How to shop smart during Medicare open enrollment

Here’s your chance to save hundreds or even thousands of dollars in the next several weeks. That’s because it’s Medicare’s open-enrollment period, which offers you the potential to do some smart shopping for your health care coverage. 

During this period, which begins Oct. 15 and ends Dec. 7, you have the opportunity to make changes in your plan for 2017. Many people automatically re-enroll in their current plan, but that could leave a lot of money on the table -- money that could be better used for your health care coverage.

Medicare’s open-enrollment period applies to people age 65 and older who have previously enrolled in the program. It also applies to certain younger people who qualify due to a disability. If you turned 65 in 2016, special rules apply.

Your basic choices under Medicare

To understand your choices, let’s review your two basic options:

• Traditional, or original, Medicare. Care is provided on a fee-for-service basis, and you can choose your medical providers, as long as they accept Medicare patients.
• Medicare Advantage (MA) plans. You typically receive medical services through a provider network, similar to an HMO or PPO.

The traditional Medicare plan has significant deductibles and co-insurance, so you’ll want to purchase a separate, supplemental plan (called a Medigap plan) to cover any expenses Medicare itself doesn’t pay. Because traditional Medicare doesn’t cover prescription drugs, you’ll also need to purchase a second separate plan under Medicare’s Part D. Both Medigap and Part D plans require additional monthly premiums.

MA plans typically provide more comprehensive coverage than traditional Medicare, so there’s usually no need to purchase a supplemental plan. MA plans still have co-payments, co-insurance and out-of-pocket limits. Most MA plans also cover prescription drugs, so you only need to buy coverage from one health care provider to cover all your costs.

The disadvantage of MA plans is that you’re usually restricted to using the health care providers in the plan’s network. Some MA plans, however, will reimburse for medical services provided out-of-network, although there could be a higher co-payment.

Some MA plans are called “zero premium plans” and require no additional premium above the Part B Medicare premium. However, they may not be the cheapest plan for you because zero premium plans usually have higher co-payments, co-insurance and out-of-pocket limits compared to MA plans that require an additional premium. 

So when you consider the sum total over the year of the premiums you pay and your out-of-pocket costs for co-insurance and co-payments, you might end up spending more out-of-pocket with a zero premium plan.

Changes for 2017

If you’re a Medicare beneficiary, you should have by now received notices of premium increases for 2017 and any changes in coverage for Medigap or MA plans. You’ll want to carefully examine these communications to see how your plan might be changing, including:

• Premium increases
• Increases in co-payments, co-insurance and out-of-pocket limits
• Your doctors or other health care providers being dropped or added
• Changes in prescription drug “formularies,” which identify the reimbursement schedule for specific drugs

Regarding drug formulary changes, one possibility deserves special attention: A brand-name drug you’re taking might be dropped altogether. In this case, you’ll be paying for the drug’s entire cost.

The premium and change notices you’ve received might be hundreds of pages long, but don’t be discouraged: They usually include up-front summaries of the changes described above.

Occasionally, providers will drop certain plans and automatically enroll you in a substitute plan. If this happens to you, you’ll want to carefully review the new plan’s features to identify any additional restrictions or requirements.

During open enrollment, you can switch from traditional Medicare and Medigap to a MA plan. You can also switch from one MA plan to another, or change your prescription drug plan under Part D.

It’s not always the case that you can easily switch from an MA plan to traditional Medicare and a Medigap plan. People who suffer a decline in health or incur a new serious health condition may want to make such a switch to gain more freedom with selecting providers or even to save money after co-insurance and co-pays are factored in. Unfortunately, most states allow providers to require medical underwriting, which can result in increased premiums or even outright denial of coverage. In this case, you may have to stay with your MA plan.

Generally, once you make your choices for 2017, you won’t be able to make changes again until the open-enrollment period for 2018.

Help if you need it

If the complexity of shopping for health care coverage intimidates you, help is available. Medicare’s website contains an plan shopper and tools to find doctors, hospitals and other health care providers. It can also help you compare your out-of-pocket costs for prescription drugs under your plan and the alternatives, considering each plans’ particular drug formulary.

Professional advisers can also help you compare plans and estimate your total out-of-pocket expenses for premiums, deductibles, co-pays, and co-insurance, given your particular health conditions and prescriptions.

Some advisers are insurance agents or representatives of insurance companies or MA plans. For example, the American Association for Medicare Supplement Insurance provides a directory of local agents who work with Medigap plans. They don’t vet the agents on this list, which agents pay to be on. 

With any agents you work with, you’ll want to be aware of how they are paid. They might not charge you directly for their services, but they could be paid a commission on insurance products they sell, which could restrict the plans they might be able to consider for you.  You’ll want to ask them if they can help you analyze all of the Medigap or MA plans that are available to you.

You may want to consider working with an independent consultant who can help you analyze the complete range of options, such as Sixty-Five Incorporated. It charges a fee for a consultation, so its recommendations aren’t influenced by the way its advisers are paid.

You might also find free help from some nonprofit organizations, such as your local Area Agency on Aging or a senior center.

Remember, it’s your health and your wallet. Use the latter wisely to best ensure the preservation of the former.