Medicare Enrollment Options for 2015-16
A summary of what you need to know.
Provided by Michael Fassi CLU, ChFC
Key Medicare enrollment periods are approaching. This fall and winter, there are three periods in which Medicare beneficiaries can either enroll or disenroll in forms of coverage.
>> Oct. 15-Dec. 7: Open enrollment period. This is when you can exit Original Medicare (Part A & B) for a Medicare Advantage Plan (Part C) and change your prescription drug coverage (Part D). You can also get out of a Part C plan and go back to Part A & B during this period, although you will certainly want a Medicare Supplement (Medigap policy) in place before you make such a move. (In most cases, that means having to pass underwriting.)1
>> Dec. 8: Annual enrollment period begins for 5-star plans. All Part C and Part D plans are assigned ratings. Beginning December 8, 2015 and ending November 30, 2016, a window opens for you to enroll in a 5-star Part C or Part D plan. You can do this once per 365 days. How do you find the 5-star plans? Visit the Medicare Plan Finder: medicare.gov/find-a-plan.2
>> Jan. 1-Feb. 14, 2016: Disenrollment period. If you join a Part C plan in late 2015 and decide you want to leave it, you can do so within this window of time and go back to Original Medicare (Part A & B) with a stand-alone Prescription Drug Plan (Part D). Again, having a Medigap policy before making such a switch is only prudent.1
Do you have to confirm Medicare enrollment at the Health Insurance Marketplace? No. If you have Original Medicare or a Medicare Advantage plan through an HMO or PPO, you are covered under the Affordable Care Act. If you need to make changes to your Medicare coverage, you don’t need to go to the HIM to do so. (For the record, you can’t buy any Medicare plan through the HIM.)3
The ACA has enhanced Medicare benefits. It gives Medicare recipients in the “donut hole” avenues to brand-name prescription drug discounts, and recipients may now take advantage of free preventive benefits, cancer screenings and an annual wellness visit.3
If you only have Medicare Part B coverage (medical insurance), then you lack minimum essential coverage under the ACA, and you may have to pay a penalty. If you just have Medicare Part A coverage (hospital insurance), you are considered covered under the ACA.3
Should you get Medigap coverage if you have Part A & B? This third-party health insurance may save you money over time by picking up co-payments and deductibles not covered by Part A & B, but a Part C plan provides more comprehensive coverage than Medigap does. Today’s Medigap policies don’t include prescription drug coverage, and they won’t pay for long-term care, dental or vision care, or hearing aids or glasses. If you want or need Medigap coverage, you can evaluate policies using Medicare’s Personal Plan Finder at Medicare.gov.4
Is it true that Part B premiums will be costlier in 2016? Yes, for about 30% of Medicare recipients. Monthly Part B premiums could jump as much as 52% for those who have signed up for Medicare without claiming Social Security benefits, new Medicare enrollees and Medicare recipients with modified adjusted gross incomes greater than $85,000 ($170,000 for joint filers). Monthly Part B premiums will remain at $104.90 next year for everyone else.5
What should you look for in a Part C plan? Scrutinize the out-of-pocket spending limit, the copays and the co-insurance. Attractively low premiums might not tell you the whole story about the value of a Part C plan. Also, how inclusive is the plan network? Does it include hospitals you would choose and the physicians that now treat you?
The Medicare Plan Finder can help you determine an appropriate Part D plan. After you enter your medications, it will go to work. Each Part D plan has its own formulary (list of approved drugs), categorized into higher and lower “tiers” by cost. Formularies do change; if a drug you take drops off of one, that Part D plan has to give you 60 days of notice (or alternately, written notice of the change when you get a refill with a 60-day supply of the medication).6
Beginning in early 2016, most doctors, dentists and other medical professionals writing prescriptions for Part D drugs must be enrolled in Medicare or have an “opt-out” request on file with Medicare for your prescriptions to be covered by your Part D plan. If not, you can still get a 3-month provisional fill of your prescription as you search for an enrolled prescriber or until your prescriber enrolls. Your plan and/or your prescribers will have more details on this.6
It is vital to check up on your Part D plan each fall, as your plan could change the way it pays for your specific drugs in the next year – for example, the drug you need could wind up in a more expensive tier. The co-insurance and co-payments could even be altered. Most plans send out notices of formulary changes with plenty of lead time, but sometimes they go unread.
The bad news for 2016: fewer Part D options, higher Part D costs. Avalere Health, a Washington, D.C.-based research firm studying health care issues, just released an analysis of 2016 adjustments to Part D premiums. Next year, 886 prescription drug plans will be available for Medicare recipients – 11.5% fewer plans than in 2015. About 80% of Part D plan participants are enrolled in the top 10 ranked Part D plans – and on average, the premiums on those plans will rise 8% next year. In 2016, the average Part D premium will surpass $40 (a new high).7
If you rely on federal health care subsidies, you may be feeling this pinch most – since 2013, there has been a 32% decrease in the amount of $0 Part D plans available. In related news, just 55% of Part C plans will have a $0 deductible next year, compared to 63% in 2015 – and just 51% of Part C plans will offer coverage to get people past the donut hole.7
There is some good news about Part D. In 2016, Part D plan participants will pay 7% less for generics within this coverage gap, which lies between a plan’s annual deductible and its catastrophic coverage phase (plan participants will pay 45% of costs for brand-name drugs and 58% of costs for generic drugs next year). Additionally, Part D plan participants will find themselves in the donut hole once they and the plan have spent $3,310 for covered drugs in 2016 (up from $2,960 in 2015).7,8
Medicare plans mail Annual Notice of Change (ANOC) letters to their members. Use this notice to determine if your current plan is still right for you and your medical care needs. If you didn’t receive such a letter in September, contact your plan.9
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/when-can-i-join-a-health-or-drug-plan.html#collapse-3192 [10/14/15]
2 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/five-star-enrollment/5-star-enrollment-period.html [10/14/15]
3 – healthcare.gov/if-i-have-medicare-do-i-need-to-do-anything/ [10/14/15]
4 – webmd.com/health-insurance/insurance-basics/medigap [11/21/14]
5 – forbes.com/sites/janetnovack/2015/10/15/no-social-security-benefits-or-tax-hike-for-2016-but-medicare-premiums-could-soar-for-some/ [10/15/15]
6 – medicare.gov/part-d/coverage/part-d-coverage.html [10/14/15]
7 – bankrate.com/financing/retirement/recalculate-your-medicare-part-d-deal/ [10/13/15]
8 – medicare.com/medicare-part-d/what-is-the-doughnut-hole/
9 – medicare.gov/forms-help-and-resources/mail-about-medicare/plan-annual-notice-of-change.html [10/14/15]