Fine-Tuning Your Medicare Coverage

Andrew Busa, MSPFP, CFP^®, MPAS^®, CCFC

Manager of Financial Planning

Medicare—federal health insurance coverage for people 65 and older—is a pivotal part of your retirement plan. With the Annual Election Period (AEP) fast approaching (it runs from Oct. 15 through Dec. 7), Medicare recipients must decide whether to make changes to their plan. But consumer beware: The devil is in the details.

Here are four key things to know about Medicare’s Annual Election Period:

1. 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’re within the seven-month window around your 65th birthday and are ready to sign up for coverage, there is a separate process called the Initial Enrollment Period.
2. Your current coverage. It is important you understand 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” plan, 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.
3. What you can 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 be eligible to enroll in a Medigap plan. However, be aware that you aren’t 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.

4. 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.

For more on Medicare, check out our handy Medicare reference guide and our podcast on the topic.

As always, if you have questions related to your specific situation, please don’t hesitate to get in touch with your wealth management team. We stand ready, willing and able to help—after all, we are The Planner You Can Talk To.