Why Older Adults Should Review Their Medicare Coverage Each Year

“Do I need to update my Medicare plan every year?”

It’s a question we hear often. The fact is that Medicare plan coverage details can change yearly. That’s why all beneficiaries should regularly review and understand their plan benefits to see if they still fit their needs.

A surprisingly small number of people take the time to evaluate their plan annually. In 2019, only 46% of Medicare enrollees examined their existing plan’s coverage to check for any changes in premiums or other out-of-pocket costs for coverage year 2020. Less than a third compared their current plan with other Medicare plans available to them.¹

Why is it important to review my Medicare plan annually?

If your current Medicare plan isn’t working for you, you have choices. You may be able to find a plan that costs less money, covers the medications you need, and gives you more flexibility in the doctors you see. You may even be able to get coverages not included under Original Medicare—such as dental, vision, and hearing care.

When can I make changes to my Medicare plan?

Medicare recommends taking the time to review your plan (and any notices you’ve received about your coverage) in September and October.

Then, during Medicare’s Annual Open Enrollment Period (October 15 to December 7), you can make the changes you want. These are the basic changes you can make during that timeframe:

• Change from Original Medicare to a Medicare Advantage plan (or vice versa).
• Change from one Medicare Advantage plan to another.
• Join a Medicare (Part D) drug plan, or swap one Part D plan for another.
• Drop your Medicare drug coverage completely.
• Swap a Medicare Advantage plan without drug coverage for one that offers drug coverage (or vice versa).

Any changes you make during the Annual Open Enrollment Period will take effect on January 1 of the following year.

Not reviewing your Medicare coverage options can cost you

According to Samuel Kina, SVP of Economics & Research at Picwell, Inc., Medicare choice errors can be unnecessarily costly. These errors range from selecting inappropriate coverages or not enrolling in a plan by a specific deadline. Even worse, these kinds of mistakes have financial consequences that can build over time.

In this excerpt from his book “It's Not That Complicated: The Three Medicare Decisions to Protect Your Health and Money,” author and Medicare expert Ari Parker, JD gives a jarring real-world example of the high price of Medicare choice errors:

“At one of our recent Medicare Made Simple presentations, a 72-year-old attendee, Diane, was getting ready to retire and wanted information on how to apply to enroll in Medicare. She loved her employer-provided coverage. And she assumed, because she had worked continuously past age 65, that she could delay taking Medicare without hassle.

“When it came time to notify Social Security of her intent to enroll in Medicare, Diane learned two pieces of bad news:

1. She wasn’t eligible to enroll in Medicare Part B by way of her Special Enrollment Period because her employer only had 18 employees.
2. Because she missed her sign-up window, she would pay a 70% Late Enrollment Penalty on her Medicare Part B premium for the rest of her life.”^*

Despite cautionary tales like this, Medicare choice errors are common. According to Kina, a team of economists who analyzed Medicare Advantage plan selections found that just 10% of older adults chose the optimal plan:

People were overspending by more than $1,000 per year on average, and more than 10% of people were overspending by more than $2,000 per year^,2 ” he explained.

The good news is that you can prevent these pricey mistakes—and save money—simply by reviewing your Medicare coverage each year.

Your annual Medicare coverage check in 6 steps

Reviewing your Medicare plan doesn’t have to be time-consuming—all it takes is 10 or 15 minutes. These questions can help you assess your plan and make any changes you need:

1. Have your health care needs changed in the past year? For example, did you sustain an injury that requires ongoing care, or were you diagnosed with a chronic illness?
2. Are your doctors still considered in-network? If you have a Medicare Advantage plan that only covers a specific list of providers, facilities, and/or pharmacies, you'll want to have the most up-to-date network information. Covered providers can change from year to year, and most people prefer to stick with the doctors they already see.
3. Will your prescriptions be covered under your current drug plan? Make a list of the medications you take and check them against the formulary for your Part D or Medicare Advantage plan with prescription coverage. Hint: insurance carriers publish their drug list each fall.
4. Do you need additional benefits—for example, dental, hearing, or vision? These services have very limited coverage under Original Medicare. If you think you'll need these coverages in the coming year, you may want to look into a Medicare Advantage plan that offers them.
5. Will you be traveling a lot next year? If you have Original Medicare, you're covered nationwide for any provider that accepts Medicare. But if you have a Medicare Advantage plan, your coverage may be restricted to a certain geographic area. You can avoid high medical bills by making sure your Medicare plan follows you wherever you go.
6. Have your financial needs changed? Consider how your plan fits into your current budget, and whether you need something more affordable. In addition to the monthly premium, you'll want to consider other out-of-pocket Medicare costs such as deductibles, coinsurance, and co-payments. Tightening your budget may be more of a priority right now that having a broader choice of providers.

You’ll also want to compare plans, particularly if you have Medicare Advantage. With a bit of comparison shopping, you may be able to find a new plan that offers better coverage at a lower cost.

When is the best time to review your Medicare plan? Ari Parker recommends reviewing Medicare Advantage and standalone Part D plans every fall. Medigap (supplemental coverage) plans should be reevaluated every three to four years.

Who can help me choose the right Medicare plan?

Choosing the right Medicare plan is an individual journey. There’s no one-size-fits-all plan; everyone’s needs and situation are unique. That’s why it’s essential to do your homework before enrolling in a Medicare plan—even if it’s one highly recommended by your family or friends.  

While doing your research, you may be wondering, “How do I get unbiased Medicare advice?” One place to start is talking with a licensed Medicare advisor who meets NCOA's rigorous Standards of Excellence (SOE).

We’ve identified a select group of knowledgeable Medicare brokers who can help you be confident in the enrollment choices you make. Each one meets NCOA’s strict requirements, which ensure they’re able to provide comprehensive Medicare information and helpful decision-making guidance. Talking to these certified advisors is 100% free. And best of all? You will not be pressured into buying a specific Medicare plan. Our partner brokers are here to help you find a plan that meets your needs, preferences, and budget. 

*Excerpted from "It's Not That Complicated" Copyright © 2022 Memoir, Inc. dba Chapter, All rights reserved. No part of this book may be reproduced without the prior written permission of the copyright owner.

Sources

1. Kaiser Family Foundation. A Relatively Small Share of Medicare Beneficiaries Compared Plans During a Recent Open Enrollment Period. Found on the internet at https://www.kff.org/medicare/issue-brief/a-relatively-small-share-of-medicare-beneficiaries-compared-plans-during-a-recent-open-enrollment-period/

2. Gruber, J., B. Handel, J. S. Kina and J. Kolstad. Managing Intelligence: Skilled Experts and Decision Support in Markets for Complex Products (GHKK, 2021). Found on the internet at https://www.nber.org/papers/w27038