Medicare—federal health insurance coverage for people 65 and older—is a pivotal part of your retirement plan. With the Annual Election Period (AEP) approaching (it runs from October 15 through December 7), Medicare recipients must decide whether to make changes to their plan or not. But consumer beware: The devil is in the details.
Here are four key things to know about Medicare’s Annual Election Period:
- AEP Basics. This two-month window enables anyone already enrolled in Medicare to change their supplemental coverage. While the term “open enrollment” indicates that this period is “open” to anyone who’s eligible for Medicare, that’s not the case. If you’ve just turned 65 and are ready to sign up for coverage, there is a separate process called the Initial Enrollment Period (IEP), which we’ll cover in a future post.
- Understand Your Current Coverage. It is important to know a little bit about your existing benefits before considering a switch. For instance, Medicare Parts A and B—commonly referred to as “Original Medicare”—offer basic coverage that is the same for everyone. (Broadly speaking, Part A covers hospitalization and Part B covers outpatient costs.) After that, you’ll need supplemental coverage to ensure you have adequate health care throughout your retirement. You can bridge the gaps in Original Medicare by enrolling in a Part C, also called Medicare Advantage, or a “Medigap,” both of which are supplemental plans administered by private insurance companies. You can also opt to access Part D, the Medicare prescription drug benefit. The AEP allows you to choose these supplemental coverage options as your health needs change.
- What You Can (and Can’t) Change. The AEP allows you to:
- Switch from Original Medicare to Medicare Advantage
- Switch from Medicare Advantage to Original Medicare
- Switch from one Medicare Advantage plan to another
- Enroll in Part D prescription coverage or change or drop your prescription plan
If you move to Original Medicare from a Medicare Advantage plan, you will also be eligible to enroll in a Medigap plan. However, be aware that you won’t have guaranteed entry into Medigap when you switch from Medicare Advantage—you may need to apply through a traditional insurance underwriting process and/or accept a higher premium based on your health status.
- Consider Your Options. To make fully informed decisions about supplemental Medicare plans, you need to objectively assess your needs. The costs for Medicare Advantage and Part D plans often change annually, so it pays to maintain a list of your regular prescriptions to make comparison-shopping easier. If you can, project what your medical costs might look like over the next year to decide if you should switch plans.
We’ll have upcoming posts to assist as you navigate the often-confusing Medicare journey. You can also check out Adviser Investments’ reference guide or our podcast on the topic.
As always, if you have specific questions related to your situation, please don’t hesitate to get in touch with your wealth management team. We stand ready, willing and able to help.