by Jeff Deiss
CFP, AEP, Wealth Advisor
It’s that time of year when Medicare beneficiaries receive a barrage of television ads and mail regarding the fall annual election period (AEP). Many aren’t sure whether the election period applies to them or if they need to take any action. AEP runs from October 15 to December 7 each year and it is a time when beneficiaries can enroll in, change, or disenroll from their current Medicare Part D or Medicare Advantage plan if they have one.
Medicare Part D (prescription drugs) and Medicare Advantage plans can change their premiums, benefits, copays, networks and drug formularies from one year to the next. So the purpose of Medicare’s AEP is to allow beneficiaries to change their coverage if they don’t like the changes or if they just want to comparison shop for a better-suited plan from year to year.
AEP does not affect Medicare Supplement (Medigap) plans
If you have a standalone Part D drug plan, chances are that you also have a Medicare Supplement (“Medigap” plan). The benefits on Medigap plans do not change from year to year, so the AEP has nothing to do with Medigap plans.
Your annual notice of change letter is important
Every year in September, your insurance carrier will mail you an annual notice of the change (ANOC). This letter details any changes to your Medicare Advantage or Medicare Part D plan for next year. The changes are listed side by side so that you can easily identify any changes that will affect you.
Changing Part D plans
For Part D, the primary changes to look out for are your monthly premiums and any changes in the drug “formulary” (the prescriptions you take). As we’ve mentioned in previous posts on this topic, it’s a good habit to shop your Part D plan every year.
Medicare has tools to help you evaluate your options
There are several online resources to help and the most important of these is the Medicare Plan Finder tool. You can use this tool to evaluate all the Medicare Part D or Medicare Advantage plan options in your county for next year.
To shop for the plan with the most cost-effective rates for next year, Medicare beneficiaries first need to have a ready list of their currently prescribed medications. Enter your list of medications and each medication’s dosage and frequency and the Plan Finder will pull up a list of drug plans offered.
Medicare’s Plan Finder is being revised for next year and will no longer retain saved data about prescription drugs. If you would like to save your list of medications, then you can first sign up for a MyMedicare.gov account and enter your drug details there. Your MyMedicare.gov account also helps with managing claims and accessing personal health information throughout the year.
Changing Medicare Advantage plans
As opposed to ‘original’ Medicare (Parts A, B, D, and a Medigap plan), some beneficiaries choose to get their coverage through a Medicare Advantage plan, also known as Part C. Medicare Advantage plans are private insurance policies that reimburse health providers (physicians, labs and other outpatient services) directly and work similar to HMOs in that they have “networks” of providers and provide incentives (lower copayments or coinsurance) for participants to use in-network providers.
Your providers may join or leave your plan at any time so you’ll want to talk to your doctors to confirm that your preferred providers are remaining in your network from year to year. And if you want to change to a different Medicare Advantage plan, then you should first verify that your preferred providers are in the network for the new plan. Each plan has an online directory where you can look this up.
Switching to original Medicare
Some beneficiaries may wish to leave their Medicare Advantage plan and return to original Medicare instead of another Medicare Advantage plan. You can do this by notifying the current carrier in writing that you wish to disenroll or, better yet, by calling 1-800-MEDICARE to make the change by phone.
Before you disenroll from a Medicare Advantage plan, however, it’s important to apply for a Medigap plan first. Why? If you choose original Medicare, then you are likely to want a Medigap plan as well to cover the deductibles, copayments, and co-insurance that Parts A & B don’t cover. Applying for a Medigap plan outside of your initial enrollment period (the three months before and after the month you turn 65 years old) does not guarantee acceptance (except in a handful of states). Health questions may apply and you can either be charged a higher premium or declined coverage depending on your health. So you need to make this decision carefully.
If you change your mind
Because beneficiaries are bombarded with so much marketing during this time of year, you may make a plan decision and then change your mind later. This is okay. You can submit a new application for a different plan anytime up until December 7. The last application processed during the AEP is the plan that will take effect on January 1.
Remember:
- AEP is from October 15 to December 7 and applies to Medicare Part D and Medicare Advantage plans
- AEP does not apply to Medigap plans
- Take a look at your annual notice of change
- You should shop your Part D plan every year
- Check to see if your providers are remaining in your Medicare Advantage plan network
- Be careful to consider the Medigap plan implications before changing from a Medicare Advantage plan to original Medicare
Check back next week where we will provide an update on changes to Social Security benefits, the closing of Part D’s “donut hole” and Medicare’s income-related surcharges (“IRMAA”) for 2020.
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