Open Enrollment 2015: What Medicare Beneficiaries Need to Know
Medicare beneficiaries may have noticed their mailboxes are filling with brochures and packets from health insurance companies. That's because the open enrollment period for Medicare has arrived, and companies are vying for a share of the 55 million member market.
From Oct. 15 through Dec. 7, Medicare beneficiaries have the opportunity to change their coverage and can choose from original Medicare (provided directly by the government) or Medicare Advantage (offered by private health insurance companies). In addition to switching their health care plan, beneficiaries can change Part D plans which provide prescription drug coverage.
Open enrollment occurs once a year, and for most people with Medicare, it's their only chance to change plans. As you weigh your options, here are six things you should know.
Part B Premiums May Be Increasing for Some People
A report this month in the AARP Bulletin, based on data from the Medicare Boards of Trustees, finds 1 in 7 Medicare beneficiaries could see their Part B premiums increase as much as 52 percent next year.
The increase will go into effect if there is no cost-of-living adjustment for Social Security in 2016, but it will apply mainly to those already paying higher premiums because of their income and affect those who pay premiums directly to the government. Most people making direct payments are doing so because they are delaying Social Security benefits, a strategy that can increase their future monthly payments.
"Should folks in the latter situation sign up for Social Security now?" asks Patricia Barry, a features editor for AARP Publications who wrote the AARP report and author of "Medicare For Dummies." Under the law, those who have their Part B premiums deducted from Social Security cannot be subject to a premium increase.
Barry says applying for Social Security in October may allow people to save money on premiums in the short run but could cost them more in the future. "They might be giving up higher [Social Security] payments for the rest of their lives for the sake of what could well turn out to be just one year of inflated Part B premiums."
Pay Special Attention to Your Part D Coverage
Although it's a smart idea to review your health insurance options each open enrollment period, experts say most plans stay largely the same each year. Instead, most people will find changes in Part D plans.
"It's something [consumers] want to check into every single year," says Kristin Romel, a health and life agent with Alpine North Insurance Agency in Alpena, Michigan.
Romel explains that many companies use a claims-based system for determining prescription drug costs and coverage. A medication for which they had a large number of claims may end up moving into a tier with higher copays. However, other insurers may not have had the same number of claims for those drugs, and the out-of-pocket costs for those prescriptions might remain lower in other plans.
Barry's research supports this finding. In the last few years, she has analyzed what different Part D plans in the same state charge as copays for the same drug. "Those copays vary enormously, often by more than $100 for a 30-day supply, and sometimes by a lot more," she says.
The Network May Be More Important Than the Price
Those shopping for a Medicare Advantage plan may gravitate toward the option with the lowest premium. However, there is more than price to consider.
"Patients should be scrutinizing the providers [in a plan's network]," says Colin LeClair, senior vice president of business and product development for ConcertoHealth, a health care provider for dual-eligible Medicare and Medicaid patients. "The quality of providers is far more important than cost."
While it may hard to gauge the quality of unknown physicians, Medicare beneficiaries should at least check a plan's network to see if their preferred doctors and facilities participate. "You've got to be careful with little, fly-by-night companies," Romel says. "Are hospitals actually going to take that insurance?"
Your Mailbox Is Full, but the Best Help May be Found Elsewhere
Barry has a simple piece of advice when it comes to all those brochures you've received: "Ignore that avalanche of mailings from Medicare plans that are coming through the door."
Instead, use the plan finder at Medicare.gov to look over your options. Your State Health Insurance Assistance Program may also be able to help you navigate your choices. LeClair says he finds a lot of his company's clients bring their stack of mailings to the doctor's office.
"Physicians should not be advising patients on which plan to use," LeClair says, "but they can help [patients] understand them."
65-Year-Olds Need to Enroll Even If They Delay Social Security
Open enrollment is only for those who are already enrolled in Medicare, but John Piershale, a certified financial planner and wealth advisor with Piershale Financial Group in Crystal Lake, Illinois, says now is a good time to remind 65-year-olds that they need to enroll in Medicare, or they will face penalties.
For those filing for Social Security by age 65, enrollment in Medicare is typically automatic. However, those waiting to claim Social Security until a later age will need to be proactive about enrolling. The initial enrollment period runs for seven months and includes the three months before your birthday month, your birthday month and the three months after it.
Failing to enroll in Medicare during this period results in a 10 percent increase in Part B premiums for every year you delay enrolling. "A lot of people don't know about [the penalty], and there is no way to fix it," Piershale says.
The Biggest Change to Medicare Is One You Can't See
One of the biggest changes coming to Medicare is one that won't be immediately obvious to patients, LeClair says. Many insurance companies are moving toward outcome-based contracts with providers, which could change how patients are seen by doctors. These contracts are intended to reward physicians who are, for example, successfully managing chronic conditions and reducing hospital admissions.
"Historically, [insurers] paid physicians on a fee-for-service model," LeClair says. That system encouraged physicians to move through patients quickly and possibly order unnecessary testing and other services. "Now you have providers focused on doing less and providing better outcomes," LeClair says.
From a patient perspective, an emphasis on positive outcomes may mean shorter wait times to get in to see a doctor and more time spent with a physician once you're in the office.
Until outcome-based care becomes standard, Medicare beneficiaries can use the annual open enrollment period to switch to a new plan with different providers if they are unhappy with their options. However, to make the most of the opportunity, you'll need to compare more than just the price. "Don't go cheap on your health insurance," Romel advises. "Don't put a price tag on your health."
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