It’s open enrollment time for Medicare (Oct. 15 to Dec. 7). In other words, if you or your parents are Medicare beneficiaries, this is your annual opportunity to switch from traditional Medicare to a Medicare Advantage private health plan (also known as Medicare Part C) or change Medicare prescription drug plans (known as Medicare Part D). Making the move will help you get the best coverage at the lowest price.
(MORE: What Are Private Medicare Advantage Plans?)
By contrast, there’s no defined enrollment period for Medigap policies — the type sold by insurers to cover some of traditional Medicare’s out-of-pocket expenses. Medigap policies, however, have other enrollment restrictions.
Medicare Advantage vs. Medigap
If you have a Medicare Advantage plan, you can’t also own a Medigap policy. That’s because Medicare Advantage plans combine traditional Medicare and Medigap coverage; they offer the same benefits as traditional Medicare, but usually add in drug coverage and other benefits, like hearing aids. Because they’re typically HMO or PPO plans, Medicare Advantage policies limit the choice of medical providers.
Finding the best-fitting Medicare Advantage and Medicare prescription drug plans can be daunting, though. There are a variety of possiblities, each with its own benefits and tradeoffs, and insurers constantly change what their policies cover.
Reasons to Shop for Coverage
But the rising cost of these policies is a strong argument for shopping wisely.
Premiums for Medicare Advantage plans are projected to rise 5 percent next year, according to the Kaiser Family Foundation, and Part D premiums are expected to go up by 7 percent. Seven of the 10 most popular prescription drug plans are raising their 2013 premiums by 11 to 23 percent, according to Avalere Health, a health care consultant.
Yet many beneficiaries appear to be paying more than necessary. The journal Health Affairs found that just 5 percent of people with Medicare Part D bought the least expensive policy that met their needs.
6 Shopping Rules for Open Enrollment
Here are six rules for shopping for Medicare Advantage and Medicare prescription drug plans:
1. Don’t be taken in by sales pitches. These include mail solicitations, TV commercials and invitations to dinner and a presentation by insurers. Aggressively promoted products are not necessarily bad, but you can’t make an informed choice until you know all your options.
A recent Wall Street Journal article cautioned against new plans that lure customers with low “teaser” prices. Sometimes, these plans are less expensive because they limit your choice of pharmacies.
(MORE: Tool: Are You Eligible for Medicare?)
2. Make sure you understand your current coverage. To brush up on Medicare rules, visit Medicare.gov and read the overviews from Consumer Reports and the National Council on Aging.
United Healthcare’s Medicare Made Clear site is also useful. It’s deliberately walled off from the company’s insurance products and offers educational videos as well as interactive tools.
3. Check to see whether the insurer is changing its coverage and out-of-pocket costs for 2013. The National Council on Aging recommends finding out if the plan will cover all the medications you or your parents expect to need next year.
4. When considering alternative policies, pay careful attention to details. For help, you might consult a free adviser for Medicare beneficiaries at your state’s Senior Health Insurance Assistance program, or SHIP. To find one, follow the links on Medicare’s site or call the government's toll-free helpline, 1-800-MEDICARE.
According to The Wall Street Journal, the Medicare Rights Center has been getting more calls lately from people complaining that their Medicare Advantage or prescription drug policies limt them to a month’s supply of a drug at a time, which means they get socked with a new co-payment every time.
5. Be careful not to buy too much coverage. Under the Affordable Care Act, Medicare beneficiaries are already entitled to annual exams and recommended screenings with no co-pays or deductibles. In addition, the “doughnut hole” for prescription drugs is slowly closing — that’s the gap in prescription medication costs not covered by Medicare, between $2,930 and $4,700.
6. Find the best offers close to home. Once you know the type of coverage you want, you’ll need to locate specific policies available in your area. A SHIP adviser can help or you can search on Medicare.gov by following the links and entering your ZIP code.
(MORE: Medicare and Health Insurance Options as You Age)
Express Scripts, a pharmacy benefit management firm, recommends looking for Medicare Advantage and prescription drug plans with four- or five-star ratings in the government’s Medicare Plan Finder. You can also drill down deeper into the ratings to rule out plans with low grades for customer service.
This fall, the government will send letters to people whose plans have had low star ratings for three years or more, encouraging them to consider other options. (You can switch into a five-star plan at any time of the year.)
You’ll find plenty of other companies happy to help, too. But be careful: Most of them are insurance brokers or others whose impartiality isn’t assured.