Making sense of Medicare, the government-run health-insurance plan for people with disabilities and those age 65 and older, isn't easy. The options read like alphabet soup, including Parts A and B (original Medicare), Part C (Medicare Advantage), and Part D (drug coverage).
Every year Medicare beneficiaries have a chance to change coverage during a Medicare Annual Enrollment Period, which ends on December 7.
Here are 14 things you need to know about Medicare and the open enrollment period.
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You can switch plans
Open enrollment is a time when people can change their Medicare Advantage and/or Part D prescription-drug plans. If you have Original Medicare with a Medigap supplemental plan and are happy with it, you need take no action.
"People can join a Medicare Advantage plan or a Part D prescription drug plan for the first time. If they are already in one of these plans, they can switch. If they don't want [the plans they currently have], they can unenroll and go back to Original Medicare," says Elaine Wong Eakin, executive director of California Health Advocates, in Sacramento.
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Parts C and D cover additional services
More than 14.5 million peopleor about 28% of the Medicare populationare enrolled in Medicare Advantage plans.
These plans allow seniors to receive both Medicare Parts A and B benefits through a private health insurer that contracts with Medicare. Plans cover hospitalization, outpatient care, and, often, prescription-drug coverage under one plan. Many plans also kick in extra services that original Medicare doesn't cover, such as dental and vision care.
Part D plans cover the cost of prescription drugs for which Original Medicare alone doesn't pay.
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Open enrollment dates have changed this year
In years past, open enrollment has been held from November 15 to the end of December. Now, that election period starts on October 15 and runs through December 7.
The change was made in 2011 to ensure that Medicare has enough time to process beneficiaries' plan choices in time and to avoid any hiccups in coverage at the start of the New Year when plans take effect, says David Lipschutz, attorney with the Center for Medicare Advocacy, in Washington, D.C. "Completing open enrollment by December 7 would give the computer systems time to catch up and for people to have their election effective and ready to go as of January 1," he says.
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You have until Valentine's Day to drop a plan
Between January 1, 2013, and February 14, 2013, you can drop your Medicare Advantage plan and return to Original Medicare. If you get out of a Medicare Advantage plan and return to Original Medicare during disenrollment, you're also allowed to pick up a Part D plan, but you don't necessarily have the right to pick up a Medigap plan, Lipschutz says.
Medigap is another type of private insurance that works with Original Medicare to help cover out-of-pocket costs and is used by about 20% of Medicare beneficiaries. With some exceptions, you're only guaranteed a Medigap plan within the first six months of both being 65 or older and enrolled in Medicare Part B. After that, unlike with Medicare Advantage plans, you can be denied coverage based on your health.
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Quality is rewarded
Because of provisions in the Affordable Care Act, starting in 2012 the Centers for Medicare and Medicaid Services (CMS) began to financially reward Medicare Advantage plans that earn high ratings.
The CMS also allows for a special enrollment period only for those Medicare Advantage and Part D plans that have earned the top five-star rating. If you choose to sign up for one of these top-rated plans you get extra timefrom December 8 through November 30, 2013, Wong Eakin says. To encourage Medicare beneficiaries to choose top-rated insurers, anyone can move to a five-star Medicare Advantage or Part D drug plan (or a plan that covers both) at any time during this periodbut this change can be made just once.
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Look past premiums
Steve Zaleznick, senior Medicare adviser at PlanPrescriber.com, says the monthly cost, or premium, of a plan doesn't tell the full story of how much you'll pay for your health care. "Most important for someone who thinks they'll be a heavy user of health-care services is the total out-of-pocket maximum," Zaleznick says.
That means adding up all possible costs, including monthly premiums, copays, coinsurance, and deductibles, so you're clear about what your total spending could be for a given year.
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Check your medications
Wong Eakin says all Medicare beneficiaries should look carefully at which drugs are covered under the plans they are considering for 2013 (check the plan's formulary) and make sure the drugs you need are on the list.
"Also know the restrictions," Wong Eakin says. "Sometimes a drug is covered but there may be a restriction like prior authorization or a quantity limit, so you should look into those things to see what you need to do to access your drugs," she says.
And, a growing number of plans are adopting a network pharmacy benefit. That means some pharmacies will be in your plan’s network and others will be out-of-network. You’ll pay more out-of-network so be sure to check that the pharmacies near you participate with your plan.
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New savings on prescription drugs
Many popular brand-name drugs are going generic next year as a result of expiring patents, so talk to your doctor about whether your medications are among them and if you can make the switch to generics to save money.
PlanPrescriber.com also offers a tool that checks if you have the right drug plan for the medications you are taking.
If in years past you've hit the prescription-drug "doughnut hole," or the gap in Part D coverage, you'll get a 52.5% discount on covered brand-name drugs and 21% off generics until you've reached the end of the coverage gap and catastrophic coverage kicks in. The discounts are the result of the Affordable Care Act, which aims to eliminate gaps in Part D coverage by 2020.
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There are new limits on out-of-pocket costs
Starting in 2012 all Medicare Advantage plans were required to limit a person's total out-of-pocket costs to no more than $6,700 for the year. That includes spending for deductibles, copays, and coinsurance for outpatient and hospital-related services (Medicare Parts A and B). It does not, however, include prescription-drug costs.
"Many plans have out-of-pocket maximums at significantly lower than $6,700," Zaleznick says. In fact, some plans being offered next year come with an out-of-pocket maximum as low as $500. What's more, CMS announced that, on average, Medicare Advantage premiums will increase by just $1.47 or 5% from last year.
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You should check your doctor's affiliation
Don't forget about your doctor when evaluating your plan during annual enrollment. "People's relationship with their doctor is paramount," Lipschutz says. Make sure he or she is still accepting your particular Medicare Advantage plan next year.
If your doctor is out of network, you'll either have to choose a new health-care provider or be on the hook for higher out-of-pocket costs in order to stay with the doctor you have.
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Many preventive services are now free
The Affordable Care Act has made many more preventive medical services available at no cost. That means you can get yearly wellness visits, diabetes screenings, and cancer screenings, among other things, without paying a copay, deductible, or coinsurance.
Look at the preventive benefits available to you and ask whether you are taking full advantage of them, Zaleznick says.
You can find a full list of free preventive services at Healthcare.gov or in the Medicare handbook. If you have a Medicare Advantage plan, you should also check with your insurer to confirm what's covered.
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You should review your options
Plans can change significantly from year to year, so even if you're happy with your current plan make sure it still meets your needs, Lipschutz says. If it does, you don't need to do anything.
But a lack of action can cost you. This year, average premiums for drug plans are expected to rise by 6%, with some plans raising costs by more than 20%. In an evaluation of 100,000 user sessions on its website during last year's Medicare Enrollment Period, PlanPrescriber.com found that a user could save more than $654 per year on average by changing to a different prescription-drug plan.
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Decision-making tools can help
Online tools designed to help people sort through the many Medicare plan choices should be used when choosing a plan, Zaleznick says.