Open enrollment is here; it is a process you should review thoroughly, and your decisions should be weighed carefully. Review your annual notice of change, which you should have received in September or early October. It will update you with any changes you can expect for your plan. Check to ensure your prescriptions are still covered. Check to ensure your physicians are still in-network. If you have a Medicare Advantage policy, networks, premiums, and benefits can change every year and doctors can switch networks at any point. This year, with the public health crisis still looming, it is crucial you check your benefits offerings before the window closes.
Costs could rise by 10% in 2021 if most of the care deferred this year gets pushed into 2021, which would make it the highest rate of medical–cost inflation since 2007, according to PwC’s Health Research Institute. Premiums and deductibles have been going up, and more than likely will continue to do so.
The window for making changes to your coverage is small. The annual enrollment period for Medicare is from October 15 through December 7. Changes will go into effect on January 1. There is an open enrollment period for Medicare Advantage from Jan. 1 through March 31. Any changes you make will take effect on the first of the month after the plan receives your request.
What can you do during these timeframes?
During Medicare open enrollment (Oct. 15 – Dec. 7)
- Move from a Medicare Advantage plan to a different one.
- Switch from a Medicare Advantage plan back to traditional Medicare.
- Switch from traditional Medicare to a Medicare Advantage plan.
- Join a Medicare prescription drug plan.
- Switch Medicare prescription drug plans.
- Drop your Medicare prescription drug coverage.
During Medicare Advantage open enrollment (Jan. 1 – Mar. 31)
- Switch from one Medicare Advantage plan to another.
- Drop your Medicare Advantage plan and go back to traditional Medicare, with an option to join a Medicare Prescription drug plan.
What does Medicare Advantage and Medicare cover?
Medicare Advantage plans provide all the benefits of Part A and Part B, as well as prescription drug coverage so you won’t have to worry about signing up for Part D. They usually also offer coverage for things that aren’t covered under traditional Medicare such as vision, dental and hearing. You are required to use health care providers that are in the plan’s network and may need a referral to see a specialist, which is a major difference from traditional Medicare. Another key difference between the two is with Medicare Advantage plans, once you spend a certain amount, the plan will cover 100% of the costs for the rest of the year. With traditional Medicare, there is no limit on your out-of-pocket costs each year.
Medicare (Part A and Part B) covers a large percentage of medical expenses for those age 65 and beyond. Part A pays for hospital related costs such as inpatient hospital stays, time in skilled nursing facilities, surgery, hospice, and some home health care needs. Part B pays for doctors’ visits, outpatient care, some medical equipment, and some preventive services.
However, Medicare does not cover everything. There are some big holes to be aware of:
Prescription drugs: You can purchase a separate Part D prescription-drug policy or a Medicare Advantage plan to supplement. Sign up for these policies can take place at the time of enrolling in Medicare or when you lose coverage. Policy changes can take place every fall during open enrollment. The Medicare Finder is a good tool for comparing costs and coverages.
Long-term care: These costs can be huge! According to a study by Genworth, a room in an assisted living facility costs $48,612 and the average cost of a private room in a nursing home was $102,000 in 2019. The use of a home health care aid was $52,624 based on 44 hours/week. Medicare offers coverage for some skilled nursing services but not for help with things like bathing or dressing. You can purchase a long-term care policy to fill in the gap.
Deductibles and co-pays: You are responsible for paying a Part A deductible of $1,408 before coverage starts (an increase of $44 from 2019), and you’re also on the hook for a portion of the cost of extended stays in the hospital ($352 per day for days 61-90 in the hospital and $704 per day after that – these numbers are projected to increase to $363/day and $726/day respectively). With Part B, you must pay 20% of the costs after the $198 deductible, but it usually covers 80% of doctors’ services, x-rays, and lab tests. A Medigap or Medicare Advantage plan can supplement. Medicare.gov provides more information on choosing a Medigap policy.
Vision and dental and hearing aids: Dental visits, cleanings, fillings, dentures, or extractions are not covered by Medicare. Some Medicare Advantage plans cover cleanings and x-rays but typically there is an annual coverage cap. You can obtain coverage from a separate dental insurance policy or dental discount plan. Another option is to save in a health savings account (HSA) prior to enrolling in Medicare. You can’t make contributions to an HSA after you sign up for Medicare.
Usually, Medicare doesn’t cover eye exams or glasses. Some Medicare Advantage plans do, or you can purchase a supplemental policy or use a previously established HSA.
Medicare does not cover hearing aid costs, which can run as much as $3,250 per ear. Some Medicare Advantage plans do or again, you can use a previously established HSA.
Medical Care Traveling Abroad
Medicare usually doesn’t cover care you receive while traveling outside the U.S. Medigap policies C through G, M and N cover 80% of the cost of emergency care overseas with a lifetime limit of $50,000. Medicare Advantage plans sometimes offer this coverage, or you could buy a travel insurance policy.
- Part A costs are up to $458 a month from $437 previously (projected to be $478/month in 2021).
- Those that meet some of the work credits will pay $252 instead of 2019’s $240 monthly premium (projected to be $263/month in 2021).
- Part A deductible rose from $1,364 to $1,408 in 2020 (projected to be $1,452 in 2021).
- Part B premiums rose from $135.50 in 2019 to $144.60 in 2020.
- Part B deductible rose from $185 in 2019 to $198 in 2020.
- First Dollar Coverage Plans, which are supplement plans that cover deductibles, coinsurances and copayments, are all going away in 2020 (Plan C, F and High Deductible F).
- Plan G and F will become guaranteed issue plans for newly eligible beneficiaries not able to sign up for Plan C and Plan F.
- New High Deductible Plan G available in 2020.
- Starting in 2020, Medicare Advantage plans will begin offering supplemental home health benefits (adult day care, transportation, telehealth, meal delivery, and more).
- Some Medicare Advantage plans will cover End-Stage Renal Disease patients.
- The income brackets for high-income premium adjustments for Medicare Part B and D projected to start at $88,000 for a single person, and the high-income surcharges for Part D and Part B will increase in 2021.
- Maximum out-of-pocket limit for Medicare Advantage plans is increasing to $7,550 for 2021.
- Part D standard plan’s maximum deductible is increasing to $445 in 2021.
For more information relating to Medicare and options available, visit www.medicare.gov.
Sources: Kiplinger/ Forbes/ MarketWatch/ Medicareresources.org/ CNBC
© Geier Asset Management, Inc. November 2020. Gregory Palacorolla, CFP ® is Director of Wealth Management for Geier Asset Management, Inc., a Registered Investment Advisor. The articles & opinions expressed in this material were gathered from a variety of sources, but are reviewed by Geier Asset Management, Inc. prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. The views expressed are those of the firm as of November 2020 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of results, or investment advice. Any advice given is general in nature and investors must consider their own individual circumstances. In all cases, please contact your investment professional before making any investment choices. Geier Asset Management, Inc. is not responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.