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Are You Prepared for Medicare’s Annual Enrollment Period?

medicareWith annual enrollment opening from Oct. 15 through Dec. 7, Medicare beneficiaries will have the chance to make changes to their plans during the annual enrollment period.

Before changing a Medicare plan, adding or dropping a drug plan or Medigap supplemental policy or shopping among various Medicare Advantage plan options, anyone who qualifies should brush up on what is available. Since private insurers change plan options from one year to the next, it’s a good idea to shop each year during the open enrollment period to see if you may benefit from a different plan with a lower co-pay or better prescription drug coverage.

Basic Coverage (Parts A and B)
Medicare’s basic coverage is separated into Part A, which provides hospital insurance, and Part B, which covers doctor visits and other outpatient care. As a general rule, the two go hand-in-hand; you must own both. If you or your spouse paid Medicare taxes during your career, there is typically no charge for these two plans.

For those who do not qualify for free coverage, the monthly premium can run as high as $407 a month. Most enrollees must pay a deductible and coinsurance for Part A and Part B services. There is no plan network of providers, per se. Participants are free to see any provider so long as that healthcare professional or facility accepts Medicare.

Part C
Medicare Part C is better known as a Medicare Advantage Plan. You can choose from a wide variety of Advantage plans that are offered by private companies that contract with Medicare, such as health maintenance organizations, preferred provider organizations, private fee-for-service plans, special needs plans and Medicare medical savings account plans. While it’s technically called Plan C, Medicare Advantage plans actually cover the same benefits provided by original Medicare Part A and B plans. Some Medicare Advantage plans also feature prescription drug coverage, which are referred to as “MA-PDs.”

Part D
Part D is an additional Medicare plan that provides prescription drug coverage for a separate premium. This includes a variety of plans that are actually managed by private insurance companies approved by Medicare. Plans feature different levels of coverage and premiums. Variables that influence coverage may include the specific type of drug purchased, whether it is included in the plan’s formulary, and whether it is purchased from an in-network pharmacy. Higher income ($85,000+/year) Part D enrollees may pay a higher premium, with the additional amount going directly to Medicare (not the plan).

Some Part D plans include drug copays or coinsurance expenses, which may be applied before or after the participant reaches his deductible. A different copayment amount may be assigned for each drug tier, and will be lower for generic drugs than brand-name drugs.

No Medicare drug plan may have a deductible of more than $360 (2016), and some plans do not apply a deductible at all. Once the enrollee has spent $3,310 (2016) on covered drugs, he will enter the coverage “doughnut hole”. While in this gap of coverage, the beneficiary pays 45 percent of the plan’s cost for covered brand-name prescription drugs and 58 percent of the cost for generics. Most drug manufacturers give Medicare beneficiaries a 50-percent discount to start with, and this savings can also be applied toward the out-of-pocket total. Once he reaches the out-of-pocket spending limit of $4,850 (2016) for Medicare drug plans, the participant’s medications will be 100 percent covered. This gap in drug coverage is scheduled to gradually reduce until it no longer exists starting in 2020.

Gap Coverage
The combination of multiple chronic conditions and what can be exorbitantly high medication costs means that the doughnut hole can create a substantial financial hardship for many Medicare beneficiaries. To cover this gap, a beneficiary may purchase a supplemental policy, also known as “Medigap.” This type of policy is designed to cover administrative expenses such as copayments, coinsurance and deductibles incurred by other Medicare policies.

Enrollees may not purchase a Medigap policy if they own Medicare Advantage or a Medicare drug plan –it is only available if you have Medicare Part A and Part B plans. Also note that this supplemental coverage does not cover long-term care, vision or dental care, hearing aids or private-duty nursing.4 However, they do cover medical expenses incurred when traveling outside the country, which is something original Medicare does not cover. Be aware that coverage for emergency care in a foreign country is covered only if it begins during the first 60 days of a trip. There is also a $50,000 lifetime limit on foreign travel emergency coverage.

  1. Your Medicare coverage choices. Accessed Sept. 23. 2015.
  2. “Costs for Medicare drug coverage.” Accessed Sept. 23. 2015.
  3. January 2015. “Closing the Coverage Gap — Medicare Prescription Drugs Are Becoming More Affordable.” Accessed Sept. 16, 2015.
  4. January 2015. “What’s Medicare Supplement Insurance (Medigap)?” Accessed Sept. 16, 2015.
  5. January 2015. “Medigap & travel.” Accessed Sept. 16, 2015.