Written by: Christian Worstell
When it comes to Medicare, preparation is everything. There are eligibility dates to keep straight, and you can face financial penalties for missing important enrollment deadlines. There are even certain combinations of Medicare coverage you can and cannot have. If you make a mistake in your Medicare enrollment, you could face coverage gaps, lifelong late enrollment fees or a benefits package that is overpriced or ill-suited to your needs.
The 2021 Medicare Annual Enrollment Period (AEP, which is also referred to as the fall Medicare Open Enrollment Period) is fast approaching, and it’s important to prepare now so you get it right when it’s time to enroll. If you miss your chance to take any action during this period, you could potentially have to wait until next year’s AEP to change your Medicare coverage.
The five tips below are designed to help current and soon-to-be Medicare beneficiaries prepare for the Annual Enrollment Period, which takes place from October 15 to December 7 each year.
1. Check your eligibility
There aren’t many worse feelings than celebrating the opening day of Medicare enrollment season only to learn you aren’t eligible for the coverage you want. If you want to enroll in a Medicare Advantage (Medicare Part C) plan or a Part D prescription drug plan during AEP, you should make sure you’re eligible before the enrollment period begins.
Over a third of all Medicare beneficiaries are enrolled in a Medicare Advantage plan. In order to be eligible for a Medicare Advantage plan, you’ll have to be enrolled in both Medicare Part A and Part B.
You must also be enrolled in either Part A or Part B (or both) before you can enroll in a Medicare Part D prescription drug plan. Most Medicare Advantage plans include Part D prescription drug coverage, but you can enroll in a standalone Part D plan if you have a Medicare Advantage plan without drug coverage or if you stick with Original Medicare (Part A and Part B).
You are only eligible to enroll in a plan that services the area where you live. Plan selection varies by location and carrier, so not everyone will be afforded the same options.
2. Know your options
While AEP is often referred to as “open enrollment,” it isn’t exactly open season on every species of coverage. Here’s what you are allowed to do during this enrollment period:
- Change from Original Medicare (Part A and Part B) to a Medicare Advantage plan
- Change from Medicare Advantage back to Original Medicare
- Switch from one Medicare Advantage plan to another
- Enroll in a Medicare Part D plan
- Switch from one Medicare Part D plan to another
- Disenroll from a Medicare Part D plan
Medicare Advantage and Medicare Part D make up two of the three types of private Medicare insurance. Another type of private Medicare plan is called Medicare Supplement Insurance, or Medigap.
The Annual Enrollment Period does not apply to Medigap plans, however, and you don’t need to make any enrollment changes with a Medicare Supplement as a result of AEP.
3. Determine what you need
Medicare Advantage plans and Medicare Supplement plans are very different types of coverage, and you can’t have both types of Medicare plans at the same time. It’s critical for beneficiaries to know which one best suits their needs.
- Medicare Supplement plans help pay for Medicare costs you typically have to pay for out of pocket, such as deductibles, copays, coinsurance and other Medicare costs. Your Original Medicare benefits pay for a portion of your health care services, and your Medicare Supplement plan covers any Medicare copays or coinsurance costs that your Medicare Supplement plan covers.
- A Medicare Advantage plan, however, covers all of the same benefits found in Medicare Part A and Part B. In fact, these plans are required by law to do so. In addition to that basic coverage requirement, Medicare Advantage plans may then provide some benefits that are not included in Original Medicare. The most common extra perks include dental, vision, hearing and prescription drug coverage along with memberships to gyms and senior fitness programs.
With a Medicare Advantage plan, you may still have copay and coinsurance costs, but you typically get more benefits for things you would otherwise have to pay for out of your pocket if you only had Original Medicare.
Medicare Advantage and Medicare Part D are also very different types of plans. Medicare Part D plans only cover prescription drug costs. They don’t provide coverage for any medical services or cover any of your health care costs other than the costs of prescription drugs.
In the run up to AEP, ask yourself what type of coverage you need. Some important questions to consider include:
- If you don’t plan to enroll in a Medicare Advantage plan, are you in a position to obtain affordable dental care through some other means?
- Do you need vision or hearing aid coverage?
- What kind of medications will you need to have covered? Even if you don’t take any now, there’s a good chance you will one day.
- Do the plans you’re considering cover your prescriptions?
- Do you prefer to pay a higher monthly premium in exchange for lower costs when you receive care? If this is your preference, you might want to consider a Medicare Supplement plan.
- Do you prefer lower monthly premiums (often as low as $0 per month) in exchange for paying some coinsurance and copayments when you receive care? If this is your preference, you may want to consider a Medicare Advantage plan during this year’s AEP.
4. Decide how you want to budget
Comparing prices of Medicare plans isn’t just about how much money you will be spending, but also how you will spend it.
A Medicare Advantage plan or Part D plan with a low monthly premium but a high deductible allows you to spend as little as possible up front, but forces you to dig deeper when it comes time to use the plan.
Plans with higher premiums and lower deductibles may require more money at the outset of each month but allow for more predictable health care spending by limiting your out-of-pocket expenses when you use your benefits.
There’s not necessarily a right or wrong answer here. Determine how you prefer to spend your money and shop accordingly.
5. Choose how to shop
The average Medicare beneficiary will have their choice of dozens of Medicare Advantage and Part D plans from multiple different carriers.
You can take the time to gather plan quotes and coverage details from each insurance company separately, but that’s a daunting task.
You can commit to the same insurance company you’ve had for years or the one used by your family or friends, but that might prevent you from getting the absolute best coverage for your needs.
The most recommended way to shop is with the help of an insurance agent who is licensed to sell Medicare plans on behalf of several different carriers. A licensed insurance agent can take the time to discuss your specific health care needs, lay out all your plan options and pricing, confirm your eligibility and walk you through the enrollment process. And it doesn’t cost anything extra use their services. Medicare agents and brokers typically receive a commission from the insurance company for selling a policy; they don’t charge you an extra fee for working with them.
Follow these five bits of advice and you’ll enter the 2021 Annual Enrollment Period ready to take charge of your coverage, your finances and – most importantly – your health.
Christian Worstell is a senior staff writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options. His work has been featured in outlets such as Vox, MSN and The Washington Post, and he is a frequent contributor to health care and finance blogs. Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.