Medicare beneficiaries often make costly mistakes during the annual year-end “open enrollment” period during which they are allowed to make adjustments for the following year of coverage. Five common mistakes…
Mistake: Missing Medicare’s odd deadline. The Medicare enrollment deadline is not, as you might assume, December 31, and it’s not a generously late deadline like the Obamacare deadline of January 31. Instead, the Medicare enrollment deadline is December 7. You must make any changes you want between the start of enrollment on October 15 and December 7. Miss the early December deadline, and you might not be allowed to alter your coverage for another year unless you experience any of a number of “life events,” such as marriage or relocation.
Mistake: Assuming that the options that were best for you in the past are still best for you for the coming year. Medicare beneficiaries often stick with the same selections for many years simply because reevaluating their earlier selections would be time-consuming and confusing. But if your health-care needs have changed, those earlier selections might no longer be good options—the expensive prescription drugs you now require might be better covered by a different Part D prescription drug plan, for example.
In fact, your current Medicare selections might no longer be good options even if your medical needs have not changed—your Part D plan or Medicare Advantage (private Medicare-approved coverage) plan might have changed. Many Part D plans recently have reduced or eliminated their coverage of certain drugs due to sudden spikes in the prices of those drugs, for example…and many Medicare Advantage plans have been making substantial changes to their provider networks, meaning that your health-care providers might no longer be in-network.
What to do: Ideally, you would use Medicare’s online “Plan Finder” tool to reanalyze your Medicare options each year (on Medicare.gov, click the green “Find Health & Drug Plans” tab). But if you don’t do that this year, at least…
Read the Plan Annual Notice of Change (ANOC) sent to you by your current Medicare Part D plan and/or Medicare Advantage plan each September. This notice will lay out any changes made to the plan from the prior year in relatively easy-to-understand language. Look for changes that will affect you, such as a drug you take being dropped from coverage or made available only in certain situations…or increases to premiums, deductibles and/or co-pays.
Call your health-care providers, and ask them to confirm that they will still be “in network” for your Medicare Advantage plan (or for original Medicare) in 2017.
Mistake: Assuming that you can easily make changes with Medigap plans during open enrollment. Open enrollment is a great opportunity to change Medicare Advantage plans and/or Part D plans, but that isn’t true with Medigap plans—and that limitation means that it sometimes isn’t wise to make other Medicare coverage changes, either.
A Medigap plan is supplemental insurance that covers certain out-of-pocket costs not covered by original Medicare. Example: Medicare Part B, which covers medical services such as doctor visits and surgeries, typically pays 80% of incurred costs, leaving patients to pay 20% out of pocket. A Medigap plan could cover much or all of that remaining 20% in exchange for your paying a monthly premium. (Medigap plans are not used with Medicare Advantage plans.)
But many Medicare recipients do not realize that the companies that sell Medigap coverage are required to sell these plans at their standard rates only during the first six months that the recipient is Medigap eligible. After that, these companies might charge prohibitive premiums or deny coverage entirely.
So while you could switch from a Medicare Advantage Plan to original Medicare during open enrollment, you might not be able to add a Medigap plan to supplement that original Medicare at a decent price. And while you could switch from original Medicare and a Medigap plan to a Medicare Advantage plan during open enrollment, you might not be able to reenroll in that Medigap plan at a reasonable price during a future open enrollment if you change your mind.
Medigap plans are regulated by states, however, and there might be rules in your state that mean you do still have access to some or all Medigap options at a reasonable price after your initial six-month eligibility even if you have preexisting health conditions. Search online for your state’s State Health Insurance Assistance Program for details.
Mistake: Choosing a Medigap plan based on its issuer. Medigap plans are offered by many different insurance companies in most states, but any plan, regardless of issuer, will carry one of 10 “letter codes”—A, B, C, D, F, G, K, L, M or N. Every plan with a particular letter code is required to offer exactly the same coverage as every other plan available in that state with the same letter code. Any plan with a code of F or C will cover your entire Medicare Part B and Part A deductibles, for example, along with a preset list of other expenses. (In certain cases, plans with a certain letter code might be offered with either a low or high deductible. Plan options and rules are different in Massachusetts, Minnesota and Wisconsin.)
Because all Medigap plans with a given letter code in a given state provide the same coverage, it usually is not worth paying extra to obtain one from an insurance company you know and trust…or from an insurer that suggests in its marketing materials that its plans are somehow special. If you choose to pay for a Medigap plan in addition to original Medicare, just pick the Medigap letter code that makes the most sense for you and then buy it from the insurer that offers you the lowest price.
Mistake: Expecting too much from Medicare Advantage dental, vision and hearing coverage. Companies that sell Medicare Advantage plans often heavily promote the fact that their plans include dental, vision and hearing coverage—all things that original Medicare does not cover except in very limited circumstances. But the dental, vision and hearing coverage included in Medicare Advantage plans usually is quite limited, and plan participants still end up paying most of these costs out of pocket.
If dental, vision and hearing costs are a big part of the reason that you are considering a Medicare Advantage plan, take the time to carefully read the section of the contract that lays out the details of this coverage before signing up. What types of services are covered? What are the annual coverage maximums? Do not assume that the coverage fits your needs because the marketing materials imply this is so.
If you have major upcoming dental costs, for example, a stand-alone dental insurance plan might be the better choice. AARP offers dental insurance, for instance…and some retirees can obtain dental insurance through a former employer’s retiree benefits package.
Medicare Hospital Trap
Not every patient in a hospital has been admitted to the hospital. Hospitals, under pressure to reduce their readmission rates, recently have been holding an increasing percentage of patients “for observation” rather than formally admitting them—including patients who are in the hospital for days.
That lack of a formal hospital admission can have devastating financial consequences for Medicare patients who require rehabilitation in a nursing home following their hospital stays. Original Medicare will pay for up to 20 days of rehabilitation at a skilled nursing facility—if the nursing home stay occurs immediately after the patient was admitted to a hospital for a minimum of three consecutive midnights. Patients given observation status do not qualify under this rule and might have to pay thousands of dollars out of pocket as a result. A federal law that took effect this year requires hospitals to notify patients that they have been given observation status—previously, patients often did not learn about this until they received their bills, if at all. If you or a loved one is given observation status and a nursing home stay could follow, ask the doctor whether he/she can change this status decision…contest the decision with the hospital’s ombudsman…and if that fails, follow the appeal instructions on the Medicare “summary notice” that arrives in your mail every three months, assuming that you receive medical treatment.