If you are new to Medicare or have been on Medicare for a little while, you’re probably wondering the same thing.
Medicare’s Annual Enrollment Period, Oct. 15th – Dec. 7th, is the time to review your health and drug benefits for next year. You can make changes to your Advantage Plan by enrolling in different coverage or going back to traditional Medicare, as well as make changes to your Part D drug coverage. Any changes you make usually take effect on January 1st of the following year.
There is a lot of buzz around this time of year.
You will probably get some unsolicited phone calls, see a lot of television commercials, hear a ton of radio ads, and even see a few billboards advertising “Medicare Open Enrollment.”
Today we will clear up what the Annual Enrollment Period is and what you can do during this period, depending on what parts of Medicare you have and what additional coverage you may have.
What is the Annual Enrollment Period?
The Annual Enrollment Period (AEP) occurs every year from October 15th through December 7th.
This is Medicare’s absolute busiest time of year.
You will notice a lot of marketing and advertising referring to this period as “Open Enrollment.”
There are several things you can do this time of year:
- Switch your Part D drug plan
- Enroll in a Part D drug plan
- Drop a Part D drug plan
- Switch from Medicare Advantage to Original Medicare plus a supplement
- Switch from Medicare Advantage to Original Medicare only
- Switch from Original Medicare to Medicare Advantage
- Switch from one Medicare Advantage plan to another
Continue reading, and we will talk about what you can do during the Annual Enrollment Period.
Switch Your Part D Drug Plan
During the Annual Enrollment Period, you can compare your current Part D drug plan to the newly released Part D drug plans for the coming year. Learn more about Part D here.
The plans change quite a bit from year to year. For example, insurance companies can raise premiums or change how they will cover certain drugs, also known as formularies.
It is always worth looking at the plans for the new year. There may be a new plan that will cost you less or will cover your drugs better.
If you enroll in a new Part D drug plan, you will still be covered by your current plan through the end of the year.
On January 1, the new one will start, the old one canceled automatically.
If you choose to stay in your current Part D drug plan, you need to do nothing this time of year – it automatically renews.
Let’s Look at an Example:
Doug has a 2020 Smart Senior Part D drug plan.
He gets a letter from his plan during the annual enrollment period, notifying him that if he stays on the same plan for 2021, his monthly premium will be going from $25 to $80.
So Doug gives his agent a call as soon as he gets the letter, and his agent helps him enroll in a 2021 Very Well Value plan for $25 per month.
On January 1st, Doug’s Very Well Value coverage begins, the Smart Senior plan cancels simultaneously.
Most people make some kind of change to their drug plan during AEP.
Enroll in a Part D Drug Plan
Many people do not enroll in a Part D drug plan when they are initially eligible. Or, they previously had one and chose to drop it.
If you are not new to Medicare but chose to go without Part D prescription drug coverage, you can enroll in a Part D plan during this enrollment period.
After you apply, Your coverage will begin on January 1st.
In addition to the monthly premium, you may pay to the insurance company for your Part D drug coverage, you may also have to pay a late enrollment penalty to Medicare.
Medicare determines the late enrollment penalty based on how long you went without prescription drug coverage but were eligible to have it.
If you chose to go without drug coverage because you could not afford the extra premium, and now have to pay a penalty, there may be help available.
You can apply for extra help with your out-of-pocket costs.
Extra help is a program that helps with copays, deductibles, and premiums.
It is generally for lower-income households. You can read more here.
Drop Your Part D Drug Plan
If you want to drop your Part D prescription drug coverage altogether, you can do so during this enrollment period.
It is essential to know that if you drop your Part D drug plan and decide to enroll in one later, you will likely be subject to the late enrollment penalty mentioned earlier.
There are other limited situations in which you can lose your Part D plan.
For example, they can drop you if you fail to pay your monthly premium. However, in general, you can only drop Part D coverage during certain times of the year, like during AEP.
Switch from Original Medicare to Medicare Advantage
During the Annual Enrollment Period, you can switch to a Medicare Advantage Plan if you currently have:
- Original Medicare Part A and Part B only.
- Original Medicare Part A and Part B plus a Medicare Supplement
- Original Medicare Part A and Part B plus a Part D drug plan
- Original Medicare Part A and Part B plus a Medicare supplement and a Part D drug plan
If you are in any of the above situations and enroll in a Medicare Advantage Plan, your plan begins January 1st.
If you have a Medicare Supplement, you will have to contact the insurance company your supplemental plan is through and cancel that coverage as of January 1st.
Many Medicare Advantage Plans include prescription drug coverage.
If you enroll in one that does, you will also need to cancel your current Part D plan as of January 1st.
If you enroll in a Medicare Advantage Plan that does not include prescription drug coverage, you may or may not be able to enroll in a new drug plan.
You’ll have to talk to your agent when you are considering a specific plan.
Suppose you have only had Medicare Part A and Part B and have been eligible for Part D drug coverage but have been going without it.
Medicare will still charge you the late enrollment penalty mentioned earlier when you get onto a Medicare Advantage plan with prescription drug coverage or a Part D plan in addition to an Advantage plan that does not include drug coverage.
Let’s Look at an Example:
Edith has Original Medicare and Plan G.
She did some research and found that there will be a Smart Senior Choice Medicare Advantage plan available in her area in 2021.
The possibility of saving money and not having to pay for her Supplement is very appealing to her.
All her favorite doctors are in the plan’s network, so she calls her agent, and he helps her enroll in the Smart Senior Choice plan.
Edith’s Advantage Plan begins on January 1st. She calls the company she has her Supplement with to cancel that plan as of January 1st.
If you decide you no longer want your Medicare Advantage Plan, this would be the time of year to make these changes.
Switch from Medicare Advantage to a Medicare Supplement
If you have a Medicare Advantage Plan, you can switch back to Original Medicare (Part A and Part B) and apply to get a Supplement Plan during this enrollment period. You can learn more about Medicare Supplements here.
In most cases, this will require you to be medically underwritten.
Medical underwriting is when there are health questions on your application for Supplemental coverage.
The insurance company reviews the health questions, looks at your health history, and either approves or declines your application based on their findings.
Once your application for a Medicare Supplement is approved, you’ll need to pick a drug plan.
You can learn about Medicare Supplement underwriting in this post.
If your Medicare Advantage plan did not include prescription drug coverage, you can continue to go without or pick one at this time.
Just remember, you’ll have a penalty when you eventually decide to apply for drug coverage.
Your Supplement and your Part D drug plan will begin January 1st, at the same time removed from your Medicare Advantage plan.
Let’s Look at an Example:
Gregory has a Very Well Value Medicare Advantage plan.
He is no longer happy with it because his favorite doctor no longer participates in the program.
So Greg decides he would like to switch back to Original Medicare to continue to see his favorite doctor.
He also decides to add a Supplement to minimize his out-of-pocket costs.
His agent helps him apply for a Plan G. He is relatively healthy, so his application is approved.
As soon as he’s approved, he applies for Part D prescription drug coverage.
On January 1st, Gregory’s Plan G coverage and drug coverage begin, and his Medicare Advantage Plan cancels at the same time.
Moving from a Medicare Advantage Plan to a Supplement is very easy. Your agent can help you do so during this time.
Switch from Medicare Advantage to Original Medicare
Medicare Supplement coverage is optional. So if you decide to go without and have just Medicare, you can do so.
Just be careful of the out-of-pocket costs. Medicare generally only covers 80%. There is no cap on the out-of-pocket you may have.
When enrolling in a Part D drug plan, the enrollment automatically drops the Advantage coverage.
Suppose you do not enroll in a Part D drug plan in addition to Original Medicare, in that case, you will have to contact the insurance company you have your Advantage plan through and cancel that coverage as of January 1st.
Switch from one Medicare Advantage Plan to Another
During the Annual Enrollment Period, you are eligible to switch from one Medicare Advantage plan to another.
You may want to switch to another Advantage plan if:
Your current Advantage plan does not include drug coverage, and you want to enroll in one that does.
Your current Advantage plan does include drug coverage, but you found that it would be more cost-effective to enroll in a program that does not add separate drug coverage to that plan.
Your doctor no longer participates in your current plan but participates in another available to you.
You want to switch to an Advantage plan that has a lower maximum out-of-pocket amount for the year.
You want to switch to a plan with smaller copays for the types of services you receive most frequently.
There is a plan that covers your specific medical condition better than the plan you are currently on.
If you choose to enroll in a new Advantage plan during this period, it will begin on January 1st; your old Advantage plan automatically stops when the new one begins.
What You Do NOT Need to Do During AEP
Many people think that if they want to switch from one Medicare Supplement to another, this is the only time of year to do so.
If you have a Medicare supplement, you can switch to another supplement at any time during the year. You’ll go through underwriting if you are outside of your Open Enrollment Period.
Remember, open enrollment is when you are new to Part B. You can read more about it here.
We will talk about the initial enrollment period for getting a supplement without health underwriting in a different post. Very briefly, it is around the time that you are new to Medicare Part B.
As you can see, there are quite a few things you can do during the Annual Enrollment Period (AEP), which runs from October 15th through December 7th each year.
There are also things people on Medicare think they must do this time of year but do not have to.
Again, this time of year is very heavily marketed and advertised and can cause undue panic.
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