Medicare annual enrollment: How to review and optimize your coverage

If you’re seeing pumpkin-spiced everything these days, it must mean the year is rapidly coming to a close. Before the holiday season begins (leaving aside whether Halloween counts), there’s one more important calendar event you might need to observe if you’re 65 or older – or caring for someone who is: the Annual Enrollment Period for Medicare.

Like an open enrollment benefits period, the Medicare AEP gives you a chance to make sure your coverage best fits your current needs. Consider costs, but also provider access (including telehealth and specialists), prescription coverage, and even travel coverage.

During the AEP, you can:

• Switch between Medicare Advantage and Original Medicare, including potentially adding a Medigap plan in some cases
• Change from one Medicare Advantage plan to another
• Update, add or drop prescription drug coverage

Think your Medicare coverage is fine? You should review it anyway. That’s because even if your life has stayed the same, your plan coverage might not have. That’s true of Medicare Advantage plans and especially prescription plans.

You don’t want to ignore this opportunity and then find out that:

• Your plan costs greatly increased
• Your doctors are no longer in network for your plan
• Your ongoing prescriptions aren’t covered by your plan anymore

In 2027, there’s a $2,400 cap on prescription drug costs if you have a Part D Medicare plan, but it only applies to drugs covered by your plan. If you do nothing else, make sure to review your Part D selection.

Let’s tackle it together

If you’re thinking, “Medicare is complicated and I don’t want to deal with that again,” don’t worry. Edelman Financial Engines clients have an opportunity to work with a Medicare consultant, Chapter Advisory, LLC, to help ensure that they’re getting the Medicare coverage they need. The process for checking to see if there is better coverage can take less than an hour, and getting new coverage approved can take less than a week.

Our Head of Insurance, Robert Bain, spoke with Chapter’s senior Medicare advisor and co-founder, Ari Parker, about the reasons to revisit your Medicare coverage and the process you can follow to make changes during AEP.

To have your complimentary coverage review with Chapter Advisory, contact us to schedule it as early as possible during the AEP – slots fill up fast.

Medicare coverage Q&A

Bain: Thanks for joining us, Ari. Enrolling in Medicare can be difficult to navigate and, as a result, not everyone chooses the coverage they need. The good news is that you wrote a book about enrolling in Medicare, It’s Not That Complicated, so let’s help make it easier for people who want to make changes to their coverage. First, who should consider reviewing their coverage?

Parker: You should review your coverage regardless of whether you think you need to. Prescription plans can change from year to year, so we recommend you review your Part D (prescription plan) coverage annually. Part D plans frequently change drug pricing and new drugs can receive coverage while certain prescriptions are dropped, so it’s worth comparison shopping your drug plan each year.

It’s as easy as the three P’s

Bain: Let’s talk about clients who have opted for traditional Medicare and have Medigap coverage offered by private insurers to cover what Medicare does not. Do you have to review your Medigap? And what if you have Medicare Advantage (an alternative to traditional Medicare offered by private insurers)?

Parker: First, consider the three P's when determining whether you have the coverage you need: providers (your doctors), prescriptions (which we just covered) and priorities, such as: Is the plan’s cost most important to you? Or do you need to have international coverage? Are you looking to increase coverage with certain healthcare needs?

Apply these three P's when you review your Medigap or your Advantage plan. Like Part D plans, Medicare Advantage plans can change their coverage and pricing annually, so review your Advantage plan annually, if you opted for one. You may get a better deal and/or you may need a different provider network.

Bain: Do you need to review your Medigap coverage annually?

Parker: No. I have a saying, “Marry your Medigap. Date your drug plan.” Consider reviewing your Medigap plan every three to four years to make sure that what you’re paying is in line with your budget, expectations and healthcare needs, based on the three P's – providers, prescriptions and priorities. Your Medigap coverage may be fine, in which case, it’s a relatively happy marriage.

However, if you have never reviewed your Medigap policy to make sure it’s optimized based on the three P's, then you should do so in October. Sometimes clients can save a lot over time by changing Medigap plans.

Switching plans and saving money

Bain: Give me an example of how a client could save money by changing Medigap coverage without changing quality of coverage.

Parker: Most people with Medigap coverage have one of three plan letter types – plans F, G or N – so those are the ones I will discuss. When switching Medigap plans, you typically don’t have to worry about the first P (providers) because with Medigap plans, any doctor that accepts Medicare is “in network.” (Advantage plans have their own provider networks, like HMOs.)

However, there are differences in cost. Plan F and Plan G offer among the most comprehensive Medicare coverage. But Plan F can be much more expensive than Plan G, even though the only difference is that Plan G doesn’t cover the Part B annual deductible. So, there may be substantial savings in premiums over time if it makes sense for you to switch to Plan G.

When you’re in less-than-perfect health

Bain: Why doesn’t everyone just switch to Plan G?

Parker: There’s a catch. In 46 states, if you are switching Medigap plans, an insurer can reject you based on health conditions, such as chronic complications with diabetes. There are insurers that have more lenient underwriting standards, but they also may cost more. This means there’s a wide range of costs even within the same plan letter types, and that leads to potential opportunity.

Any plan within the same letter type, such as G, will offer the exact same hospital and medical coverage, by law, regardless of price. So, if you’re already in Plan G, it’s worth reviewing it to see if you’re getting the best priced plan.

Bain: Could there be a scenario where Medicare doesn’t cover your chronic condition?

Parker: Medicare keeps a list of 21 chronic conditions, including some conditions you would expect, like Alzheimer’s, cancer and diabetes, as well as some that may be a surprise, including asthma, high cholesterol and high blood pressure.

If you have a chronic condition, it won’t affect your original Medicare coverage – Medicare can cover 80% of your medically necessary outpatient expenses (after you meet the deductible). But it may affect your decision to choose an Advantage or Medigap plan. Advantage plans won’t reject anyone based on health conditions, but remember with Advantage, your provider must be in your network, including your specialists, like cardiologists, surgeons, etc.

Bain: Are there scenarios in which someone with Medigap would switch from Plan N?

Parker: Plan N has a lower premium than G or F, and your coverage may be just fine given your needs, but each Medigap plan has its pros and cons. With N, you carry more upfront costs, like copays, as you would in a high-deductible health plan. You’re also on the hook for excess charges that providers can add beyond Medicare rates. In many states, providers can add up to 15% on top of Medicare-approved rates. For some people, the risk of having to pay excess charges isn’t worth the lower premiums of Plan N.

Bain: If you try to switch plans and get rejected, is there a penalty?

Parker: No, there are no penalties, and really, no risk to seeing if you can switch plans. It’s worth going through the process just to see if you can get coverage that better suits your healthcare needs and at a better price.

Ready to review your Medicare? Here’s how.

Bain: What information do you need to bring to the consultation with Chapter when revisiting your Medicare coverage?

Parker: Most of our meetings are done virtually, such as through Zoom, and to prepare, just remember the three P's. Bring your list of providers, your prescriptions and know your top priorities for coverage, such as cost, quality of care and choice. It would be helpful to know your general health history in the past two to three years, such as any chronic conditions. The meeting itself may last just 30 minutes, during which time our system will generate the top three or so plans based on your needs.

Bain: Can they meet before AEP starts? Is there a best time to meet?

Parker: Good question. I wouldn't recommend holding a review before the start of AEP as the new pricing on all of the plans is not released until around the beginning of AEP (Oct. 15). But the sooner the better after that, so try to get the review done with us before Thanksgiving within the AEP window (which ends Dec. 7). There’s absolutely no obligation to switch plans, but this way, you’ll have done your due diligence. And, for Edelman Financial Engines clients, there’s no cost to use our services.

Bain: Thanks, Ari. Any of our clients who want to review their Medicare coverage during AEP can reach out to their planner, who can send them information on how to arrange a meeting with a Chapter consultant. It can be an easy process. Considering we’re talking about your health, we always recommend taking the time to optimize your Medicare coverage.

Why Medicare decisions can affect your retirement planning

Medicare costs are a recurring retirement expense. Choosing the right combination of coverage can influence your healthcare spending, cash flow and overall retirement withdrawal strategy. Reviewing coverage annually can help ensure healthcare costs remain aligned with your broader financial plan.