Medicare’s annual open enrollment period begins October 15 and, given the COVID-19 pandemic, financial planners are urging beneficiaries to review and choose the plan that best suits their health care needs.
By way of background, Medicare health and drug plans can make changes to costs, coverage, and providers and pharmacies in their networks each year, according to the Centers for Medicare & Medicaid (CMS). And October 15 to December 7 is the period when all people with Medicare can change their Medicare health plans and prescription drug coverage for the following year.
So, what do you need to consider before open enrollment starts?
Review, COVID-19 or not
Revisit your current Medicare enrollment options each year to see whether you would be better off in another plan, independent of the current COVID-19 crisis, recommends George Gagliardi, a certified financial planner with Coromandel Wealth Management.
Why so? Changes in health conditions make revisiting health plans during open enrollment period a necessity.
“But even if there haven’t been changes on your side, it is worth checking the changes in plans because your physicians may no longer be available under your current plan,” says Gagliardi. “Also, plan costs change, as do reimbursements for different medications that you may be using, so there may be other policies that are more cost-effective for you given your situation.”
Consider a Medigap policy
Medicare beneficiaries without some sort of Medicare Supplement Insurance (Medigap) will face Medicare cost-sharing if they contract COVID or have any other health problems.
Given that, Joshua Mungavin, a certified financial planner and author of “Medicare Made Easy”, says most people are best served by a Medigap plan that coordinates well with their Medicare coverage.
The cost savings of not paying for Medigap can be quickly used up by having to pay for any major medical problems, and if you don’t enroll in Medigap when you are first eligible, you may not be able to get the coverage when you need it,” he says.
According to the CMS, a Medigap policy helps fill “gaps” in original Medicare and is sold by private companies. Original Medicare pays for much, but not all, of the cost for covered health care services and supplies. A Medigap policy can help pay some of the remaining health care costs, such as copayments, coinsurance and deductibles.
Consider a medical savings account
If for whatever reason, you’re not able to purchase a Medigap policy, Sharon Luker, a certified financial planner with LTC Insurance Planning Consultants, recommends a Medicare Medical Savings Account (MSA), which combines a high-deductible insurance plan with a medical savings account that you can use to pay for your health care costs.
What about Medicare Advantage plans?
Learn how Medicare Advantage plans work before enrolling in one, says Luker. “Many people just buy them because of the $0 premium and do not realize that may have out-of-pocket costs of $6,700, or that their doctor or hospital is not in-network.”
Others also recommend examining carefully whether a Medicare Advantage policy makes sense. “There are a significant number of ‘potholes’ Advantage enrollees can fall into, and that may take a number of years to reveal itself,” says Mungavin.
According to the CMS, Medicare Advantage plans are a type of Medicare health plan offered by a private company that contracts with Medicare to provide all your Part A and Part B benefits. Most Medicare Advantage plans also offer prescription drug coverage.
What are your options?
If you have health conditions and leave a Medigap plan for a Medicare Advantage plan for the first time, you do get a one-time 12-month “trial right” period to try the Medicare Advantage plan and still have the option to go back to their same Medigap without medical underwriting, says Shon Anderson, a certified financial planner with Anderson Financial Strategies.
“After that, you could be denied,” he says. “So, approach the open enrollment period with caution and only make a change if it makes sense for you personally. And always ask the question: ‘If this plan shouldn’t work out for me, what are my options for returning to my old plan or changing to a new plan?’”