Medicare’s Annual Election Period: A Time to Evaluate and Make Changes
The arrival of autumn brings about changing leaves, pumpkins and cooler weather. It also marks Medicare’s Annual Election Period (AEP), which is sometimes called Medicare’s Open Enrollment Period. AEP, which happens between October 15 and December 7,1 provides the opportunity for current participants in Medicare to evaluate their drug plans and supplemental coverage and make any necessary changes.
(Please note, AEP is not the time for new participants to sign up for Medicare. Check out our blog post, “Medicare—When to Enroll?” to learn about when to enroll for Medicare for the first time).
For Medicare participants who have prescription drug plans (Part D) or who are enrolled in a Medicare Advantage plan (with or without drug coverage), it is important to take advantage of the opportunity AEP presents. It’s best not to assume that last year’s coverage is still the best and most cost-effective coverage. Here’s what to look out for.
What to review if you are part of a Part D prescription drug plan
There are annual changes to drug plans that may impact the coverage and cost of the drugs you take. Also, new drug plans enter the marketplace and may provide similar coverage at a cheaper price.
Every participant of a drug plan should receive an annual document called “Evidence of Coverage.” It is in this document that a drug plan’s current coverage is explained and you are notified of what changes are going to take place. We advise clients to carefully review this document and to look at the following items:
- Monthly premiums
- Drug formulary
- Medication tiers
- Annual deductible
- Copayments or coinsurance
- Coverage rules
- Additional benefits in the coverage gap
- Pharmacy networks
- Quality ratings of plans
If you want to shop for a new drug plan, Medicare’s website is a great place to start (https://www.medicare.gov/find-a-plan).
What to review if you are part of a Medicare Advantage plan
For Medicare Advantage plans, which are run by insurance companies and structured in HMO and PPO formats,2 it is important to review not only the “Evidence of Coverage” documents to see changes in your drug coverage, but also to learn of changes that may impact which doctors you can see and which medical facilities you are able to access. We recommend that Medicare Advantage plan recipients pay close attention to the following during their review:
- Monthly premiums
- Annual deductible
- Annual-out-of-pocket spending limit
- Your out-of-pocket costs (copayments, coinsurance)
- Provider network
- Quality ratings of plans
- Optional benefits such as dental or vision
What if you want to change your Medicare coverage?
If you decide to make a switch, you can call 1-800-MEDICARE or the insurance provider of the new plan. Alternatively, you can go online to medicare.gov or the website of the insurance carrier.
The following actions can take place during AEP3:
- Join, drop or switch to another Medicare Advantage plan (or add or drop drug coverage)
- Switch from Original Medicare to a Medicare Advantage plan
- Join a Medicare drug plan if you’re in Original Medicare
- Switch from one Medicare drug plan to another if you’re in Original Medicare
If you decide to make a change to your current Part D or Medicare Advantage plan coverage, it will go into effect on January 1, at which time you will be automatically unenrolled from your old coverage.4 If you are going from Original Medicare with a Medigap Policy to a Medicare Advantage plan, please note that you will have to cancel your Medigap policy as it will not happen automatically.5
If, upon review of your current coverage, you find that it is still the best coverage for you, you do not need to do anything. You will automatically be re-enrolled by your current provider.6
To summarize, we recommend that all Medicare recipients take advantage of the AEP/Open Enrollment Period in order to take a look under the hood of their Medicare coverage. This exercise is important to avoid paying more than necessary and to make sure that you understand what is and what is not covered by your insurance.
Medicare decisions are important to your overall financial well-being. We recommend that you discuss the choices with your Corient Wealth Advisor so that you are clear on your decision and can adjust your financial plan as needed.
1 https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/joining-a-plan
2 https://www.medicare.gov/medicare-advantage-plans-cover-all-medicare-services
3 https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/joining-a-plan
4 https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/joining-a-plan
5 https://www.uhc.com/news-articles/medicare-articles/can-you-switch-between-original-medicare-and-medicare-advantage-during-the-annual-enrollment-period
6 https://www.cms.gov/priorities/key-initiatives/medicare-open-enrollment-partner-resources
ABOUT THE AUTHOR
Bryan Smalley, CFP®
Bryan is a Wealth Advisor in our Morristown, NJ, office. He is responsible for managing client relationships and coordinating all aspects of client service for the team. He currently serves on the firm’s Financial Planning Committee, providing research and input into such topics as Medicare and retirement planning. Bryan is an Ohio native (Go Bucks!) who has earned the CERTIFIED FINANCIAL PLANNER™ certificate along with a BA from the University of Toledo, an MA from Bowling Green State University and a certificate in Financial Planning from Boston University. Bryan, his wife, Liz, and their four children live in Flemington, NJ, where they enjoy exploring new places and spending time with family and friends.
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