You can switch from your existing Medicare coverage to different coverage during the “open enrollment” period. This period is October 15 - December 7 in every year, and enables Medicare enrollees to ensure that their health coverage will meet their anticipated needs in the upcoming year. Described below are the four different parts of Medicare, typical differences between Original Medicare and Medicare Advantage (MA) plans, and factors to consider in choosing among various health plans offered by an insurance company – as well as how to ascertain the best prescription drug plan for your needs.
Understanding the Four Different Parts of Medicare
Administered by the US Centers for Medicare and Medicaid Services (CMS), Part A is hospitalization coverage while Part B covers outpatient physician office visits. Drug coverage is provided by Part D if you are enrolled in Original Medicare. There is a Part C, but this is offered by private insurance companies contracted to the CMS. More commonly-termed Medicare Advantage, Part C differs from Original Medicare (which includes Parts A and B).
Part D is also offered solely by private insurance companies, and essentially covers prescription drugs for people enrolled in Original Medicare. A critical point to remember is that Original Medicare only covers 80 percent of the enrollee’s Part A and Part B costs.
How Does a Medicare Advantage Plan Differ from Original Medicare?
Many Medicare Advantage (MA) plans offer prescription drug coverage and dental coverage in addition to hospitalization and outpatient care coverage. These plans may also pay more (or less) than 80 percent of the costs for health services. If you are enrolled in a MA plan that includes drug coverage, you do not need to purchase a Part D drug plan. However, you still are required to pay the monthly premium of Part B even though your health plan may cover the same outpatient services. Therefore, you need to consider both the monthly premium for the MA plan and monthly premium for Part B to determine whether your income level will enable you to pay that total monthly cost.
Original Medicare allows you to see any physician that accepts Medicare, but MA plans often require the use of “in-network” healthcare providers (although some allow you to use an “out-of-network” provider at a higher cost). Therefore, it is vital if you choose to enroll in a MA plan to determine that the “in-network” hospitals and providers are acceptable to you. If not, a different MA plan that includes hospitals/providers acceptable to you may be a better choice (or Original Medicare may be preferable for you).
Considering the Impact of Deductibles and Co-Insurance on Your Potential Costs
The Part A deductible of Original Medicare in 2020 has been $1,408 for each benefit period. If you believe that you are likely to need hospitalization and do not have enough money saved to cover that cost, this deductible may over-strain your financial resources. MA plans with higher monthly premiums tend to be linked to lower deductibles (but this is not always the case). Meanwhile, your “out-of-pocket” portion of the cost for your healthcare (which is 20 percent if you have solely Original Medicare) can vary widely between the various MA plans.
For example, a low-monthly premium MA plan may cover hospitalization at 100 percent of cost (with a high deductible) and 80 percent of costs for outpatient visits (with no deductible) – but require a large co-pay from you for prescription drugs that you take on a daily basis. In comparing that MA plan to another one offered to you, you may find that your monthly premium is only slightly higher but your deductibles are far lower.
Alternatively – if you can afford the monthly expenditure – you may find that a higher-premium MA plan with no deductibles and a low co-pay for your medications will be actually an overall cost-saver for you. It all depends upon your chronic health disorders, medication needs, and financial circumstances as to which plan will be best for you.
Comparing Drug Plans (Part D) and Why Switching Annually May be Necessary
Although MA plans usually include prescription drug coverage, enrollment in Original Medicare means that you will need to separately enroll in such coverage. If you do not enroll in Part D upon initial Original Medicare enrollment, you can be required to pay an annual financial penalty for “late enrollment” in each following year. Therefore – if you choose to enroll initially in Original Medicare – it makes sense to enroll in Part D at the same time.
Only you know whether you prefer a particular pharmacy and/or need to take a specific brand-name rather than generic medication, and that matters in choosing the Part D plan that will be best for your needs. While a lower-cost Part D plan may better fit your current budget, it will cost you more if your prescribed drug is not covered by that plan. Likewise, a Part D plan that does not include your preferred pharmacy can leave you needing to switch to a different pharmacy that may be farther from your home. Indeed, many Medicare enrollees switch from one Part D plan to another during “Open Enrollment” for this combined reason.
Consider scheduling an appointment with a UrHealth Benefits agent to learn more about your Medicare health plan options.