There’s no doubt that choosing or changing a Medicare plan can be confusing and overwhelming. A plan that worked a few years ago may not meet your current needs. Or maybe you were still working and never enrolled at age 65.
The rules can be mystifying, so before you make any decisions or change your current plan, do your homework carefully to avoid potentially expensive mistakes, and to ensure you reap new benefits enacted under the 2022 Inflation Reduction Act, according to Centers for Medicare and Medicaid (CMS) Administrator Chiquita Brooks LaSure.
If you want to make a change, the time to do so is during Open Enrollment, which runs from October 15 through December 7 each year. Current Medicare beneficiaries (including those in Medicare Advantage plans) can sign up for or change their Part D prescription drug coverage, switch between Medicare Advantage (MA) plans or between MA and traditional Medicare coverage.
New Medicare enrollments normally take place just before, during, or after your 65th birthday month. If you miss that window, you must wait you to enroll until the first quarter of the year (anytime between Jan 1 and March 31). In some situations, you may have to pay a penalty. In other cases, you may qualify for a Special Enrollment Period and avoid additional lifetime surcharges.
New benefits save beneficiaries money
Some benefits from the Inflation Reduction Act are already in effect. These include a $35 monthly cap on insulin and coverage of all CDC-recommended vaccines for anyone 65 or older. Brooks LaSure highlighted elimination of cost-sharing for the shingles vaccine, an option that often previously cost an older individual several hundred dollars out of pocket.
Other benefits will be rolled out over the next few years, including capping prescription drug costs. Eligibility for the low income subsidy program, Extra Help expands in 2024 as well. The program helps more people afford their Part D prescription drug plan premiums, deductibles, co-insurance and other costs.
“There are about three million eligible people right now who are not enrolled [in Extra Help],” she says. “We are really trying to emphasize people enrolling to get additional help with their prescription drugs.”
The Inflation Reduction Act will bring down the cost of the highest-prices drugs through direct negotiations with pharmaceutical companies over the next few years. But even if your medication is not on the list of the first 10 drugs in the program, BrooksLaSure says she’s already seeing some pharmaceutical companies start to voluntarily cap or lower prices on other medications.
One of the additional benefits the Administrator pointed to is that mental health services are covered even more fully. “So marriage and family therapists, as well as mental health counselors are included, which is a really exciting change for the Medicare program,” she says.
Meanwhile, as millions of current and new Medicare beneficiaries evaluate the insurance that’s right for them, Brooks LaSure offered some suggestions to avoid common and costly errors:
1. Risking a lifetime penalty
Original Medicare enrollment (Parts A, B, and D) or Medicare Advantage (including Part D) should usually occur within your initial eligibility window. Some MA plans may “bundle” prescription drug coverage under a comprehensive plan, others require separate Part D enrollment. Lifetime penalties can be expensive. For example, late enrollment in Medicare Part B incurs a lifetime penalty of an extra 10% for each year you delay. This cost is added to your monthly premiums. In 2021, more than 700,000 individuals who did not qualify for deferred part B enrollment were penalized. (Part D penalty figures were not yet available).
2. Not understanding the criteria that may allow you to defer enrollment
If you're still working and have comparable employer coverage or have coverage through your spouse’s job, you may not need to enroll in Medicare at 65. However, even the CMS Administrator admits the rules are challenging, since criteria vary depending on employer. She suggests calling 800-MEDICARE to connect with an expert who will walk you through your options and explain how you can avoid financial penalties.
3. Not purchasing supplemental insurance early
The initial Medicare enrollment period is when you should buy supplemental insurance (Medigap), because it’s guaranteed issue. This private insurance closes the “gap” between what original Medicare pays for services and what the beneficiary pays. It is only available for those on traditional Medicare plans. If you try to buy it later, such when switching from Medicare Advantage to original Medicare, insurers are not obligated to issue a policy. Or, you could be subject to medical underwriting, leading to higher premiums.
4. Not reviewing your Part D prescription drug plan annually.
Formularies change. Your health may change as well. A drug plan that worked last year may not include the new drug you were recently prescribed, or it may be prohibitively expensive. Open Enrollment is the time to review your current prescription plan and see if there are better options for you financially. A slightly higher premium may more than offset a covered new drug that could otherwise cost hundreds of dollars a month.
5. Not reviewing your Medicare Advantage plan provider list and coverage annually
Plans are required to notify beneficiaries of any material changes in coverage or benefits, including copayments, coinsurance and deductibles. A procedure or treatment that was once covered may not be now, or it may require higher out of pocket costs. Remember too, that the plan’s provider list can change. A specialist or hospital you regularly visit may no longer accept a particular plan. Open Enrollment allows you to switch to another Medicare Advantage plan or to original Medicare so you can find the care your need. Even if you incur a penalty, the tradeoff may me worthwhile if it means seeing your providers of choice and having the peace of mind that needed treatments, services or medications are covered.
“It’s really important as a Medicare beneficiary to take a look at these health plans from a trusted source,” Brooks LaSure says. To find a plan that fits your needs, she suggests reviewing the Medicare and You handbook, which is updated annually. The handbook and Medicare website will walk you through available plans in your area. And, she cautions, don’t be swayed by fancy marketing materials or slick ads. Companies make lots of promises, but the reality is that coverage for extras like dental or vision often have very limited networks, which may not be accepting new patients, the Administrator says.
Other no-cost options to help you choose the best coverage, and ensure you get the benefits you need, include:
- a trusted insurance agent or broker
- State Health Insurance Assistance Programs (SHIPs)
- The Medicare Rights Center
- MedicareResources.org
- State insurance departments (particularly for Medigap coverage)
