’Tis the season for Medicare recipients of incessant robocalls, mailers and television ads, all urging them to select one option or another during the annual open enrollment period.
And Medicare is not exactly the easiest thing to understand. The federal government program most well known for providing health care coverage to people ages 65 and older contains a universe of different options: traditional or private coverage, drug plans, supplemental plans. And each of those has their own rules, benefits and drawbacks.
To help people trying to navigate the Medicare morass, we at The Sun assembled an expert panel to explain all the details and to answer questions from readers. Here are some of the highlights from that discussion. But, if you’d like to learn more, you can watch the entire hourlong panel below.
Learn the basics
Medicare open enrollment runs from Oct. 15 through Dec. 7. This is the window during which people who are already enrolled in Medicare coverage can change it up. (People who turn 65 at other times during the year and become newly eligible for Medicare can enroll whenever that eligibility hits.)
During open enrollment, you can switch from a traditional Medicare plan to a Medicare Advantage plan or vice versa — more of these options below. Or you can switch between Medicare Advantage plans. Or you can adjust prescription drug coverage options.
“This is your time to think about the past year,” said Brandon Davis, the director of the Colorado State Health Insurance Assistance Program, which helps people navigate their Medicare choices. “What has gone on with the current plan that you’re with? Has the customer service been good? Have all your drugs been covered? Is your doctor currently taking what you have? Or will they be changing up plans? Those are some questions that you need to be asking yourself right now during this time.”
Know your ABDs
It’s easy to think of Medicare as just one monolithic program, but it’s not. Medicare is made up of a lot of smaller parts. How you choose to assemble them determines what kind of coverage you have and how much you pay for it.
So here’s the basic overview, as spelled out by Louise Norris, a health policy analyst with the informational website MedicareResources.org.
Traditional Medicare: Also known as Original Medicare, it is made up of two parts:
- Medicare Part A covers hospital stays and other inpatient care.
- Medicare Part B covers other medical expenses: doctors’ visits and other outpatient care, medical equipment, physical therapy, etc.
In general, most people don’t have to pay a monthly premium for Part A coverage. But Part B coverage often comes with a premium, though there are assistance programs available to help those who are unable to afford it.
Both programs may also have other expenses.
“Original Medicare does not have a cap on your out-of-pocket costs,” Norris said.
It also doesn’t cover prescription drugs. Which leads us to …
Medicare Part D: These are separate prescription drug plans that people can purchase to cover medication costs. They work like a typical insurance plan: Monthly premiums and then some kind of copays or out-of-pocket costs. People who wait too long after their initial Medicare eligibility date to purchase a Part D plan may be subject to a late enrollment penalty on their premiums.
You may have noticed there’s a missing Part C in this explanation. That’s because most people don’t call it that. Instead, Part C is known as …
Medicare Advantage: These are Medicare plans sold by private insurance companies that often bundle together a lot of the features of Traditional Medicare — hospital coverage, general medical coverage and prescription drug coverage, plus potentially other benefits — into one plan. People would typically buy these plans in lieu of going with Traditional Medicare.
Mind the gap
Davis said one of the most common myths he hears is that Medicare — as in, Traditional Medicare Part B — pays for everything.
“Medicare, keep in mind, pays 80%,” he said. “But then you’re responsible for the other 20%.”
If you don’t want to be on the hook for that remaining 20% of the bill, you can buy a so-called Medigap plan to cover it. Medigap plans are supplemental insurance that cover the out-of-pocket costs you owe in Traditional Medicare. As with other insurance plans, they come with a premium and their own out-of-pocket costs.
One important thing to know about Medigap plans, though, is that if you want one, it’s best to buy it when you’re first eligible. During your Medigap open enrollment period — which is in the first six months after you turn 65 and enroll in Medicare Part B — these plans are what is known as “guaranteed issue.” That means companies have to sell them to you.
But after that window, the guaranteed issue period ends.
“That’s when the insurance companies can take a look at your medical history and see whether or not they want to take you,” Norris said.
They could also consider your health status and decide to sell you a plan only at a higher price.
Study for your MA
Medicare Advantage, also known as MA, is an increasingly popular choice for Medicare recipients.
An estimated 51% of people eligible for Medicare are enrolled in Medicare Advantage plans, up from just 19% in 2007, and that percentage is expected to rise higher in the coming years. In Colorado, an estimated 54% of people are enrolled in a Medicare Advantage plan.
So what’s the benefit? Simplicity.
Medicare Advantage plans typically bundle all of Medicare’s services into one premium and one out-of-pocket limit — for 2024, that limit will be $8,850, not including prescription drug costs. In general, Medicare Advantage looks a lot like what many people know of when they think of health insurance.
“It’s more sort of along the lines of what people would get with an employer-sponsored plan,” Norris said.
But that means it also comes with familiar limitations.
Medicare Advantage plans typically have networks of doctors and hospitals that patients must stay within. They may have prior-authorization requirements, meaning a patient couldn’t receive a treatment without the insurance company first giving its OK.
The growth in Medicare Advantage plans has also led to concerns about how the private insurance companies that operate them may be restricting care in order to boost profits.
To see the full list of Medicare Advantage plans available in your area, go to Medicare.gov and click the “Find Plans” button.
So how do you choose which Medicare coverage options are right for you?
It ultimately comes down to knowing yourself and your needs.
Are you planning to travel for long periods of time or split time between locations? Traditional Medicare, without the boundaries of insurance networks, may be best for you.
Are you fairly set where you are and want just one simple option to cover everything so you don’t have to cobble together Part B, Part D and Medigap plans? Then Medicare Advantage might be a better choice, especially considering that some plans also offer limited dental, vision and other coverage.
Greg Glischinski, a volunteer with AARP Colorado who is serving as the organization’s interim president, said he often advises friends to think not just about their immediate needs but also long-term.
“My initial statement to most people when they asked me is to look at not what your health condition is right now,” he said, “but what do you think your health condition is going to be 10, 15 years from now?”
This is important because it helps you take advantage of opportunities available to you when first eligible — like Medigap coverage or buying a Part D drug plan without paying a late-enrollment penalty.
“You don’t want to just be making your Medicare decisions based on how you are right now,” Norris said. “We know that as time goes on you’re probably not going to be as healthy when you’re 85 as you are when you’re 65.”
As should be clear by now, it is a massively complicated endeavor to select a Medicare plan or plans that best fit your needs now and in the future. But don’t despair. You don’t have to navigate this journey alone.
Davis’ program, the State Health Insurance Program, commonly known as SHIP, provides free advice to people looking for help with Medicare — during open enrollment and also throughout the year. The program is locally administered, meaning you can receive help from someone in your area. But it uses one phone number to field inquiries and route people to the right office: 888-696-7213.
You can also seek help from a Medicare broker. They typically operate at no additional cost to the consumer — brokers get paid by commissions from insurance companies that are already baked into the price of the plans. Brokers can also help you figure out whether Traditional Medicare or Medicare Advantage is right for you and can help you select plans that best meet your needs.
Norris said a word-of-mouth approach often works well; ask your friends if they’ve used a broker they like. If that doesn’t work, the National Association of Benefits and Insurance Professionals, a broker trade organization, has an online search tool to find a broker in your area.
Best of luck and be sure to watch the full video of our panel discussion if you’d like to learn more.