Any time you turn on the TV over the next few months, you’ll likely be bombarded with ads about Medicare. If you’re 65 or older, you also can expect phone calls and letters urging you to act now to avoid missing out on savings or extra benefits. That’s because October 15 through December 7 is the Medicare open enrollment period—the annual opportunity to make changes to health and prescription plans for the coming year.
However, the majority of Medicare beneficiaries won’t take advantage of this period to review their options, which is a missed opportunity for savings, says Ari Parker, co-founder of Medicare advisory firm Chapter and author of “It’s Not That Complicated: The Three Medicare Decisions to Protect Your Health and Money.”
You might be able to significantly reduce your healthcare costs in the coming year by taking the time to review your options during the 2023 Medicare open enrollment. Here’s what to consider.
What is Medicare annual open enrollment?
Each year, there is an annual enrollment period—known as open enrollment—from October 15 through December 7 when Medicare beneficiaries can make certain changes to their coverage. When you initially enroll in Medicare, you can choose from the following coverage options:
- Original Medicare (Parts A and B): Medicare Part A is hospital insurance, and there is no monthly premium. Part B is medical insurance for doctor visits, outpatient services, preventive screenings and medical equipment. The monthly premium in 2023 is $164.90 or higher (depending on income). If you’re already receiving Social Security benefits, you’ll automatically be enrolled in Parts A and B at age 65.
- Medicare Part D: Prescription drug plans are offered through private insurance companies, and premiums are typically $10 to $15 a month, Parker says. However, they can range from $1.60 to $170, according to health policy research organization KFF.
- Medicare Advantage (Part C): This plan combines hospital, medical and prescription drug coverage and is offered by private insurers. Many Medicare Advantage plans have no monthly premiums and include additional benefits, such as vision and dental coverage.
- Medicare Supplement (Medigap): Medicare Parts A and B cover about 80% of medical costs. You can choose one of the 10 Medigap plans to help cover the 20% of costs that original Medicare doesn’t cover. Premiums are higher than Medicare Advantage plans because Medigap covers more out-of-pockets costs, such as deductibles. However, these plans don’t include prescription drug coverage.
If you’re not happy about the Medicare plan that you chose when you initially enrolled, the fall open enrollment period offers an opportunity to add, change or drop Part D and Medicare Advantage plans.
What changes can be made during Medicare open enrollment?
The changes you can make during Medicare open enrollment depend on the type of coverage you have.
- If you have original Medicare (Parts A and B), you can opt into a Part D prescription drug plan or a Medicare Advantage plan.
- If you have a stand-alone Part D plan, you can switch to a different prescription plan or drop your plan.
- If you have a Medicare Advantage plan, you can switch to another Advantage plan or drop your plan and revert back to original Medicare. (You also have an opportunity to make changes during Medicare Advantage open enrollment January 1 through March 31.)
Any changes you make during Medicare open enrollment will take effect on January 1, 2024.
If you want to add Medigap coverage or switch Medigap plans, you can do that at any time—not just during the annual Medicare open enrollment period. However, the best time to sign up for a Medigap plan is during the six-month enrollment period that is available to you after signing up for Medicare Part B.
During this time, Medigap insurance providers won’t ask you any health questions or charge you more for any pre-existing health conditions you have, Parker says. If you wait to sign up or try to switch plans, you might have to pay a higher rate or not even qualify for coverage if you have health issues in all but four states (Connecticut, Maine, Massachusetts and New York have guaranteed-issue protections).
Why you should review your coverage during open enrollment
The coverage you originally chose might seem to be working well enough for you. However, you could have missed opportunities to keep down medical costs if, say, you didn’t initially sign up for prescription drug coverage. Or, if you opted for a Part D or Medicare Advantage plan, there could be changes in your premiums and coverage from year to year that will impact your out-of-pocket costs.
If you have a Part D or Medicare Advantage plan, your plan provider will send an “Annual Notice of Change” pamphlet with a summary of changes to your coverage. Medicare will send a “Medicare and You” handbook with general information about Medicare options and changes for 2024.
Parker says that there are three key things to consider each year during open enrollment when reviewing your current coverage and deciding if you should change plans or add coverage.
- Providers: Have any of your doctors left your plan’s network? Will you be seeing new providers in the coming year?
- Prescriptions: Does your plan still cover the prescriptions you take? Are you taking new medications that aren’t covered by your plan? Is your pharmacy still in your plan’s network?
- Priorities: Have your health care needs changed? Do you need more comprehensive coverage than Original Medicare provides?
Pay attention to your plan’s monthly premium, too. If there will be a significant increase in 2024, you might want to see if other plans offer similar coverage at a lower rate.
If you have Part D prescription coverage or are thinking about signing up for this coverage, be aware of a change that will take effect in 2024. As a result of the Inflation Reduction Act, the 5% coinsurance that Part D enrollees have to pay for drugs once they reach the catastrophic coverage stage will be eliminated. So don’t be confused by any ads that might claim that you have to switch plans to take advantage of this change.
Should you get help from a Medicare broker?
You can attempt to navigate Medicare open enrollment on your own. However, you could save time and money by working with a Medicare brokerage service. Brokers will do the work of comparing options for you—at no charge. (They earn commissions from insurance companies that provide plans.)
For example, Parker says that the advisors at his company, Chapter, save Medicare beneficiaries an average of $1,100 a year by reviewing their current plans and switching them to better coverage options.
He recommends working with an independent advisor/brokerage service that will compare options from several insurance providers, not just one provider. The advisor also should be licensed to sell Medigap, Medicare Advantage and Part D plans—not just one type of plan—to identify the best fit for your circumstances.
Chapter is one of the four Medicare brokerage services that have completed the National Council on Aging’s review and training process to meet its Medicare Standards of Excellence. The other three services are Alight Retiree Health Solutions, Fidelity Medicare Services (for residents in 17 states) and Medicare Choice Group.
Director of Education and Content at Carefull