Millions of seniors on Medicare have some important decisions to make during the Medicare Open Enrollment period that starts on October 15 and continues through December 7. Lately, that process has been complicated by enticing television and radio ads for Medicare Advantage programs that offer everything from dental and visions benefits to rides to doctor appointments and in-home food delivery in one package for one monthly fee.
Before you make any decisions, here’s a quick overview of what every senior needs to know about the choice is between “traditional” Medicare and Medicare Advantage, as well as the other changes you can make during open enrollment.
Traditional Medicare vs, Medicare Advantage
Traditional Medicare includes Part A, which covers hospitalization, and Part B, which covers physicians, outpatient care, medical supplies and more. But because Parts A and B don’t cover ALL your expenses, such as co-payments, you will also need a Medicare supplement plan if you choose the traditional Medicare option. And you should sign up for Part D, the prescription drug plan — even if you currently don’t take any medications.
Each of those portions of traditional Medicare has a cost — sometimes deducted from your monthly Social Security check or paid by automatic charge to your credit card. And even if you select your options wisely, those monthly bills can add up.
That has led to the growing popularity of all-in-one Medicare Advantage plans, sometimes called Medicare Part C. Big insurers figure their risks and costs, negotiate deals with providers, and then set a monthly premium for coverage. Some Advantage plans have a zero monthly premium, only requiring you to pay for Part B and co-payments.
The insurers make money on these plans — and pay for their expensive advertising — by setting limitations you must consider before choosing. They limit the hospitals and physician networks that can be used, and likely charge co-payments for certain services. They may restrict drug choices and refuse to pay for out-of-network second opinions. So it’s important to read the fine print carefully before choosing a Medicare Advantage plan over traditional Medicare.
Once a year you get a chance to change your supplement plan and drug coverage — or switch to Medicare Advantage during the Open Enrollment period.
—Changing Medicare supplements
If you purchase your supplement within six months of enrolling in Part B, you cannot be denied the most comprehensive coverage for health reasons. So, even though it’s costly, pick the most comprehensive supplement. It’s likely you’ll stick with this plan your entire life. But you are allowed to change supplements during open enrollment.
Search for a Medicare supplement at www.eHealthMedicare.com, where trained agents help guide your choice at no extra cost.
—Part D: prescription drug plans
During open enrollment, you must review your Part D coverage and costs every single year, even if your prescriptions haven’t changed. That’s because each year the Part D insurers change their premiums, drug prices and drug formularies. Do your comparisons at Medicare.gov, using the Part D plan-finder tool. Hint: Line up your current medications so you can enter correct names and dosages to do a search for the least-cost plan for next year.
—Switching from traditional Medicare to Medicare Advantage
As noted above, Medicare Advantage plans are being widely advertised now, and they tend to be less expensive than purchasing the separate parts. Plus, there are no billing headaches. But think carefully about making the switch, even though you can return to traditional Medicare in the future. After one year, you just may not qualify for your old comprehensive supplement when you return if you have a pre-existing condition.
Andrew Shea, senior vice president at eHealthMedicare.com, notes that seniors are switching to Medicare Advantage plans to avoid expensive monthly supplement premiums. If they have a healthy year, their costs will be minimal. And, he notes, most Advantage Plans have a yearly cap of $6,700 or less.
These big decisions — about moving to or from Medicare Advantage, and reviewing your Part D drug plans —must be made by December 7, so don’t procrastinate. Otherwise you could make a costly mistake. And that’s The Savage Truth.
(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)
© 2020 TERRY SAVAGE
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