November 19, 2019
Medicare Premiums are Up, Can Open Enrollment Help?
The Centers for Medicare & Medicaid Services recently released the premiums, deductibles, and coinsurance costs retirees will pay for Medicare Part A and Part B in 2020.
With punishing increases running far ahead of inflation, such as a 7% increase in Part B premiums, retirees may want to reassess their options, before the Medicare Open Enrollment window closes on December 7th.
While there’s no silver bullet to escape rising healthcare costs, a savvy choice of plans could help you get the best deal. It all comes down to personal circumstances.
What Does Open Enrollment Mean For You?
You might already know it’s Medicare Open Enrollment season, certainly insurers are spending a lot of time and money to inform us. But it’s often unclear exactly what Open Enrollment means and what opportunities it affords you to protect your health and wealth in retirement. Let’s breakdown what Open Enrollment means for retirees looking to contain their healthcare costs.
So what does this affect?
The Open Enrollment period is important if you are thinking about any of the following:
- Changing from Original Medicare to a Medicare Advantage Plan.
- Changing from a Medicare Advantage Plan back to Original Medicare.
- Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
It is also important if you are thinking of changing, dropping or starting a Medicare prescription drug plan for example:
- Changing your Medicare Part D prescription drug plan.
- Enrolling in a Medicare Advantage Plan that includes a drug plan.
- Leaving a Medicare Advantage Plan that includes a drug plan and starting a separate prescription drug plan.
There is another opportunity to switch between different Medicare Advantage Plans or back to Original Medicare between January 1 and March 31. However, you can not typically move from Original Medicare to Medicare Advantage in this time period.
How can I save money?
There’s no single option guaranteed to save money – it comes down to personal circumstance, understanding your options and comparison shopping. For example, while some Medicare Advantage plans cover the Part B premium for you, they may then offset that cost with higher deductibles or copays than you would pay with original Medicare. Make sure you understand the pros and cons of the various options and pick the one that’s best for your needs.
You don’t need to worry if you turn 65 next year!
Open Enrollment is a period in which you can make changes to your Medicare coverage which will take effect beginning January 1st next year and once the period closes you may be locked into your coverage for 2020. One important thing to know is that if you are turning 65 next year you don’t need to worry about missing the Open Enrollment period. If you are currently 64 you will be able to enroll as and when you reach 65. If you are already taking your Social Security benefits you should be automatically enrolled. If you are not you can visit ssa.gov/benefits/medicare to enroll.
What if I miss it?
Once the Open Enrollment period closes you may be locked into your plan for 2020. There are however numerous circumstances in which you may qualify for an exemption and be able to switch outside of the open enrollment period. These are called Special Enrollment Periods (SEPs) and they can get very technical. You can view a list here.
The good news is that a lot of the circumstances permitting you to take advantage of a SEP are exactly the sort of life changes that might cause you to reconsider your plan in the first place: Interstate moves, changes to your or your spouse’s work status or employer based insurance. Be sure to check the details though before counting upon being eligible for an SEP.
What About Changes to my Health?
Changes to your health are much less likely to make you eligible for an SEP as the purpose of the opening and closing of enrollment is to prevent consumers from taking low-cost low-protection coverage in times of good health and switching to more comprehensive plans when their health expenses increase. Though there are some exceptions. If you are concerned about the risks your current insurance exposes you to now is absolutely the time to compare your options.
What should I look out for when comparing plans?
As with all insurance, choosing between Medicare, Medicare Advantage and Part D Prescription Drug Plans is all about uncertainties, but there are some critical issues to consider. Particularly, be aware of the Medigap Trap.
Medigap plans help with the costs not covered by Original Medicare, and when you enroll in the first 6 months after turning 65 you have “guaranteed issue.” This means that you can’t be turned away because of your medical history. However, after those 6 months have elapsed Medigap plans are “medically underwritten,” which means you could be denied or charged a higher premium based upon your health. You can always stick with your existing plan but may find it impossible or prohibitively expensive to switch. So when reviewing your options be sure to think about not just your potential expenses and needs this year but throughout retirement.