Attention Medicare-Eligible Folks!
Medicare Open Enrollment runs from October 15 to December 7 this year. As you may know, managing health care costs is a HUGE piece to the retirement puzzle. With this important period just around the corner, here’s a quick refresher on the basics of Medicare and how you can navigate open enrollment. Let’s dive right in!
Medicare 101
Medicare is a federal health insurance program primarily for people aged 65 and older. However, individuals under 65 with certain disabilities or conditions may also qualify. Medicare is divided into four key parts, each offering different types of coverage:
Enrolling as First-Timer
Medicare eligibility begins at age 65, but you can start the enrollment process up to three months before your 65th birthday which is highly recommended. While you can wait to enroll, delaying beyond your 65th birthday may result in lifelong late enrollment penalties. These penalties are not one-time fees but are applied for as long as you have Medicare coverage.
There are exceptions to these penalties, such as if you’re still covered by health insurance through an employer. However, even in this case, you may still be required to make Medicare your primary insurance.
Annual Medicare Open Enrollment
Medicare Open Enrollment is an eight-week period for those already enrolled in Medicare to adjust their health insurance coverage. Running from October 15 to December 7, changes made during this period take effect on January 1 of the following year. During this time, you can:
- Switch from one Part D plan to another.
- Switch between Advantage plans.
- Switch from an Advantage plan to an original Medicare plan.
- Switch from an original Medicare plan to an Advantage plan.
- If you have Parts A or B, you can add or drop a Part D plan.
If you’re happy with your current Medicare coverage, no action is needed to keep it. However, if you’ve received notice that one of your plans is being discontinued, you’ll need to select a new one during open enrollment.
Even if you don’t plan on changing your coverage, it’s a good idea to explore your options. Open enrollment is the best time to review and optimize your healthcare plan. Remember, you can switch plans as many times as you like during the open enrollment period until you settle on the right one.
The Exception to Open Enrollment
If you miss the annual Medicare Open Enrollment, there’s still an opportunity to adjust your health insurance. If you have an Advantage plan, then you can make additional changes during the Medicare Advantage Open Enrollment Period. This period runs from January 1 through March 31. During this time, you can:
- Switch from a Medicare Advantage plan back to original Medicare and add a Part D prescription drug plan.
- Switch between Medicare Advantage plans.
Unlike the annual open enrollment period, you can only make one change during this window. So, if you enroll in a Medicare Advantage plan but find it doesn’t meet your needs after the new year begins, you have one chance to make a change before the end of March.
If you did not enroll in Medicare Part A and B during your original seven-month enrollment window (three months before your 65th birth month, your birth month, and three months after), you may do so between January 1 and March 31 with the coverage taking effect on the first of July. This is where those penalties we mentioned earlier can apply. A penalty of 10% of your monthly premium may come into play. It’s critical to review your options as you approach age 65, even if you’re still working, to avoid lifelong penalties.
Why Switch Plans?
Not all Medicare plans are created equal, which is why it’s essential to carefully evaluate the coverage each one offers. Here are a few reasons why you might want to switch plans:
- Prescription Costs: Some Part D plans may offer lower prices for your medications.
- Doctor Networks: Your doctors could become “out of network,” meaning higher costs when you visit them. Ensure your plan still covers the healthcare providers you trust.
- Plan Ratings: Medicare plans are rated on a five-star system. If your current plan is rated three stars or lower, it may be time to explore higher-rated options for better service.
You can check your Medicare enrollment status and explore a wealth of resources at the official Medicare website, www.Medicare.gov. The site provides valuable tools for finding the right Medicare coverage, including information on covered procedures, doctors in your network, and cost comparisons. For further assistance, you can also reach Medicare by calling 1-800-633-4227.
The Wrap Up
Signing up for Medicare and choosing the right supplemental (Medigap) policy can be very complex and anxiety-provoking. That’s why FSA often pulls in Medicare experts to guide clients through the process and help choose the best supplemental coverage for their needs.
If you’re curious about how Medicare impacts your retirement, send us an email at questions@FSAinvest.com or click here to schedule a call with one of FSA’s CERTIFIED FINANCIAL PLANNER® professionals. See you in the next blog post!
FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is also available at https://fsainvest.com/disclosures/ or by calling 301-949-7300.
