Medicare Open Enrollment: How to choose the best Medicare option for you?

By The Lerner Group on November 14, 2023

In our previous blog, we mentioned the Medicare Open Enrollment Period is from October 15^th through December 7^th. This is when you can enroll, cancel, or change Advantage plans and Part D (Prescription Drug) plans.  Medicare.gov makes evaluation easy by offering a summary of what changes have been made to your policy (if you currently have one), and side-by-side comparisons of policies offered in your area. But there is more to know about Medicare coverage options. In this blog, we’ll explore the different options to help you choose the option that is best for you. To start, you should know there are 3 general combinations that can give adequate coverage to most enrollees:

1. Original Medicare (Parts A and B) + Part D
2. Original Medicare + Part D + Medigap policy
3. Advantage Plan (with or without Part D)

Depending on your overall health, medical needs, lifestyle and /or area of residence, each coverage should be considered.  Let’s take a look at the options below:

• Option #1 – Original Medicare + Part D

Original Medicare (Parts A (Hospitalization) + B(Medical)) offers nationwide coverage for all medical providers, specialists, and facilities that accept Medicare (and most do!).  There are no referrals needed to see specialists or to get needed therapies.  It is for these reasons Original Medicare is considered the most flexible of health care options. Costs for coverage include a monthly premium and co-pays (about 20% of service costs).

Part D (Prescription Drug) covers medications covered by Medicare.  The cost structure includes monthly premiums, co-pays and deductibles.  Part D coverage is optional coverage and can be added or changed during the Initial enrollment Period (IEP)- (3 months before and after the month of participants 65^th birthday) or the Open Enrollment Period (OEP), or a Special Enrollment Period (SEP) predicated by an approved life event.  Part D is guaranteed coverage, but penalties will be added if not enrolled during the Initial Enrollment Period

While this combination offers the most flexible coverage, the primary disadvantage of this combination is unlimited medical cost exposure.[1] Depending on the medical services required during the year, 20% is the responsibility of the patient.  So, while Part D does have an out-of-pocket maximum ($8,300 for 2023), Parts A and B do not have out of pocket maximums or limits.

• Option #2 – Original Medicare + Part D + Medigap policy

When a Medigap policy is added to Original Medicare plus Part D, out-of-pocket exposure can be minimized or eliminated.  Medigap plans cover deductibles and copays for Parts A, B, and D.  There are 10 Medigap plans that offer a range of coverage for these out-of-pocket costs, and several plans additionally cover out-of-country emergency expenses. 

Medigap plans can be joined at any time during the year, but the best time to join a Medigap plan is within 6 months of enrolling in Part B.  When enrolling during this Initial Enrollment Period, participants are guaranteed coverage at the lowest premium rate, without medical underwriting.[2]  If enrollment doesn’t happen during that time, premiums can be much higher, medical exams can be required, and Medigap coverage can be denied.

If you currently have an Advantage plan but would like to switch to a Medigap plan, make sure that you can get Medigap coverage before dropping the Advantage plan. The best time to buy a Medigap plan is during the (IEP), but the next best is during the Open Enrollment Period when side-by-side comparisons can be made (premium costs) between different carriers.  Remember, Advantage plans can only be dropped during the open enrollment period!

• Option #3 – Advantage Plans

Advantage plans offer consolidated healthcare coverage with attractive additional benefits (like health club memberships, and transportation to appointments).  Benefit packages are built with local doctors and suppliers of health care, and often include Part D prescription drug coverage.  These added benefits come at little to no extra cost, as Medicare incentivizes insurance companies with payments that can be used to reduce or eliminate additional Advantage premiums.  During Open Enrollment, participants have dozens of different plans to choose from to get the best coverage for you.

Advantage plans offer streamlined or simplified coverage and out of pocket limits!  However, limitations in coverage might make these plans not as good of an option as Original Medicare + a Medigap policy. 

• Medicare Part A and Part B are required to enroll in an Advantage program.
• Medicare Part D should be enrolled in unless drug costs are covered by the Advantage plan.

Pros and Cons of Medicare options

Original Medicare + Part D

              Pros:

• Most flexible coverage
  • Easy enrollment during Initial Enrollment Period (IEP) for Parts A, B and D
  • Part D coverage can and should be compared annually during the Open Enrollment Period for improved coverage or price.

              Cons:

• Unlimited out of pocket exposure for Parts A and B

Most beneficial coverage for:

• Healthy participants that don’t anticipate major medical needs.
  • Very low income or net worth participants that are likely to need special (government) assistance to cover any medical care co-pays or deductibles.

Due to the out-of-pocket expense exposure, participants should be very cautious about selecting this option!

Original Medicare + Part D + Medigap policy

              Pros:

• All the benefits of Original Medicare + Part D
• Quantifiable and limited out of pocket exposure based on which Medigap policy chosen.

              Cons:

• Additional monthly premium for Medigap plan
  • Medigap plan premiums can be increased (significantly), and coverage can be denied if not enrolled within the first 6 months of Part B coverage (Initial Enrollment Period). 
  • If Medigap coverage is secured, any changes to that policy that the participant makes can result in re-pricing of premiums and medical underwriting requirements.

Most beneficial coverage for:

• Participants who have health issues that might require specialty care.
  • Participants who spend significant periods of time outside of primary residence area, or who live in another state part of the year, or those who spend significant amount of time out of the country.
  • Participants who live in more rural areas that don’t have a network of high-quality specialty healthcare.
  • Participants who can afford the additional monthly premium for a Medigap plan- and want the flexibility of Original Medicare, and out of pocket limits.

Advantage Plans

              Pros:

• One stop shop for medical coverage
  • Easy annual plan comparison to make changes to coverage.
  • Coverage of other medical services such as dental, vision and hearing in addition to other benefits
  • Wellness benefits including gym memberships, nutrition, or health care counseling.
  • Out of pocket limits

              Cons:

• Local healthcare provider selection might limit medical coverage when out of town or out of state.
  • Referrals are sometimes required for specialty services.
  • Low-cost coverage on “in-network” providers, but
  • Reduced coverage for out of network providers.

              Most beneficial coverage for:

• Participants whose doctors and medical providers of choice are covered in-network – most often the case in larger metropolitan areas.
  • Participants that are generally healthy
  • Those who will take advantage of the “extra benefits” provided by the plan.
  • Participants that spend most of their time in their area of residence.
  • Participants who might struggle to pay higher Medigap monthly premiums.

              When selecting the best healthcare coverage, start by considering your own health and medical needs, then evaluate the coverage that best fits your lifestyle and budget!

Go to Medicare.gov to get more information and side-by-side comparisons for all Medicare plans and premiums!    

[1] https://www.medicare.gov/basics/costs/medicare-costs

[2] https://www.medicare.gov/basics/get-started-with-medicare/other-paths