Medicare Open Enrollment Is Here. What to Know.

Medicare’s open enrollment period arrives predictably each fall, blanketing beneficiaries in advertisements. While there’s no need to look at everything, it pays to review your coverage and make sure it still meets your needs.

From Oct. 15 through Dec. 7, the roughly 65 million Medicare beneficiaries can pick a new Medicare Part D drug plan, a new Medicare Advantage plan, or switch from original Medicare into a Medicare Advantage plan or vice versa. Any coverage changes made during this period will go into effect Jan. 1, 2023.

Amid all the marketing mail, it can be easy to miss important notifications that come from your plan, said Louise Norris, health policy analyst for Medicaresources.org. The Annual Notice of Change informs beneficiaries of any changes to your coverage that will go into effect for the following year, such as to the way Part D covers medications. These notifications go out in September, so if you haven’t received yours yet, contact your plan. You can use it to help you decide whether you want to continue with your current coverage.

Benefit adjustments to individual plans are separate from the changes that are coming to Medicare next year as part of the Inflation Reduction Act of 2022. Those new policies, like the $35 monthly cap on certain insulin costs, apply to all beneficiaries regardless of where you’re enrolled. 

Medicare Advantage

Nearly half of all Medicare beneficiaries are enrolled in Medicare Advantage, an alternative to original Medicare. Also known as Part C, it offers care managed by private health insurers, such as Aetna and UnitedHealthcare, that contract with the government to provide Part A hospital coverage and Part B outpatient coverage. 

The projected average premium for Medicare Advantage plans in 2023 is $18 a month, a decline of nearly 8% from the average premium of $19.52 this year, according to the Centers for Medicare and Medicaid Services. Many Medicare Advantage plans do not charge a premium (most enrollees still pay the standard Part B premium, which will also fall next year).

Most Medicare Advantage plans include drug coverage. A growing number cover benefits that original Medicare doesn’t, such as limited dental and vision care and even gym memberships. This often makes Medicare Advantage more cost effective than original Medicare, at least on a premium basis. 

These lower costs and expanded benefits come with a trade-off, however: many Medicare Advantage plans are HMOs with narrow networks of participating doctors and hospitals. For this reason, they may not be suitable for snowbirds who split their time between states, or for those who need access to specific specialists. With original Medicare, you can visit any doctor in the country who accepts Medicare. 

Changes to Medicare Advantage provider networks may not be included in the Annual Notice of Change. You can check on your plan’s website or Medicare.gov to see whether your doctors participate in the plans you’re considering. Be sure to check not just the doctor’s name, but the location where you see the doctor, said Ari Parker, head Medicare advisor at Chapter, an online Medicare insurance broker, and author of It’s Not That Complicated, a guidebook about the program. Sometimes, doctors see patients in more than one location, and one will be in-network but the other won’t, he noted. 

When choosing a Medicare Advantage plan, many beneficiaries prioritize ancillary benefits, Parker said. Instead, put your overall health needs first, he advised. “People over-optimize for dental, but if it has a very small network of doctors, you won’t be happy if you need care,” Parker said.

If you want to switch from Medicare Advantage to original Medicare and buy a Medigap supplement plan, keep in mind that Medigap policies are medically underwritten, outside of certain circumstances and a handful of states that have different rules. That means that insurance companies look at your medical records when you apply and can deny you coverage based on your health status. Serious conditions like cancer could make it very hard to qualify for Medigap coverage. 

Medicare Advantage often appeals to beneficiaries who are in good health. But if you receive an unexpected diagnosis and decide to switch from Medicare Advantage to original Medicare plus a Medigap plan for more comprehensive coverage, then the reason you want to switch—a change for the worse in your medical condition—could be the very thing that prevents you from doing so. Talk to a knowledgeable insurance broker or apply directly to the Medigap plan you want before you drop your Medicare Advantage coverage. 

If you are denied Medigap coverage, you could still go back to original Medicare, but your costs won’t be capped. Beneficiaries with only original Medicare are responsible for about 20% of their care costs, with no out-of-pocket maximum. Medigap fills in the gaps of Medicare coverage for a predictable monthly premium.

Medicare Part D

Many people on original Medicare buy a stand-alone Part D drug plan to help cover their medication costs. The average basic monthly premium for standard Part D coverage is projected to be $31.50 in 2023, compared with $32.08 in 2022.

Premiums are just one component of your total costs, though. If you input your medications into Medicare’s plan finder tool, it will tell you your estimated total costs, which include any copayments and coinsurance. Some plans might have a higher premium but better coverage of your prescriptions than a lower-premium plan, so it’s important to look at the whole picture. 

You’ll want to check how your plan covers your medications. Each plan sets its own formulary, or list of covered drugs. Also pay attention to where you fill your prescriptions. You’ll generally find the lowest costs if you stick to your plan’s preferred, in-network pharmacies. Drug plans are different enough that partners shouldn’t coordinate their coverage, Parker said (unless they happen to have the exact same prescriptions). It’s likely that the Part D plan that works best for one member of the couple won’t be the best option for the other. 

There’s good news next year for beneficiaries who take insulin: the Inflation Reduction Act caps monthly costs for Part-D covered insulin at $35 starting next year. (Because this is a new benefit, the $35 cap might not be reflected in your estimated total costs under Plan Finder, Medicare notes.) Make sure your plan covers the type of insulin you take. 

One of the most anticipated Medicare changes in the Inflation Reduction Act won’t take effect until 2025. That’s when beneficiaries’ out-of-pocket prescription drug expenses will be capped at $2,000 a year, indexed for inflation. Currently, there’s no ceiling on beneficiaries’ expenses. For 2023, once you hit $7,400 in total drug spending for the year, you enter the catastrophic coverage level and are responsible for about 5% of total costs. 

The ‘donut hole’—an intermediate coverage phase where Medicare used to pay nothing toward drug costs—has been closed, but beneficiaries’ costs still change based on how much you’ve spent for the year. Starting in 2024, beneficiary costs in the catastrophic phase will drop to $0.

Write to Elizabeth O’Brien at elizabeth.obrien@barrons.com