By Camille Barron
Once again, Medicare Open Enrollment Season is here. If you’re 65 or over, you’ve probably had enough of the mail and endless TV commercials promoting this or that Medicare product. It’s tempting to toss it all aside and keep the status quo. After all, your insurance has been working for you, so why change it, right?
Unfortunately, that approach is a mistake.
Each year, between October 15th and December 7th, you have a chance to evaluate your current Medicare plans and decide whether to stay where you are or change coverage. It’s important that you not overlook this opportunity.
The specifics of your coverage might not be the same as before and there could be costly consequences if you simply let your insurance continue without further examination. And, since this is a once per year event, if you don’t like what you end up with, you’ll have to wait an entire year to make further adjustments.
As a quick review, Medicare consists of several components. Listed below are each of these and what they cover.
Part A
Inpatient care, such as hospitalization, skilled nursing facility or hospice
Part B
Outpatient care, including office visits, outpatient surgery, lab work and testing
Part D
Prescription drug coverage
Part C
Known as Medicare Advantage, this packages Parts A, B and typically D into a single policy
Medicare Supplement
Also known as Medigap, this supplements Parts A and B, which cover approximately 80% of medical costs.
Depending on your coverage, there are important elements to be aware of:
1) If you have Parts A and B (AKA, “Original Medicare”), and Part D, combined with a Medicare Supplement plan:
Pay particular attention to Part D, your Prescription Drug insurance.
If you simply let your Part D plan renew, you may find yourself with higher drug costs or without coverage altogether on a certain drug.
It is estimated that more than half of those insured will experience premium increases if they remain with their current plan next year. This is because prescription drug insurers make changes to their drug formularies and pricing every year, affecting coverage, premiums and out-of-pocket costs.
In addition, changes at the federal level will alter the Part D Coverage Gap, also called the “Donut Hole,” in 2020. People who take expensive brand name drugs will pay approximately 25% of the costs of their prescriptions between the time they meet their plan’s initial coverage limit of $4020 and when they spend a total of $6,350. These limits increased in 2020 from $3820 and $5100, respectively. Those insured will have to spend more before their out-of-pocket costs drop to 5% in the Catastrophic phase. On average, this will translate into a price increase of $400 for many people.
Whether you’re happy with your Medicare Prescription Drug plan or not, it’s important to revisit your Medicare Part D choices every year. (We offer a Part D review to all our Medicare clients during Open Enrollment. If you haven’t signed up, now is the time.)
2) If you have Parts A, B and D, but no Medicare Supplement plan:
Pay particular attention to your potential for high out-of-pocket costs.
If you rely on Medicare Parts A and B for your medical insurance and forego adding a supplement, Medicare pays approximately 80% of covered medical expenses.
Once Medicare has paid its share, you are responsible for the remaining 20%.
While this cost-sharing arrangement may save money by eliminating the monthly premiums associated with Medicare Supplement plans, it places a financial burden on people with serious health problems.
Medicare does not place an upper limit on one’s out-of-pocket costs under Parts A and B. This means some individuals without supplemental coverage could face a significant financial burden because their 20% share is unlimited.
There is an additional risk for people who don’t have Medicare Supplement coverage. In most states (other than Massachusetts), there is an initial window in which anyone applying for this coverage is guaranteed acceptance regardless of health history. Anyone who waits until after that to apply needs to answer health questions. Depending on their responses, they may not be able to obtain coverage or may be accepted at a higher rate.
3) If you have a Medicare Advantage (Part C) policy:
Pay particular attention to whether you will have access to your current providers.
Medicare Advantage Plans (also known as Medicare Part C) are package policies that combine Medicare Parts A and B with medical insurance and, typically, prescription drug coverage. If you have a Medicare Advantage policy, your premiums are likely lower than what you’d pay for a Medicare Supplement.
That’s the good news.
Unfortunately, what you don’t pay in premiums is made up in out-of-pocket costs such as deductibles, copays and coinsurance which you pay at the point of service.
As with other Medicare products, Medicare Advantage plans may make changes to their premiums and out-of-pocket costs each year. People who have been satisfied with their coverage may find themselves spending more than expected when their policies renew.
Perhaps the greater risk individuals face by not looking closely at their Medicare Advantage plans is that their providers may no longer be in their plan’s network. Those with PPO (Preferred Provider Organizations) policies may continue to see their doctors but will pay a higher amount for an out-of-network provider. HMO policyholders have no coverage for going outside their plan’s network. For people with HMOs who are happy with their doctors, it’s a difficult decision between changing to a new provider or not changing, but having to pay the entire cost of their doctor’s visits themselves.
If you currently have a Medicare Advantage policy, make sure to examine the premium, deductible and out-of-pocket costs for both healthcare and prescriptions, to see if any of these have changed. And be sure to check the provider network to make sure your doctors and preferred hospitals are still in-network.
Conclusion
It can be overwhelming and confusing to navigate the changes to Medicare. But it could be costly to keep the status quo.
We encourage you to spend the time revisiting your Medicare Choices for 2020, during the Annual Open Enrollment Period (October 15th through December 7th), to make sure you are getting the best value for your insurance dollar. If you need help, please contact us.