Each year, an important window of opportunity arrives for current Medicare beneficiaries as well as those about to enroll in the government’s health insurance program for older Americans.
It’s the Medicare open enrollment period, which runs annually from Oct. 15 to Dec. 7. During that time, new enrollments are allowed and current recipients can make changes to their plans.
The enrollment period is definitely not something to be taken lightly, says Chris Orestis, president of Retirement Genius (www.retirementgenius.com) and an authority on retirement planning, long-term care and financial health.
“Enrolling in Medicare can be complicated,” he says. “Missing the correct windows to enroll will result in delays in coverage, or being locked into the wrong or inadequate coverage that isn’t keeping pace with changing care needs. There is also the risk of financial penalties that will increase premiums and out-of-pocket costs.”
Orestis notes that Medicare, which covers more than 61 million people, is the most important payer of healthcare services in the United States for those 65 and older. Medicare spends more than $800 billion annually, which is almost a quarter of the country’s healthcare spending.
If you are enrolling in Medicare for the first time, or need to change your plan, Orestis says a few important things to know include:
- Traditional Medicare. Traditional Medicare provides the same level of coverage to all enrollees across the country. There are no pre-existing condition limitations or wait periods. Every medical provider who accepts Medicare will treat a patient on traditional Medicare in any part of the country. “People who travel a lot or split time living in more than one state will typically enroll in traditional coverage, and then buy a Medicare Supplemental policy to limit their out-of-pocket exposure,” Orestis says.
- Medicare Parts A, B, C and D. Here’s how the alphabet soup of Medicare coverage breaks down, Orestis says. Medicare Part A pays for hospital and skilled nursing facility care. Medicare Part B pays 80 percent of costs for doctors, outpatient services and medical equipment. Medicare Part C is private Advantage Plans. Medicare Part D provides a variety of options to pay for prescriptions.
- Medicare Advantage. Medicare Advantage Plans are managed as HMO or PPO programs by private health insurance companies. They have lower out-of-pocket costs for staying in-network. They also offer prescription services (replacing Medicare Part D), and extra services such as dental, vision, hearing, care-related home improvements, transportation and even meal services.
- The costs. Understanding Medicare premiums and out-of-pocket costs could mean the difference in thousands of dollars for enrollees, Orestis says. Most people will not pay a premium for Part A, but they will for Part B, Part C, and Part D. In 2021, the premium for Part B is $148.50 a month. The average Part D premium is $30.50 a month. Anyone who enrolls in a Medicare Advantage Plan or purchases a Medigap policy (which pays for any gaps in coverage), will pay premiums to the insurance company. Medicare Advantage enrollees still pay the Part B premium in addition to their Advantage Plan premiums. Medigap plans, sold by insurance companies, have a range of monthly premiums based on the plan type.
- Prescription coverage. In addition to a monthly premium, Medicare Part D prescription coverage also has out-of-pocket costs. As of 2021, once out-of-pocket costs reach $4,130 the recipient is responsible for 25% of costs for the remainder of that year. If prescription drug costs reach $6,550 in the same year, the share paid by the individual will then decrease to 5%. “There are numerous Part D plans,” Orestis says, “so it is important to compare and contrast what drugs are covered and the associated costs so any needed changes can be made during the open enrollment period.”
- As of July 2020, only 37,923 people in Virginia’s 6th congressional district including Roanoke were enrolled in Medicare Advantage plans while 168,396 were eligible, indicating that quite a significant number of residents could benefit from coverage.
If you are confused, know that assistance is available through several resoureces:
The Local Office on Aging has certified Virginia Insurance Counseling Assistance Program (VICAP) counselors ready to help seniors navigate through the Medicare plan finder and enrollment process for Medicare Part D, which includes Medicare Advantage plans for those who are new to Medicare. Counseling is free and open to adults 60 and older or anyone younger who already has a Medicare card.
Free assistance also can be obtained through the State Health Insurance Assistance Program (SHIP) and the Medicare Rights Center. Also, the Center for Medicare and Medicaid Services (CMS), which is the government agency that administers both Medicare and Medicaid, provides a wealth of information and resources.
Insurance agents who specialize in Medigap and Medicare Advantage Plans can also help with initial enrollment and open enrollment.
“When it comes to Medicare enrollment, don’t procrastinate,” Orestis says. “Not being informed, missing deadlines, or making the wrong selections can cause delays and penalties that could have a negative impact on your coverage – and your wallet.”
Chris Orestis, CSA, is president of Retirement Genius (www.retirementgenius.com), and is a nationally recognized financial, health/LTC, and retirement issues expert.
