There are 5 decisions you need to make every fall during the Medicare Annual Enrollment Period. The Annual Enrollment Period spans from October 15th to December 7th and is the only time certain changes can be made to Medicare coverage. Hans Scheil, CFP® outlines the decisions below or you can keep scrolling to read!
Decision 1: Medicare Supplements vs. Medicare Advantage Plans
First, let’s talk about the difference between Medicare Advantage plans and Medicare Supplements. These two are often confused but are actually very different in how they work. Medicare is made up of Parts A and B, which cover hospital and medical expenses. Part A is premium-free for most while Part B requires that the user pay a small deductible, monthly premiums, and 20% of the remaining costs. While 20% does not seem like much, if you get a large medical bill, the out-of-pocket costs can really be detrimental.This is where Medicare Supplements come in; they cover the 20% that Part B does not.
Medicare Advantage plans, also called Medicare Part C, require that the consumers receive their Medicare through private insurance companies. With Medicare Advantage plans, consumers are required, or at least heavily motivated by co-pays, to go to doctors in the plan network. They might also need referrals and may have to use network specialist. There are low or no monthly premiums for Medicare Advantage after your Part B premium is paid to Medicare. There will still be copays, coinsurance, and deductibles. Medicare Advantage plans can also include coverage for dental and vision services that Medicare supplements do not cover.
Making the choice between a Medicare Supplement and a Medicare Advantage plan is a personal one; both can be great plans for the right person. Consumers must remember that you can change Medicare Supplement plans throughout the year; Advantage plans can only be changed during Annual Enrollment.
Decision 2: Medicare Advantage Company
Once you decide that you want to go the Medicare Advantage route, you need to decide what company you want to go with. Company availability is limited by a few factors, including location. This could mean that sometimes you only have the option of one company or many companies or even zero companies available to you. If you do have more than one company available, you need to compare their offerings. Some will charge higher copays and a lower deductible while others have lower copays and a higher premium. Medicare Advantage plans will also cover your drugs, so you do not need separate Part D Drug coverage. Advantage plans can vary from year to year and from location to location, so make sure you call more than one company, or call a brokerage that works with multiple companies to get all of the information.
Decision 3: Medicare Supplement Plan
If you decide to go the Medicare Supplement route, you have to pick which Supplement you want. The government standardized the plans a while ago, so every plan with the same letter is exactly the same, making it much easier to decide on a plan. To repeat this, all Medicare Supplement plans of the same letter are required to offer exactly the same benefits. The most commonly held plans are the Plan G, Plan F, and Plan N. Make sure to look at what each plan offers before making your choice. The most popular plan is Plan F, referred to as the Cadillac plan, because you will pay nothing out of pocket at the doctor with this coverage. The Plan G is what more people are gravitating towards recently, as it is usually the best value. The Plan G and Plan F are nearly identical in benefits except for the coverage of the Part B yearly deductible, which is $185 in 2019. While the Plan G does not cover this, once you pay it, you pay nothing out of pocket for the rest of the year. The Plan G monthly premiums are usually low enough to be a better deal than the Plan F, even with having to pay the Part B deductible.
Decision 4: Medicare Supplement Company
Once you choose the letter plan that you want to go with for your Supplement, you have to choose the company you want to get it from. Like we mentioned above, the plans are all standardized, meaning the only difference between the companies offering the plans is the price. If one company has a Plan G, any other company’s Plan G is going to offer the exact same thing. Many people go with the first company that talks to them, one with name recognition, or one that their friends or family have, but this is not always the smartest move as these companies can charge a lot more than others in your area. It is important to shop around yearly for the best price. Medicare supplements can be switched any time of the year, 365 days, not just during Annual Enrollment.
Decision 5: Part D Prescription Drug Plans
Medicare supplement plans do not include drugs, which is where Part D plans come in. Drug plans differ from company to company; they are not standardized like the supplements. The type of drugs you are taking, how much they cost, your location, and your pharmacy can all affect the price of Part D plans. Many people want to be on the same plan as their spouse or friends, but this is not a great decision because you are not taking the same drugs as them. You need to find the best drug plan for you. This is why it is important to shop around and review your plan each year–especially if your drugs change.
While a drug plan might not be needed when a beneficiary is first eligible, if users choose not to enroll, they will have to pay a late-enrollment penalty should they need to purchase it later, which will be added onto their premium forever. Drug plans can be relatively affordable to sign up for, so consider including Plan D coverage even if you are not currently taking any drugs.
Important Information to Remember:
- You cannot have a Medicare Supplement and an Advantage plan at the same time.
- If you are already in a Medicare Advantage Plan or a Part D plan and do not want to make any changes to your coverage, you do not need to do anything. It will be renewed as long as the plan is not being discontinued.
- October 15 – December 7 is the only time you can switch your advantage plan or drug plan except for a few special circumstances (seen here).
- You can switch your Medicare Supplement plan at any time!