Folks who follow a well-defined financial plan usually have some important dates circled on their calendars. At the beginning of the year, you probably plot out some annual goals. In the spring, you gather last year's info for tax season. In the summer, parents start budgeting for family vacations and the upcoming school year. Once the leaves start changing you might start making a holiday gift list and budget. And then at the end of the year, it's time to reflect on what you've accomplished and start planning for the New Year.
Retirees age 65 and over need to add a new item to their annual agendas: Medicare Open Enrollment. With very few exceptions, this is the only time during the year when seniors can lock down the health care coverage that they need. I hope this six-step guide to Open Enrollment will help ease new retirees into the process and remind current enrollees of what they should try to accomplish in the coming weeks.
1. Mark your calendar.
Medicare Open Enrollment (also called Medicare’s Annual Election Period) runs from October 15th through December 7th each year. The government will extend open enrollment for folks who have been impacted by things like hurricane season, but for most seniors, this is it.
Some new retirees might mistake Open Enrollment with other Medicare enrollment windows. Very briefly, those other enrollment periods are:
- Initial Enrollment: Seniors who are no longer receiving coverage from an employer can sign up for Medicare when turning age 65. The enrollment period lasts for 7 months, starting 3 months before you turn 65, and ending 3 months after the month you turn 65. If you miss your 7-month initial enrollment period, you may have to wait to sign up and may pay a monthly late enrollment penalty for as long as you have Part B coverage.
- General Enrollment Period: From January 1st to March 31st, seniors who missed Initial Enrollment can choose coverage. Again, you'll probably have to pay a late enrollment penalty for Medicare Part B, and your coverage won't start until July.
- Special Enrollment Period: For folks who skipped Initial Enrollment because they were still receiving coverage from their job or a spouse's job, or due to a disability.
- Medicare Advantage Open Enrollment Period: From January 1st to March 31st, Medicare Advantage enrollees can switch to a new Advantage plan or switch to original Medicare.
2. Think about the coverage you need.
Open Enrollment can be more complicated than some new retirees are prepared for. As we've covered in previous posts, Medicare is not totally free, it doesn't cover everything, and your choices may vary depending on what state you live in. Couples also need to remember that Medicare doesn't insure families like employer-subsidized plans do, so each spouse will be selecting individual coverage.
If you and your spouse are in relatively good health, that could simplify your choices. But, for example, if you have significant prescription drug needs, you'll have to check your medication list against the coverage that various Part D plans offer. If you're managing hearing loss or poor vision, you might need to investigate Part C Medicare Advantage Plans from a private insurer.
3. Know what you can do.
According to Medicare.gov, these are your options during Open Enrollment:
- Change from Original Medicare to a Medicare Advantage Plan.
- Change from a Medicare Advantage Plan back to Original Medicare.
- Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
- Switch from a Medicare Advantage Plan that doesn't offer drug coverage to a Medicare Advantage Plan that offers drug coverage.
- Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn't offer drug coverage.
- Join a Medicare drug plan.
- Switch from one Medicare drug plan to another Medicare drug plan.
- Drop your Medicare drug coverage completely.
The choices you make during Open Enrollment will go into effect on January 1st, 2022.
4. Check your mailbox.
Don't let any mail from the Centers for Medicare and Medicaid Services (CMS) land in your shredding pile this month. Current Medicare enrollees should receive an Annual Notice of Changes (ANOC) detailing any changes to your current plan, including prescription drug coverage and prices. You might also receive marketing material from insurers that could be helpful as you're comparing costs and coverage options. Even if you’re happy with your current plan, it’s important that you review your ANOC so that you’re not hit with a surprise hike in medication or copay costs next year.
5. Prevent fraud.
In 2019, the CMS sent out almost 60 million new Medicare and Medicare cards that seniors now use to verify benefits instead of a Social Security number. Fraudsters pounced, posing as CMS agents who were calling to "verify your new Medicare number." You might receive similar calls or messages during Open Enrollment.
Here's a direct quote from Medicare.gov: "Medicare will never contact you for your Medicare Number or other personal information unless you’ve given them permission in advance."
"Never" means never -- not during Open Enrollment or any other time during the year. So, if someone calls, emails, or texts you asking for your Medicare Number, banking info, Social Security number, or any other private data, hang up or delete. That includes anyone who claims to be a private insurer selling Medicare coverage.
6. Get help.
Feeling overwhelmed? Don't be.
As you're trying to narrow your options, a good start might be Medicare's own interactive tool that helps you compare plans.
You can also check out the State Health Insurance Assistance Program (SHIP) which can connect you to an insurance counselor in your state.
You could also reach out to your homeowners, auto, or life insurance agent. Even if their company doesn't provide Medicare counseling, they might be able to connect you to a trustworthy health care pro who can help.
My team at Keen Wealth can also help direct you to resources that could make Open Enrollment a little easier to navigate. Please don't hesitate to get in touch if we can be of any help. And once you've chosen your Medicare coverage, let's get a year-end review meeting on the books so that we can incorporate your new health care spending into your overall plan and start looking ahead to 2022.
This is indented to be educational and is not tailored to your specific needs.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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