IT’S OPEN ENROLLMENT season – the period when Medicare beneficiaries across the country can change their health insurance plan through Dec. 7. While making smart choices and comparison-shopping is key to maximize benefits and savings, the process of reviewing new coverage options and existing policies can be daunting.
“A lot of seniors tell us it’s almost impossible to feel confident they are making the right decision,” says Ryan McCostlin, head of healthcare financial planning for benefits brokerage Bernard Health. The government’s Medicare.gov website has a tool to compare options or a financial planner may be able to help, McCostlin says.
To dodge costly missteps and help ease the enrollment process, experts recommend keeping the following factors and policies in mind.
There are increasing out-of-pocket costs. While Medicare costs are going up in 2019, increases will be minimal for most people.
Standard Part B premiums are increasing from $134 per month (or higher, based on your income) in 2018 to $135.50 per month (or higher, based on your income) in 2019. The Part B deductible, which applies to outpatient care, is rising from $183 to $185 next year. Meanwhile, the deductible for Part A, which covers inpatient services, is increasing from $1,340 to $1,364. Coinsurance payments for extended hospital stays are going up as well.
People may likely see the biggest change in the availability of zero-deductible Medicare Advantage plans. These policies are offered by private insurers and can have different deductibles and copayments than original Medicare, which comes directly from the government.
“Last year, we could find a lot of plans without a deductible,” says John Hill, president of independent insurance agency Gateway Retirement Inc. in Rock Hill, South Carolina. “This year, it’s very hard to find a plan without a deductible.”
The Part D ‘donut hole’ is closing. Medicare Part D was founded in 2003 to provide prescription drug coverage. As originally created, it included a coverage gap in benefits, commonly known as the “donut hole.” After initial benefits were exhausted, beneficiaries would need to pay thousands of dollars out of pocket before a plan’s catastrophic coverage kicked in.
In 2019, the coverage limit for initial Part D benefits will be $3,820, up from $3,750 in 2018. Hill says beneficiaries often confuse how costs are calculated for the coverage limit. “It’s not what they pay,” Hill says. Instead, it includes the insurance portion of the price as well. “It’s the total drug cost.”
The government has been slowly phasing in changes to minimize out-of-pocket costs in the coverage gap. Next year, those in the gap will pay no more than 25 percent of the cost of a brand-name drug or 37 percent of the cost of a generic drug. Those numbers are down from 35 percent and 44 percent, respectively, in 2018.
There are drug updates for Part D. Whether you get your prescription drug coverage through a separate Part D plan or have it wrapped into a Medicare Advantage policy, don’t renew without double-checking covered drugs and costs.
“There are so many changes every year when it comes to the drug plans,” McCostlin says. Formularies, which dictate which medications are covered at what copay level, are commonly adjusted. Pharmacy networks can also change, meaning you’ll pay more if your preferred location no longer participates with the plan.
Because Part D plans are so variable, McCostlin calls them low-hanging fruit when it comes to comparison shopping. Competition by insurers can mean lower prices can often be found.
With Medicare Advantage, you can benefit from trial runs. Medicare beneficiaries have two main ways to receive their benefits. Original Medicare means receiving benefits directly from the government while Medicare Advantage plans are sold by private insurers. A Medicare Advantage plan includes all the benefits of original Medicare and often adds other coverage such as vision or dental.
During open enrollment, beneficiaries can switch between original Medicare and Medicare Advantage. Previously, the government provided a 45-day period in which people who elected Medicare Advantage could switch back to original Medicare. However, in 2019, a new system will be in place.
Medicare Advantage enrollees will have a special period, from Jan. 1 to March 31, in which they can switch back to original Medicare or change to a different Medicare Advantage plan. This provides seniors with a chance to try a policy without locking themselves in for the entire year. “If it’s not a good fit, they’ll be able to switch back,” McCostlin says.
Access to supplemental plans may be limited. Those switching from Medicare Advantage to original Medicare may be subject to medical underwriting if they want to buy a supplemental policy.
Supplemental Medigap plans cover costs not paid by original Medicare. Those signing up for Medicare for the first time are guaranteed the right to purchase a Medigap plan, but individuals enrolling later may be denied. It can be an expensive mistake to drop a Medicare Advantage plan before getting approval for Medigap first.
“You should never disenroll from Medicare Advantage without having a supplement,” says Chris Alberta president and senior financial advisor for advisory firm Principium Tactical Wealth Management in Brighton, Michigan.
Medigap plans are being discontinued. Medigap plans are labeled A through N, with each letter representing a different, standardized set of benefits. In 2020, they will no longer be allowed to cover the Part B deductible. As a result, Medigap Plans C and F will not be sold after this year.
Those currently enrolled will be able to continue their coverage, but without new members entering the plans, Alberta says premium costs could increase significantly. “There are a lot of folks scrambling to find another plan,” he says.
Since supplemental policies can be purchased at any time, people who want to switch can take their time shopping for a new Medigap plan. Alberta recommends looking at a high-deductible version of Plan F.
“Agents hate selling this plan because they earn a percentage of the premium,” he says. The plan premiums are low enough that, even when balanced against the deductibles, consumers often come out ahead financially by selecting this option.
There are network changes for Medicare Advantage. Medicare beneficiaries shouldn’t assume their current plan will keep the same network in 2019. Hill says using an out-of-network provider could cost consumers anywhere from two to 10 times more than an in-network provider.
Seniors should double-check plan networks to make sure their existing providers participate and also to ensure there aren’t better policies available. In some cases, competing insurers may move into a new area and provide lower prices.
That’s been the case in Michigan, according to Alberta. “Our networks have gotten so much better,” he says. While the east side of Michigan has long been dominated by Blue Cross Blue Shield, insurer Priority Health expanded east in recent years, offering new competition and savings for those on Medicare.
Plans are rated by Medicare. Hill recommends those shopping for Medicare coverage use the plan finder service on Medicare.gov/find-a-plan. “They will tell you the good and the bad of every plan,” Hill says.
In addition to out-of-pocket costs and prescription drug coverage, Medicare.gov assigns a star rating to each plan. This rating takes into account factors such as a policy’s ability to manage chronic conditions, deliver preventive care and offer customer service. These are all important aspects to selecting the right plan. “Medicare should be like buying shoes,” Hill says. “It should fit and it should be comfortable.”