Serving Health Insurance Needs of Elders program in Florida. “One side can be more expensive than the other.”
For instance, original Medicare doesn’t come with an out-of-pocket limit like Medicare Advantage plans do.
But there are other factors to consider. For example, if you want access to any medical professional of your choosing, original Medicare may be a better fit. Otherwise, you need to be comfortable with the provider networks included in your Medicare Advantage plan, Sung said.
“If their doctor is included, they want to understand what types of plans are there,” Sung said. “Is a referral required?”
What you choose also depends on your needs.
If you require nursing home care, Medicare may be the better choice. Those with Medicare Advantage plans often end up in lower-quality nursing homes than seniors with original Medicare, according to a study last year from Brown University.
On the flip side, while normal Medicare doesn’t cover preventative care such as dental treatment, some Medicare Advantage plans come with these perks.
“The type of people that go with Medicare Advantage – once they understand how it works – are the ones that are very healthy,” Omdahl said.
What else do I need to know?
This year’s open enrollment period brings four key changes that beneficiaries need to watch out for.
Medicare’s plan browsing tool has been redesigned, which may come as a surprise to returning enrollees. There are two changes to Part D plans, and three Medigap plans are no longer being offered to new enrollees.
If you need help choosing the right plan, you can contact your state health insurance assistance program (SHIPs), which offer Medicare counseling at no-cost to beneficiaries.
Overall, when it comes to Medicare open enrollment, one size doesn’t fit all.
“It’s really a personalized consideration,” Mears said. But “a lot of folks will take on a plan based on what their neighbor, friends or cousins says is best for them.”
Dhara is a writer for Yahoo Finance. Follow her on Twitter @dsinghx.
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