Medicare is one of the best ways for people to receive healthcare coverage in retirement.
Medicare is typically divided into several different parts, including:
- Part A and B, known as Original Medicare
- Part D, which helps cover prescription drugs
- Part C, also known as Medicare Advantage, which is a private insurance option that offers Medicare coverage. It’s often a combination of Original Medicare, Part D, and other coverage options like dental and vision.
- Additionally, there are Supplement Plans (A-N) to help fill gaps in your coverage.
Medicare open enrollment is a great opportunity to evaluate your Medicare coverage and make any necessary changes based on your health.
However, the process can be challenging to navigate. We’ll break down what you should keep in mind during Medicare open enrollment, along with important dates and requirements.
1. Know Key Dates
There are a few key dates to keep in mind during and after Medicare open enrollment.
Medicare Open Enrollment Dates
Open enrollment begins on October 15 and runs through December 7. During this time, you can make changes to your policy or purchase a new one. Unless specified, this is one of the only periods where you can alter your benefits for the year.
Other Enrollment Dates
In addition to fall enrollment, there are several other enrollment periods throughout the year to keep in mind.
Medicare Advantage open enrollment runs from January 1 to March 31, during which you can enroll in a policy if you haven’t already done so. The five-star enrollment period runs from December 8 to November 30, which applies to people who live in an area with a five-star plan available.
If you’re already receiving Social Security benefits, you’ll be automatically enrolled in Medicare at age 65, with coverage taking effect during the month in which you turn 65. This applies only to Medicare Part A and B.
If you’re not yet receiving Social Security benefits, you’ll be able to enroll anytime three months before or after the month you turn 65.
But in this case, enrolling earlier is often better. If you don’t have coverage from an employer or spouse’s employer, not registering at the proper time could lead to permanent penalties down the road.
What can you do during the open enrollment period?
Open enrollment is an excellent time to change an existing coverage.
What would those changes look like? Ask yourself the following questions:
- How much of your benefits are you using?
- What are you paying for, i.e., the total cost?
- What type of Part D plan do you need?
- Can you lower your taxable income to avoid or decrease the impacts of Income Related Monthly Adjustment Amount (IRMAA) on Part B and potentially Part D premiums?
- Are you moving, and will that impact what services are in- and out-of-network?
There are several reasons why you may find that a change can benefit your health and your bottom line. Let’s take a look at a couple of more significant changes.
Original Medicare, Medicare Advantage, and Medicare Supplement Plans
Original Medicare (Part A and B) offers baseline coverage, but several other areas like dental, vision, hearing and other needs aren’t covered, hence the need for a more comprehensive solution.
There are two available options for obtaining such coverage:
- Part C, Medicare Advantage Plan
- Medicare Supplement or Medigap Plan (Parts A-N)
Many Advantage plans offer a complete package—Original Medicare, Part D, and other coverage—but can be costly and more restrictive than Supplement plans. It all depends on the type of care you need and what services you would benefit from the most.
During open enrollment, you can swap plans should you want or need to. Keep in mind that different providers may require separate medical exams, which could increase your premiums. Together, we can help you evaluate your coverage and identify any gaps or areas where you could potentially streamline costs. Again, it’s completely unique to you and your situation.
Change Medicare Part D Coverage
Medicare Part D refers to prescription drug coverage, and it can get costly, especially since your premiums may increase should you earn over a specific amount each year. Keeping an eye on your total tax liability can save you an immense amount of money on annual Medicare premiums.
That said, there may be an opportunity to save money by swapping or adjusting your Part D coverage.
Evaluate Your Needs and Enroll or Adjust Accordingly
During the open enrollment period, it’s important to evaluate your current health needs and adjust your coverage accordingly. Your health may not stay the same from year to year, and you may need more or less coverage as a result.
You should also research the cost and coverage of different plans to choose the one that’s the best fit for you. It’s a good idea to check your prescription drug coverage and other out-of-pocket costs that you’re currently paying and compare it with the expenses on other plans. You should also research your current care providers or new providers you’re interested in seeing and check to see which plan they take.
Keep Saving For Medical Costs
While Medicare is one of the best ways to safeguard your health as a retiree, there are a few other options worth considering.
Medical costs are only getting higher, meaning today’s retirees will want an extra cushion to help foot their present and future medical bills.
One excellent strategy is making the most of your health savings account (HSA) if you have one. An HSA is a tax-advantaged account to help cover medical expenses. The triple tax benefit (tax-free contributions, earnings, and qualified withdrawals) makes it an excellent solution to cover costs tax-efficiently.
While you can’t actively contribute to an HSA on Medicare (this health coverage doesn’t qualify), you can use the funds you’ve accumulated to cover costs Medicare doesn’t like home care or other long-term care needs.
Another option is bumping up your emergency savings to help ward against rising health costs.
Get Professional Advice
The Medicare open enrollment period can be a little confusing, especially if it’s new to you. With so many options to choose from, you may be wondering what’s the best plan for you or even struggling with enrolling or switching plans in the first place. While proper healthcare coverage is an essential component of retirement planning, it’s easy to get overwhelmed.
We’re always happy to help clients navigate the process and choose a plan that meets their needs. We can help you incorporate health-related spending into an overall retirement spending plan to ensure your healthcare coverage fits your needs.
We can also assist in reducing Medicare premiums by lowering overall taxable income. If you’re interested in Medicare and other financial planning advice, get in touch with us to learn more!