By Carl Lachman

Medicare Open Enrollment 2021

            Medicare open enrollment period began October 15th and remains open until December 7th. This open enrollment period is the same every year. What do you need to do?

The Basics

            When you turn 65, you have three options for your health insurance coverage: traditional Medicare, Medicare plus supplemental insurance, and Medicare Advantage. It is a complex decision and most people should plan on lots of reading and consulting an expert. It is not straightforward, and you can get locked into a plan without many options for changes.

I Really Don’t Understand Medicare

            Many people don’t really understand Medicare at all. It might as well be a discussion of quantum mechanics and particle physics. Here’s a quick summary:

• Medicare is the U.S. government health insurance that is available when we turn 65 years old. We can sign-up in the three months before our 65th birthday.

• Medicare A is hospital insurance and Medicare B is medical/doctor insurance.

• An alternative to A + B is to go with Medicare C, which is called Medicare Advantage and is a private health insurance option (like an HMO or PPO) available from many insurance companies.

• Medicare D is prescription drug insurance coverage. Most Medicare Advantage plans will include prescription drug coverage, so there’s no separate sign-up for Part D.

• Most people want to get Part A coverage at their 65th birthday, even if they are still working and have employer health insurance coverage. If you aren’t covered by your employer and don’t sign up around age 65, there can be a permanent late enrollment penalty.

• Many will also want to get Part B at their 65th birthday.

Are You Confused?

            Many choices, many options, many costs. It is complicated! Don’t give up if you are confused at this point: Medicare confusion is a sign of normal brain function!

            Most of the time, the people you will talk to about Medicare will be either well-meaning government employees or insurance salespeople. Many of the government employees have a hard time understanding the complexities of the system and thus will have a hard time helping you make a good decision. Most of the insurance people are only interested in the sales commission they will receive when you sign-up. Neither of these groups are really looking out for your best interests. So, what should you do?

Find Someone To Be On Your Side

            Considering that health costs can be such an enormous part of your expenses after you turn 65, it could make sense to spend a little money to get some good unbiased advice.

            Do you work with a fee-only financial planner? If so, you might be able to get good advice without additional cost. These financial planners usually include Medicare advice as one of the services they offer and you might be able to get the advice without any additional expense.

            Even if you work with a fee-only financial planner, no matter how smart they are, they probably don’t know everything about Medicare. So, who else can you talk to? A good option is one of the independent Medicare experts that doesn’t sell insurance and charges a fee to help you understand the best Medicare solution for your set of circumstances.

            If you don’t currently use a fee-only financial planner and want to understand what they do, try visiting The National Association of Personal Financial Advisors online at www.NAPFA.org. This nonprofit only has links to fee-only advisors.

An Online Medicare Expert

            In the past I attended a financial conference where one of the speakers was from the i65 Medicare Software company. I was impressed. This online solution will give you detailed Medicare advice for a $109 charge. With your financial planner, you enter your information online and then you receive a report which includes step-by-step instructions for your situation. Considering that your health care costs in retirement can exceed $250,000 over the rest of your life, a charge of $109 and the time it takes you to fill out your information online seems like a trivial price to pay to get good advice.

Match Medicare To Your Health Situation, Plus Consider Risks

            How did you decide what Medicare or Medicare Advantage coverage to have? Chances are, you didn’t make a fully informed decision. Who can be fully informed when the program is complicated and hard to understand?

Because of this the coverage you have may not be a good match for the health issues you are having. For instance, are the doctors you want, or need to see, in-network? If not, maybe you should switch to a different plan. How about your out-of-pocket costs? Are they higher than you expected? Now is the time to see if you have better options that will save you money.

            Given what you know about your health situation or what you guess about your future health based on family history, you should be able to make educated Medicare decisions.

            For most people, they will probably want something in addition to traditional Medicare. There are lots of financial risks that you will probably face if you do not buy supplemental insurance (perhaps retirement-destroying risks). Traditional Medicare won’t give much protection if you have a long-term hospital stay or if you end up in a skilled nursing facility.  

            If you are in very good health, you might be able to save money with a Medicare Advantage plan. However, that’s only if you use in-network providers. If you have a rare illness or need treatment at a specific facility, that might not be in your plan and you may face lots of out-of-pocket costs.

            If your health gets worse, don’t assume you can change to a different supplemental plan in the future. Did you know that most insurance is regulated on a state-by-state basis, so make sure you know what is, and is not, possible in your state. California, for instance, has many of its own rules. There is a good chance you will be charged more or denied coverage if you are switching after the initial sign-up period.

Do You Travel Or Plan To Live In A Vacation Home?

            Some Medicare plans only have coverage in a single state or region. If you have an emergency somewhere else, it might be covered, but most normal and continuing medical issues will not be covered. A supplemental plan might be what you need, as these often have better coverage when you travel.

Consider Making Changes to your Drug Coverage

            Although you probably made some Medicare choices in the three months leading up to your 65th birthday, you want to consider your options every fall and see if it makes sense to make some changes in your coverage.

            For instance, you probably chose some sort of Medicare Part D coverage, which is insurance for prescription drugs. But, do you know that the formulary of drugs covered under each Part D plan changes every year? You need to check the drugs you need against the formulary list of your plan to make sure they are still covered. If the coverage of your drugs has changed, it may make sense for you to change to a different prescription drug plan. There is no medical underwriting for drug plans, so this sort of change is not particularly difficult to make. Look into it.

Do You Have Retiree Coverage from a Past Employer?

            If you have retiree coverage from a past employer, how well do you understand your coverage? There is a good chance it was fantastic when you retired, but benefits change and it might not very good today if you shop around. You don’t want to be stuck with coverage you can’t change, so don’t wait to check. If you wait too long, you might not be able to make a change to other Medicare coverage options.

Don’t Procrastinate or You Will Run Out of Time

            The last few months each year are often busy and you probably have a full schedule. But, you can’t change the fact that Medicare open enrollment closes in December.

            If you are diligent, you can start reading and researching, and maybe find the best Medicare solution for you. But, what if you are wrong? Consult a reliable source that is independent of the government and insurance companies, and that is willing to look out for your best interest, even if you have to pay them something. Your peace of mind is worth the cost.