[Updated November 2, 2023]
Medicare's Open Enrollment Period takes place each year from October 15th through December 7th. It’s an important time for anyone who benefits from Medicare coverage, and there are plenty of rules and limitations to consider. So, it pays to be prepared.
Read on to learn six steps to help you get the most out of Medicare’s annual Open Enrollment Period.
Medicare Basics
Since 1965, Medicare has played a leading role in our nation’s healthcare system by providing coverage and benefits to millions of Americans. In general, the federal health insurance program is available to people 65 years of age and older.
You may be eligible to get Medicare earlier if you have a disability, End-Stage Renal Disease (ESRD - permanent kidney failure treated with dialysis or a transplant), or ALS (also called Lou Gehrig’s disease).
Medicare has two main parts, plus supplemental programs, which we cover in more detail below. Part A is hospital insurance. Most people do not have to pay for Part A. Part B is medical insurance, and most people pay monthly for Part B. Click here to see Medicare Premiums for Part A & Part B.
1. Know When Your Enrollment Period Is
If you’re approaching 65, your first chance to sign up for Medicare will be during your Initial Enrollment Period. This period lasts for 7 months, beginning 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 pay a monthly late enrollment penalty for as long as you have Part B coverage. You may also have to pay a penalty if you have to pay a Part A premium, also called “Premium-Part A.” The penalty goes up the longer you wait, so don’t miss it!
Each year after that, you’ll want to bookmark the Open Enrollment Period on your calendar, as it’s your chance to make changes and take advantage of better benefits. We recommend you start preparing your questions and researching a few months before the period begins, so you’re ready to take action when October 15th rolls around.
2. Know What You Can and Can’t Do
During the Medicare open enrollment period you can join, change, or drop certain Medicare plans. For example, during this time you can:
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Switch from Original Medicare to a Medicare Advantage plan
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Change back to Original Medicare from a Medicare Advantage Plan
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Switch from one Medicare Advantage Plan to another
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Switch from a Medicare Advantage Plan without drug coverage to a plan with
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Switch from a Medicare Advantage Plan with drug coverage to one without
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Join a Medicare Part D plan
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Switch from one Part D plan to another
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Drop your Medicare drug coverage altogether
If there’s a specific change you know you want to make, check ahead of time to see if it’s allowed during the Open Enrollment Period.
3. Review and Compare Plan Options
The plan that works one year may not be the best the following year. As your health needs change, so should your Medicare plan. There are parts of Medicare, such as Section D, the prescription drug plan, that you can customize to best meet your health needs.
Beyond that, you’ll need to consider any changes Medicare may be making to your plan (whether you want them to or not). If you're already enrolled in Medicare, your plan will send you a "Plan Annual Notice of Change" (ANOC) each fall, usually by the end of September. The ANOC includes any changes in coverage, costs, and more that will be effective in January.
If you don’t review your ANOC, you could be hit with some unwelcome financial or coverage surprises. When you’re looking through the details of each Medicare plan, consider:
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Coverage - Which plan will give you the best benefits?
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Cost - Compare the monthly Medicare premium to what you’re already paying, either through your job or the Medicare plan you're currently on.
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Medicare Star Ratings - The organization uses information from member satisfaction surveys, plans, and healthcare providers to rate overall performance of Medicare Advantage and Part D plans, between 1 and 5 stars (5 being excellent).
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Compatibility with other plans - Medicare can work with other types of health insurance, but there are rules about who pays first.
4. Know What’s Covered
Medicare will not likely cover all of your health expenses. Medicare has different parts, each one with its own benefits and costs. You'll want to know about the different options so you can make an informed decision and plan ahead for out-of-pocket expenses:
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Part A (Hospital Insurance) - Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
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Part B (Medical Insurance) - Covers certain doctors’ services, outpatient care, medical supplies, and preventive services.
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Part C (Medicare Advantage Plan) - A type of Medicare-approved health plan from a private company that you can choose to cover most of your Part A and Part B benefits instead of Original Medicare. It usually also includes drug coverage (Part D).
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Part D (Drug coverage) - You can choose part D to help lower costs of prescription drugs. Medicare-approved private plans offer this coverage.
Figure out exactly what your potential plan covers, and consider your personal health situation to determine the best plan. For example, if you know you’ll be going to the doctor frequently, consider purchasing supplemental health insurance, like the Medigap plan.
This can raise your cost per month, but depending on your situation, it may pay off in the long run.
5. Make Sure Your Primary Doctor Accepts Medicare
Some doctors may not accept Medicare, which means your insurance plan won’t cover the cost of your doctor’s visits. Even if you’ve been seeing the same doctor for years, if your new plan does not cover the cost of those visits, you will find yourself paying full price, out of pocket.
When choosing to enroll in Medicare, make sure your doctor accepts it and if not, look into either finding a new doctor or choosing a different plan. It would be really disappointing to sign up for a new plan, only to find out your GP doesn’t accept it.
6. Consider a Medicare Advantage Plan
Medicare Advantage plans are offered by private insurance companies who will be able to bundle Parts A, B, and D into one plan. Depending on your plan, it may also include coverages that aren’t typically included with regular Medicare plans—things like dental, vision hearing, and even gym memberships.
Medicare Advantage can be a great option for people who want more than what Original Medicare provides. However, it may not be as widely accepted by physicians. So, be sure to check to see if your doctor accepts it. Another potential drawback is that it could have a higher copay, which means more out-of-pocket expense than with the original Medicare.
Health care coverage is an essential part of your long-term financial plan. Unfortunately, medical bankruptcy is a reality in this country, and being uninsured (including with long-term care coverage) could be catastrophic to your financial future.
If you’re not sure what’s best for you, a financial planner can help you assess your situation based on your current financial and health status, and your goals for retirement.
How prepared are you for retirement? Download the Essential Retirement Guide to learn the 7 things you need to do before retiring.
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