We are approaching the end of Medicare’s annual open enrollment period. This is important to remember because it is often the only time in the year when you can make changes to your Medicare health plan coverage. The window opened on October 15 and ends next week on December 7, 2015. Medicare provides health insurance for millions of seniors.
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Robert Quinlan, managing member of Quinlan Care LLC reviewed with me what you need to know before open enrollment for Medicare ends. “Invest your time now in the remaining days. It will pay you dividends and aid you to access better health care in 2016,” says Quinlan. Here is what you need to know:
Boomer: What are the two choices for Medicare health insurance coverage?
Quinlan: Medicare offers seniors two choices of plans. The first choice is the original Medicare Part A (called Hospital Insurance) that covers many of the costs related to your hospital stays but not all costs are covered. There is no monthly premium since you and your employers have been paying the Medicare payroll tax since you began to work. Medicare Part B (called Medical Insurance) will pay for 80% of the costs for your doctors outside a hospital. There is a monthly premium that is based on your annual income from two years ago. Many Medicare recipients today may also purchase a Medicare supplement policy (also called Medigap plans and offered by private carriers) to pay the costs that Medicare does not pay. One major advantage of Medicare Parts A and B is you can see any doctor in the U.S. that accepts Medicare payments.
An alternative to Medicare Parts A and B is called Medicare Part C (also called Medicare Advantage plans). These plans are managed care networked plans like a traditional HMO or PPO that are offered by private insurance companies. Some of these plans also offer drug, vision and dental coverage and have low or no monthly premiums due to subsidy payments by the Federal government to the private carriers. These Medicare supplement plans and Medicare Advantage plans require that you are also enrolled in both Medicare Parts A and B. No need to purchase a Medigap policy (not even permitted by law). Finally, there is Medicare Part D (also offered by private insurers) to cover your prescription drugs. Part D plans do not cover all costs of your drugs.
Boomer: What changes can be made during open enrollment?
Quinlan: During this open enrollment, you can switch to either a Medicare Advantage plan or to the original Medicare Parts A and B. You can also switch Medicare Part D carriers during this time. Medicare Advantage participants can also switch back to the original Medicare Parts A and B from January 1 to Feb, 15, 2016.
Boomer: Will I be paying higher premiums for my Part B coverage in 2016?
Quinlan: The monthly Medicare Part B premium for many people enrolled in 2015 will remain at $104.90 next year due to low inflation. Higher earners (above $85,000 for singles and $170,000 for married filing jointly) will also pay higher premiums in 2016. However, here is the kicker: for new people enrolling in Medicare Part B in 2016, the monthly premium will jump up to $123.70 for most people or more for higher earning seniors if they do not have their premiums deducted from Social Security benefits. And the flip side is also due to low inflation, there will no Social Security increase in monthly benefits in 2016.
Boomer: If I am 65 or older, can I elect to get my coverage through a Federal or State Exchange?
Quinlan: No. If you are age 65 and older, you cannot enroll in the health insurance plans offered through the states’ or federal exchange programs under the Affordable Care Act. If you are still working after age 65 and your employer has health insurance, you can elect to stay with your employer’s health plan.
Boomer: If I miss the deadline of 12/7/15 for making changes to my Medicare plan do I have any other options to make changes?
Quinlan: Yes. There are special enrollment periods when you can change your Medicare coverage. For example, if you terminate your employer’s health insurance or your Medicare insurance company no longer offers your Medicare Advantage plan or a Medicare prescription drug plan, you can choose another Medicare plan outside of the annual open enrollment period.
Boomer: Are there any penalties if I don’t enroll in Medicare when I am supposed to?
Quinlan: Yes. If you are not in an employer health plan and did not sign up for Medicare Parts B and D when you are supposed to, Medicare will penalize you. The late enrollment penalty for Medicare Part B may go up by 10% for each full 12-month period that you could have had Part B but didn’t sign up. There is also a penalty if you do not sign up for Part D when you are supposed to.
Where to Find More Information:
Check Medicare’s web site and click on the “Plan Finder” section. You will find the premiums and out of pocket expenses for the Medicare Advantage plans in your area. You can call or visit your state health insurance assistance programs (SHIP) for free counseling. You can also locate an insurance agent/broker that is up to speed on Medicare insurance matters. Finally, Medicare’s comprehensive “Medicare & You 2016” publication is now available to e-readers on devices like Kindle and Nook.
*This conversation was edited for length and clarity.