Medicare has fairly strict rules on when you can get into and out of your plan. Outside of special extenuating circumstances, most enrollees are limited to only changing their plan during Open Enrollment, which runs from October 15 to December 7 of each year. Changes that are made during Open Enrollment take effect on January 1st of the following year.
The first step, if not already done, is to enroll in Original Medicare. This is the coverage provided by the federal government and is broken up into two parts:
- Part A, which covers inpatient hospitalization and is paid for by Medicare taxes on income.
- Part B, which covers outpatient services and involves a monthly premium, usually taken out of the enrollee’s social security check.
Original Medicare covers everything at 80%, meaning that the enrollee is responsible for 20% of all healthcare costs. It should be noted that Original Medicare does not include prescription coverage, and those who are on only Original Medicare will pay the entire cost of their drugs out of pocket.
Due to the extremely high cost of healthcare, the 20% is not affordable for some seniors. During Open Enrollment they can also choose additional coverage to help mitigate that cost. There are two main categories of additional coverage: Medicare Advantage (Part C) plans, or Medicare Supplement plans.
Medicare Advantage plans come from private insurance companies, and replace Original Medicare. Medicare pays the insurance carrier the average cost of a Medicare recipient, and in return, the carrier handles all claims, payments, customer service, etc. It is important to note that Original Medicare does not pay any claims for those enrolled in Medicare Advantage plans, and will deny any claims that they receive. Part C plans can also come with prescription coverage as well as additional benefits, such as routine hearing/vision care, fitness incentives, transportation coverage, and more. The copays are lower as well since the private insurance carrier can take advantage of network contracts to negotiate a lower cost from the providers.
Medicare Supplement plans are also offered by private insurance companies but do not replace Original Medicare. Instead, they work alongside it. The provider sends a claim off to Original Medicare, and once their 80% is paid the provider can send the other 20% to the Medicare Supplement plan. Many Supplement plans pay the entire 20% for most services but can have a significantly higher monthly premium because of this. Also, Supplement plans do not cover prescriptions, so a separate Part D plan will be needed as well.
While reviewing the options during Open Enrollment, keep in mind that there is no such thing as the “best” plan. Different patients have different needs, and what’s best for one person might not be best for someone else. Above all, make sure that the plan you pick matches what your healthcare needs will be for the upcoming year.