It’s Time for a Checkup on Your Medicare Coverage

What if you could improve your healthcare and save a few bucks while you’re at it? If you’re enrolled in Medicare, this is the time of year when you can make it happen.

Medicare’s annual enrollment period is underway and ends Dec. 7. You can make changes to your coverage, but few people review their selections during the enrollment period.

Just 29% of Medicare beneficiaries compared their current Medicare plan with other Medicare plans offered in their area in 2020, according to KFF, a nonprofit organization focused on health policy.

What to Consider During the Medicare Enrollment Period

Reviewing your current selections can be an important way to save on insurance premiums and deductibles. You also can switch between traditional fee-for-service Medicare and Medicare Advantage, the all-in-one managed-care alternative to the traditional program offered by health insurance companies.

If you’re enrolled in traditional Medicare with a Medigap supplemental policy, there’s no need to review that coverage, but prescription drug coverage should be evaluated annually.

Stand-alone Medicare Part D plans often change the prices and terms for covering medications—and your needs may have changed in the past year. The same goes for Medicare Advantage plans, which often include drug coverage. Moreover, Medicare Advantage plans can add or remove providers in their network at any time, and many include prescription drug coverage that should be reviewed.

The sheer number of plan choices can be intimidating.

The average Medicare beneficiary has a choice of 60 Medicare plans that include prescription drug coverage next year, according to KFF, including 21 stand-alone drug plans and 36 Advantage plans that cover drugs. What’s more, there’s an abundance of advertising that studies have shown to be confusing and misleading to the point that the federal government has begun cracking down on marketing practices.

The lion’s share of marketing dollars is spent promoting Medicare Advantage. When seniors do seek out enrollment help, they’re most likely to turn to health insurance brokers, who have incentive to sell Advantage products over Medigap, the supplemental plans often used alongside traditional Medicare.

“For people who are enrolling in Medicare Advantage for the first time, the broker commissions are much higher than they are for Medigap,” says Gretchen Jacobson, vice president of the Medicare program at the Commonwealth Fund, which has conducted research on the Medicare brokerage system.

A Checklist for the Medicare Enrollment Period

So, let’s cut through the noise. Here are four things to consider when making Medicare decisions.

1. Ignore the blizzard of TV ads and direct mail arriving at your house. (You might want to follow—loosely—the advice of the late singer-songwriter John Prine, who so memorably suggested that you “Blow Up Your TV.”) Instead, start by reviewing the Annual Notice of Change that your current plan provider is required to send each fall. This will include the premium you’ll be charged in the coming year and the annual deductible; it will also tell you if coverage of your drugs will change or if changes are being made to your Medicare Advantage network.
2. Pay careful attention in the ANOC to any changes in the “tier” placement of the drugs you use. If a drug has moved from the first to the second or third tier, you may face higher cost-sharing or rules such as prior authorization, quantity limits, or so-called step therapy—that is, requiring you to use a less expensive drug than one that your physician has prescribed.
3. Evaluate options where you live by visiting the Medicare Plan Finder—the plan-shopping website run by Medicare. A Google search for this term will turn up dozens of links to insurance companies and brokers, so be sure to use this link to get to the authoritative government-sponsored site. Along with premiums, pay attention to plan deductibles and whether the plan covers all the drugs you take. Here, you’ll also want to scrutinize any coverage restrictions a plan might impose.
4. Medicare Advantage enrollees also should review their plan’s prescription drug coverage. Also check on whether the providers you want to use are still included in the network. Unfortunately, the Medicare Plan Finder healthcare provider information often is outdated or inaccurate, so call the insurer and ask directly about this.

Insurers can, and often do, drop physicians and hospitals from their plans when they can’t agree on contract terms. And in a new twist, some healthcare systems are now deciding to drop out of Medicare Advantage. Scripps Health, a major Southern California healthcare provider, announced in September 2023 that, beginning in 2024, its popular clinic and coastal medical groups will no longer accept patients enrolled in Medicare Advantage plans.

This inherent provider instability means that the choice between traditional Medicare and Medicare Advantage is not just financial but also a critical consideration for the stability of your healthcare.

Switching From Medicare Advantage Plan to Traditional Medicare

I’m a fan of traditional Medicare for anyone who can afford the higher upfront premium costs.

This year, 73% of Medicare Advantage enrollees are paying only their standard Part B premium ($164.90), and out-of-pocket costs up to a certain limit, according to KFF. This year, that limit is $4,835 for in-network services and $8,659 for both in-network and out-of-network services, KFF reports.

Traditional Medicare allows you to see any healthcare provider who participates in the program, and you won’t have insurance middlemen making decisions about services provided by physicians or hospitals. You can switch from Medicare Advantage to traditional Medicare during the enrollment period—with one important caveat.

Traditional Medicare has no built-in annual out-of-pocket limit. Some traditional Medicare enrollees cover these gaps with retiree health coverage from a former employer and some get it from Medicaid. The other option is a Medigap supplemental policy, which you can buy from an insurance company.

Medigap is a significant additional upfront cost you’ll shoulder in the traditional program. Pricing depends on where you live and your age but can easily run $200 to $400 per month.

But there’s one other significant supplemental coverage issue to navigate: the insurance companies might not want you as a customer.

When you first sign up for Medicare Part B, you have a “guaranteed issue” window that forbids Medigap plans to reject you because of a preexisting condition. Plans also must offer you the best available premium. This window is open during your six-month Medigap open enrollment period, which starts on the first day of the month that you’re at least 65 years old and enrolled in Medicare Part B.

After that window closes, Medigap plans can reject applications, with the exception of four states (Connecticut, Maine, Massachusetts, and New York) that provide some level of guarantee to enroll at a later time with preexisting condition protection.

Outside of those exceptions, Medigap providers can turn you down because of preexisting conditions or charge you more for a policy. So, before making this leap, check with Medigap providers in your region. (The Medicare Rights Center offers this useful detailed look at the Medigap enrollment rules.

What’s New for 2024 Medicare Coverage

Congress passed legislation in 2003 to create the prescription drug benefit, which began covering seniors in 2006. It was a major expansion of Medicare coverage, but the legislation had flaws: It did not permit Medicare to leverage its enormous buying power to negotiate drug prices with pharmaceutical companies. Moreover, it failed to cap enrollees’ annual out-of-pocket spending.

The lack of an out-of-pocket cap has become an important problem in the years since the law was enacted, as expensive, lifesaving drugs have become available for conditions such as cancer, diabetes, and heart disease.

The Inflation Reduction Act of 2022, signed into law by President Joe Biden, addresses both flaws. Much of the media attention has focused on an important provision that empowers Medicare to begin negotiating drug prices with pharmaceutical companies—a process that will play out over several years with uncertain results.

But other changes contained in the law are more immediate. Here are a few:

• This year, patient costs for insulin were capped at $35 a month, and there is no longer any cost-sharing for adult vaccines, such as the shingles vaccine. The law places caps on total annual out-of-pocket drug spending in two steps.

1. In 2024, enrollees who encounter high drug costs no longer will pay 5% of the cost of drugs when their total spending, with the value of manufacturer discounts on brand-name drugs, exceeds a threshold—$8,000 next year. KFF estimates that this will effectively act as an out-of-pocket cap of $3,300 next year.
2. And in 2025, an across-the-board $2,000 annual cap on out-of-pocket costs will take effect.

How to Get Answers to Your Medicare Enrollment Questions

If you need assistance with enrollment decisions, the State Health Insurance Assistance Program, or SHIP, offers comprehensive and unbiased guidance. The service is funded by the federal and state governments, and it provides free, expert help with Medicare. The Medicare Rights Center offers a counseling hotline at +1 800 333-4114.

SHIP can be overwhelmed this time of year. If you aren’t able to get help there, several fee-based services can provide unbiased assistance. They include Allsup and 65 Incorporated.

How about brokers? These folks can be deeply knowledgeable about their own plan offerings—but keep in mind that they don’t offer all the plan choices available in your region—and they have built-in financial incentives that can tilt the guidance they provide.