I’ve been in the business of helping people get health coverage for many years. I well remember the days before Obamacare, when people could shop for health insurance year-round. But things have been different since the implementation of the Affordable Care Act (or the ACA, as “Obamacare”) in 2010. One of the biggest changes to the insurance landscape was restricting the times of year that people can change or sign up for certain types of health coverage.
How does this affect you, as a person on Medicare, or approaching the age for Medicare coverage?
- It’s the only time of year most people can sign up for prescription drug coverage. Depending on how familiar you are with Medicare, you may or may not know that it doesn’t pay for the vast majority of drugs that are prescribed by a doctor for use outside a hospital setting. Because of this, many people pay pretty hefty drug bills every month, depending on what drugs they’re on and how much those drugs cost.
Part D prescription drug plans pay for a substantial portion of the cost of prescription drugs. These plans are administered by private health insurance companies. Every company has a different list of drugs it will cover – this is called the “formulary.”
Under the ACA, there are basically two times that an individual can get a Part D plan. The first is during your initial enrollment period, which occurs around your 65th birthday. It starts 3 months before the month you turn 65 and ends 3 months after that month. I strongly encourage all of our clients to get a Part D plan during this time period. The reason?
- You’ll pay a penalty in the form of an increased premium every month if you don’t get your Part D plan during this time. The penalty gets bigger the longer you wait.
And after that initial period expires, you can only sign up for a Part D plan during the federal government’s Annual Election Period (AEP), which began this year on October 15, and ends on December 7. If you want to change to a different Part D plan than the one you currently have, this is also the time to make that change. Otherwise, you’ll have to wait until next year’s AEP, and that’s a long time to have coverage you don’t like, or that doesn’t pay for the drugs you need.
- It’s the only time of year you can switch from original Medicare to a Medicare Advantage plan. Medicare Advantage plans provide the same coverage you get from Medicare Parts A and B, only they’re not administered by the federal government. They’re administered by private insurance companies, like Part D plans and Medicare supplement (also called “Medigap”) plans. Medicare Advantage plans typically do cover drugs, although not all of them do. They also offer additional benefits, such as free gym memberships.Perhaps the greatest benefit Medicare Advantage plans have over Medicare alone is that they put limits on the amount of money – in the form of copayments, coinsurance, and deductibles – you spend. Original Medicare does not, and depending on the type of illness or injury you have, you can spend a substantial amount of money out of your own pocket in Medicare expenses.
During the AEP, you can switch from original Medicare to a Medicare Advantage plan. The AEP is also the time of year you can switch to a different Medicare Advantage plan, if you currently have one.
- Maybe the best news about the AEP: you don’t have to do anything. If you have original Medicare plus a Medicare supplement plan and/or a prescription drug plan, and you’re happy with the way your individual coverage works, then you don’t have to do anything during AEP. Your coverage renews automatically, without you taking any action.
For more information about AEP, click here. However, if you think you might want different prescription drug coverage, or you’re interested in examining the benefits you can get from a Medicare Advantage plan, talk to us about your options. But be forewarned – we’re extremely busy this time of year, so call your Personal Benefits Consultant or our main number to get on our calendar. The AEP lasts just a few more weeks!
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.