By Nick Shea, MBA
As you move down your retirement checklist, do you get caught up on healthcare? Enrolling in the right healthcare coverage is an incredibly important decision that can often feel overwhelming. Not only do you want to make sure you have coverage for your medical needs (both known and unknown), but you also want to find a plan that offers good value without an exorbitant price tag. In other words, there’s a lot riding on your decision.
To help you out, here’s a summary of the multiple Medicare plans available and the various enrollment periods to be aware of. For those who are already enrolled, this is an ideal time to reassess your coverage to make sure it’s still the best fit for you.
Who Should Be Aware of Medicare Annual Enrollment?
Medicare annual enrollment is for people who are already a part of the Medicare system. Even if you have only signed up for Parts A and B, you can still take advantage of the annual enrollment period.
If you have not yet enrolled in Medicare, then annual enrollment does not apply to you. Your initial enrollment period is based upon your birthday, not a set date on a calendar. You need to sign up for coverage during the window of time that starts three months before the month of your 65th birthday and ends at the end of the third month after, for a total of seven months. If you are getting close to your initial enrollment period, carefully consider the coverage you choose. When first eligible, you can sign up for a Medicare Supplement plan under Guaranteed Issue Rights. This means you cannot be turned down for pre-existing conditions. If you don’t choose a Medicare Supplement plan during this time, you may not have this option in the future.
You may be wondering if you need to do anything about the annual enrollment period if you already have a plan that works for you. It’s important to review your plan and stay abreast of 2022 changes since doctor networks and drug formularies change from year to year. This review is especially true for those who are on a Medicare Advantage plan or a stand-alone prescription drug plan. If you’re unsure if your current plan is the right choice for next year, our team would be happy to help you analyze your current plans and assess other options.
When Is Medicare Annual Enrollment?
Annual enrollment for existing Medicare participants, though, has nothing to do with your birthday. It is at the same time every year, and everyone currently enrolled can participate in it, even if you only began Medicare the month before. This year, annual enrollment is in effect from Oct. 15, 2021, to Dec. 7, 2021. The decisions you make during that period will affect your 2022 medical coverage.
Starting in 2019 and continuing into subsequent years, there is a new open enrollment period for Medicare Advantage plans only from January 1 to March 31. (1) This open enrollment is more restrictive than the Medicare annual enrollment that happens in the fall. Also, it only applies to the Medicare Advantage plans, so any other changes need to be made during the Medicare annual enrollment that is fast approaching.
What Are My Annual Enrollment Options?
Medicare annual enrollment is the annual opportunity for all participants to change their Medicare coverage. Here are some of the changes you can make during annual enrollment:
- Enroll in Medicare Part C (Medicare Advantage) for the first time. If you currently have Parts A and B (Original Medicare), you can switch to Part C. Part C is contracted by outside companies and offers the same coverage as Original Medicare but can include even more services.
- Switch back to Original Medicare (Parts A and B) if you currently have Medicare Advantage (Part C).
- Change your current Part C plan to a different Medicare Advantage plan.
- Enroll in or drop Part D prescription drug coverage.
- Change your current Part D plan to a different prescription drug coverage Part D plan.
What Will Annual Enrollment Changes Cost?
Each year Medicare may change the monthly premium for Part B. Currently, the standard premium for Medicare Part B is $148.50 for 2021. However, if your income is over $88,000 for a single person or $176,000 for a couple, then your premium will be higher. The premium range for high-income earners is from $297 to $504.90.
Other costs related to Original Medicare may change from year to year. For example, the Part A deductible can increase as well as the Part B deductible. The Center for Medicare and Medicaid have not released the 2022 deductible info yet.
Medicare Part A is free if you or your spouse paid into Medicare for at least 10 years, or 40 quarters. If you only have 30-39 quarters, it costs $259. The premium for less than 30 quarters is $471. (2)
Remember that both Medicare Part B (which covers most medically necessary doctor’s services) and Part D (the prescription drug benefit) have late enrollment penalties. For Part B, that looks like a 10% Part B premium penalty for every 12-month period you don’t enroll (unless you have medical coverage through an employer or a spouse’s employer). (3) For Part D, the penalty amount accumulates over time and is permanent, even once you’ve enrolled. You’ll be charged the penalty if you go more than 63 days in a row without Medicare drug coverage or coverage through other means, such as an employer plan. The amount varies and is dependent on how long you didn’t have coverage. (4) If you go long enough without enrolling, your penalties could be higher than the cost of the Part D premium. Even if you don’t need prescription coverage when you are first eligible for Medicare, enroll in the plan to avoid extra long-term costs.
Overwhelmed by Medicare Annual Enrollment? We Can Help.
A recent study conducted by the Kaiser Family Foundation found that only 6% to 13%, a relatively small percentage of Medicare enrollees, switched their Medicare Part D in any single year between 2006 and 2016. And nearly half of enrollees “rarely or never” review their Medicare plans during that same time period. According to that same study, nearly half of those surveyed said it was too difficult to compare plans. (5)
While it is true that choosing the right Medicare plan can be a complicated endeavor, it is also true that choosing the wrong plan could negatively impact your wealth management strategy. Simply put, taking your time and shopping around for the right plan will benefit your health and medical needs while also benefiting your pocketbook. The right financial advisor can help you reassess which plan will work for you. Schedule a complimentary phone consultation by reaching out to us at (617) 610-0587 or emailing email@example.com.
Nick Shea is founder and financial advisor at Catalyst Investment Management, an independent firm dedicated to providing personalized financial advice and planning. Over 40 years ago, Nick started reading The Wall Street Journal, building his own portfolios, and developing a passion for the financial world. He turned this interest into a career, working for many years at the former Dean Witter, now Morgan Stanley, and Charles Schwab, where he worked as an investment consultant, branch manager, and product developer. As a learning and development director, Nick created and delivered the branch management leadership program for the entire branch network. He has a bachelor’s degree in political science from Occidental College and an MBA from the University of Notre Dame. Nick specializes in serving entrepreneurs and helping retirees navigate through the complexities of the Medicare system. He is passionate about helping his clients mitigate the risks that can derail their financial goals. He is known for championing his clients’ dreams and striving to help them find the financial peace of mind they long for.
Nick is actively involved in his community, faithfully serving in the Knights of Columbus. He is also an elected member of the Windham Zoning Board of Adjustment. When he’s not working or giving back, Nick loves to read, spend time with his family, research his family’s genealogy, and travel, both in the U.S. and abroad. To learn more about Nick, connect with him on LinkedIn.