10 Tips When Choosing Your Medicare Plan

From October 15th to December 7th each year, you get the opportunity to plan for your healthcare needs for the upcoming year. Although it’s not quite as exciting as making New Year’s resolutions or enjoying a winter holiday, the annual Medicare open enrollment period is something to look forward to. 

Changing plans may bring up challenges. To address some of your concerns, we’ve put together a list of common errors that individuals make during this time. There are not many chances to become a proactive medical consumer, so take advantage of this opportunity to educate yourself. 

1. Sign Up for Medicare at the Right Time

Timing is everything, and it’s especially important when it comes to enrolling in Medicare. As you approach 65, you’ll want to enroll during your initial enrollment period (IEP). This seven-month period goes from three months before the month in which you turn 65 until three months after. 

If you don’t sign up during your IEP, you will get another chance to enroll during Medicare’s annual general enrollment period. However, if you enroll at that time, your coverage won’t begin until July. Additionally, because you enrolled late, your monthly premiums for Medicare Part B- which covers your doctor visits and other outpatient services- will likely cost you more. 

2. Utilize the Special Enrollment Period 

If you are 65 or older, when you stop working and lose your health insurance coverage or when the insurance you have through your spouse ends, you’ll need to sign up for Medicare. Medicare has created a special enrollment period (SEP) that lets you do that without facing a late enrollment penalty. 

However, there is a slight caveat. What many people don’t realize is that you can only use this SEP either while you are covered by a job-based insurance or for eight months after you no longer have job-based insurance. 

3. Consider What Lies Ahead 

Your medical needs might change in the upcoming year. To ensure that your coverage keeps up, take the time to understand what you’re getting from your healthcare plan. 

For instance, you’ll want to gather information including: 

• The names and dosages of the current medications you take
• Records about any procedures you underwent during the last year
• Bills associated with specialist consultations, regular checkups, and other forms of care
• The amount you’ve paid for any medical devices 

Collecting this critical data makes it easier to understand what kind of minimum coverage you’ll need. This process could also get you into the habit of being more conscious about your healthcare costs. 

4. Keep in Mind Your Plan’s New Rules 

Medicare plans are required to issue an Annual Notice of Change (ANOC) every September. 

These letters let you know about any changes regarding: 

• Costs
• Coverage Limits 
• Service Areas

These changes usually go into effect in January after the ANOC is issued. Being familiar with these changes could make it easier for you to find new coverage that fills the gaps. 

5. Test the Waters 

Medicare plan providers commonly use open enrollment periods to market their products and services. Although many of the promotions that they offer look extremely enticing, you should still shop around before committing.

What initially seems like a great deal may end up being far more expensive when you factor in your out-of-pocket costs.

It’s critical to compare plans on a term-by-term basis, and you probably shouldn’t wait until fall to get started.

Put yourself on solid footing and become a more responsible medical consumer by learning about your available Medicare insurance plan offers.

6. Understand Part B and Part D Late Enrollment Penalties 

For every 12 months you delay enrolling in Part B, your monthly Part B premium may be 10% higher. However, the penalty won’t apply if you have job-based insurance or are still under your special enrollment period. 

For every 12 months that you delay signing up for a Part D plan (prescription drug costs), your monthly premium may be 1% higher. That being said, you won’t have to pay the Part D penalty if you can show Medicare that you have drug coverage as good as that provided by a Medicare Part D plan. 

7. Compare Medicare and Medicare Advantage Plans 

If you are eligible for Medicare, you have a choice to receive your benefits through original Medicare or a Medicare Advantage plan. The type of Medicare coverage you choose depends on factors such as your health care needs, the insurance your doctors accept, where you live, whether you travel often, and your financial situation. 

• Original Medicare

This traditional program is offered directly through the federal government. It is comprised of two parts. Part A covers hospital costs and Part B covers doctor visits and other outpatient services. Original Medicare doesn’t include Part D, so you will have to sign up for Part D separately if you do not have other drug coverage. 

• Medicare Advantage

Medicare Advantage is a private insurance alternative to original Medicare. These plans provide Part A, Part B, and usually Part D benefits. They may also offer certain benefits that original Medicare doesn’t cover, such as dental and vision care. Some MA plans may also provide some nontraditional services such as paying for wheelchair ramps, meals delivered to beneficiaries’ homes, and transportation to medical appointments. An MA plan may require you to get a referral from a primary care physician before it will cover care from a specialist. MA plans generally have a network of providers in your area and may not cover care if you seek an out-of-network provider. 

8. Don’t Delay Buying Medigap Policy 

Medigap policies are supplemental health insurance policies that work with original Medicare. If you have a Medigap policy, it pays part or some of the out-of-pocket expenses that Medicare doesn’t cover. 

Depending on where you live, you can choose from as many as 10 different Medigap plans. Each policy has a different letter name and offers a different set of standardized benefits. 

The best time to buy a Medigap policy is during your Medigap open enrollment period. This period of time is a six-month window that starts when you turn 65 and have enrolled in Medicare Part B. It’s important to enroll then because during that time the insurance companies that sell Medigap policies cannot deny you coverage if you have a preexisting condition, and they have to sell you a plan for the best available rate. If you do try to buy a plan outside of this window, companies may refuse to sell you a policy or may deny you coverage for your existing health problems. 

9. Become Familiar with Your Out-of-Pocket Costs 

Although Medicare pays for the majority of the medical costs for its enrollees, you need to be prepared for sometimes substantial out-of-pocket costs. 

• Premium

Most people have no premium for Part A, which covers hospital services. You will be responsible for the Part B premium, which will be deducted from your monthly benefit if you are collecting Social Security. If you enroll in a Medicare Advantage plan or a Part D plan, you may also owe a monthly premium, depending on what you select. 

• Deductible

Before Medicare starts paying for the cost of your care, you may have to pay a flat amount. Parts A and B in original Medicare have annual deductibles, and some MA and Part D prescription drug plans also have deductibles. Medigap policies often cover original Medicare deductibles. 

• Copayment

This is a fixed amount you pay for specific services. 

• Coinsurance

This is where your plan will charge you a percentage of the cost of a medical visit or service. If you have original Medicare, you will owe 20% of the cost of the service. 

10. Choose a Medicare Advantage Plan that Includes Your Healthcare Providers

Each type of Medicare Advantage plan has different network rules. Most plans are either HMOs or PPOs. If you decide to enroll in an MA plan, check with your providers to learn which plans they accept. If you have questions, contact your plan for more information. If your providers are not in the plan’s network, check to see how much, if anything, the plan will pay for their services. 

Final Thoughts

Missing deadlines, delaying enrollment, or choosing the wrong plan can significantly cost you when it comes to Medicare. By being aware of some of the common enrollment mistakes that people make, you could avoid these issues and choose the best health care plan for the upcoming year.