It’s that time of year once again. The time for apples, pumpkins, changing colors on the trees and … The Medicare Annual Enrollment Period (AEP)! Every year from October 15 through December 7 those who are eligible for Medicare have the opportunity to make a few key changes to their plans that could help save a lot of money in 2022.
Remember that healthcare will most likely be your largest expense in retirement. Many people have the common misconception that Medicare covers all healthcare costs, but this isn’t quite true. Medicare premiums and out-of-pocket expenses add up, and fluctuate year to year based on the type of Medicare program you are enrolled in. That’s why it’s important to spend the early fall looking at the kind of healthcare expenses you had the year before and planning ahead, so that you can take advantage of the eight-week window of the AEP to get the best cost savings possible. We’ve put together some of the FAQ we think it’s important to have answers to as you plan for this year’s AEP.
Why are there so many enrollment periods for Medicare?
Medicare can be confusing, because there are so many different enrollment periods. The reason for these different enrollment periods is that Medicare comes in different “parts” and each of these “parts” has its own enrollment period. You have your Initial Enrollment Period 1 and Initial Enrollment Period 2, you also have your Special Enrollment Period and General Enrollment Period! For the purposes of this guide, we are only talking about the Annual Enrollment Period (AEP) which is open for eight weeks every fall, always on the same dates, from October 15 through December 7.
What can I change during the AEP?
You can make a few key changes during the AEP, including:
- Switch from Medicare Advantage back to Original Medicare
- Switch from Original Medicare to Medicare Advantage
- Change Medicare Advantage to another Medicare Advantage
- Sign up for a Part D prescription drug plan
- Change from one Part D prescription drug plan to another
- Cancel prescription drug coverage.
How soon will my AEP changes take effect?
All changes you make during this period will go into effect on January 1, 2022.
Why would I need to change my plan?
Every year, Medicare Advantage and Part D benefits change, which can cause your premiums to increase, coverage to change and medication prices to fluctuate. That’s why it is important to fully and carefully read your Annual Notice of Change, which you should have received in September. This explains all changes that will happen to your plan in 2022. Line those changes up with your medical expenses from 2021, to see what the cost difference could be. For example, you may take medication every day that will no longer be covered by your medicare plan, or your doctor may become out of network.
What should I be looking for?
As you look over the Annual Notice of Change, you will want to find answers to the following questions:
- Will my monthly premiums increase?
- Are my medications still listed in the drug formulary?
- Are all of the doctors I see regularly still in-network?
- What are my predicted medical costs?
What if I plan to travel a lot this year?
Often our clients will plan ahead to spend a long portion of the year in a warmer climate at a second home or a long-term vacation rental. While heading south for the winter is always a fun idea, it may affect your medicare plans and what you do during your AEP. Make sure your plan covers pharmacies and providers near where you will be living. If you see a doctor in Florida that isn’t in network, you might want to switch to Original Medicare because this plan does not have provider networks. You don’t want to wind up paying hefty provider prices out of pocket when you’re soaking up the sun in Florida.
Do the star ratings for my Medicare plans mean anything?
Medicare has a star rating system that was designed to help people like you compare the Medicare plan options available. Medicare Advantage and the different prescription drug plans receive a star rating between 1 and 5 stars, based on customer service, experience and complaints. And yes, those ratings are fair and they do matter. The closer you can get to a five-star plan, the better off you will be. If you have a plan with a four star rating or above, you’re in great shape. If your rating is lower than that, this is a great time for you to switch to a five-star rating if it makes sense, meaning if the coverage is relevant to your needs. This article from MarketWatch breaks these star ratings down.
What about routine dental, vision and hearing coverage?
Original Medicare doesn’t cover dental, vision and hearing. However, some Medicare Advantage plans do. If you notice that you are paying a lot out of pocket for routine dental, vision or hearing services it might be time to consider a Medicare Advantage plan.
The eight week AEP is an excellent time to re-evaluate your healthcare budget and look into new options. Take a close look at what you spent on healthcare last year, and think about what aspects of your plan are reliably saving you money, and which aspects of your plan are costing you. Then, look at the ways you may be able to reduce your out-of-pocket costs by comparing your current Medicare plan with others, reading your Annual Notice of Change closely, and predicting the health needs you may have in 2022. Of course, you can’t know everything that will happen in the future, so always be conservative when it comes to healthcare cost planning. There’s likely an opportunity to save money, but you’ll have to spend some time now digging into your healthcare spending records, planning for the future and doing some research to make sure you seize it.
Do you need help planning for healthcare spending in retirement, or making sense of your AEP options? We’d love to hear from you. Contact us at info@trsfamily.com or reach us at (855) 895-5830 to start the conversation.