Medicare enrollment: Time to change plans?

See practical tips on when it makes sense to make a switch in Medicare coverage.

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Key takeaways

  • Medicare Annual Enrollment Period (AEP) begins October 15 and runs through December 7 each year.
  • During Annual Enrollment, you can add, drop, or switch certain coverage types, such as Medicare Advantage and Part D prescription drug plans.
  • Medicare's private plans can change every year and potentially impact your coverage and cost options, so it's a good idea to review your Medicare coverage in advance of every Medicare AEP.

It's Medicare enrollment time. And from TV ads to robocalls to even advice from your favorite friend, sources all around you seem to be telling you which Medicare plan is right for you. Some are credible; others, not so much.

As we continue to live with COVID, you especially need to know that your Medicare health insurance has you covered with the right doctors, medical facilities, and prescriptions. "If you're not satisfied with your current plan or your health or financial situation changed, it may be time to take another look at your options," says Aditi Sharma, director of Fidelity Financial Solutions. "You may be paying a lot for coverage you don't need, or your health situation may now require the attention of medical specialists who are currently out of your network. Either way, it's time to investigate other options."

The good news for individuals enrolled in Medicare: If you're not satisfied with your current Medicare coverage, you can make changes during the Medicare Annual Enrollment Period (AEP), which runs every year from October 15 to December 7.

Generally, there are 5 reasons why you might consider making changes to Medicare coverage:

  1. You want a less expensive plan. If you find that Medicare is taking a bigger bite out of your retirement budget, it can pay to shop around to save money.
  2. Your health situation has changed, and you need different coverage. If you experience a significant change to your health, you may find that the plan you signed up for cannot support such a change.
  3. The cost of your prescription drugs has increased. Sometimes health insurance companies that provide prescription drug coverage raise the price of certain medications. If you happen to take one of those medications, it could end up costing you a lot more money.
  4. You're not satisfied with the quality of medical services in your current network. You may need the ability to see certain specialists or pursue additional avenues of treatment.
  5. You want to simplify and consolidate coverage options. This is often the case when people want to shift to an "all-in-one" Medicare Advantage (MA) plan to bring all their coverage together instead of multiple plans handling different types of health care coverage such as Part A, Part B, a Medicare Supplement plan, or a Part D prescription drug plan (PDP).

Tip: Keep in mind, any changes you make take effect on January 1 of the upcoming year.

Did your health insurance company make changes to your existing Medicare coverage?

When it comes to Medicare plans, and health insurance in general, change happens. These modifications are usually made by the health insurance companies that sell Medicare Supplement, PDP, and MA plans. It's up to you to determine if these changes help or hinder your health care needs.

Every September, health insurance companies that sell Medicare coverage mail out an Annual Notice of Change (ANOC) letter to inform you of changes that are taking place with your current coverage for the upcoming year. These differences can be cost changes to prescription drugs, increased or decreased types of coverage, or expanding or shrinking the network area of doctors and medical facilities. "If your coverage becomes more limited or more expensive, that's the catalyst for you to research all your options and consider making modifications to your Medicare plan," advises Sharma.

Why you might want to switch your Medicare coverage

If you have... You might want to...
Original Medicare with separate Medicare Part D prescription drug plan (PDP) coverage
  • Combine your coverage into a single Medicare Advantage (MA) plan with PDP coverage.
  • Consider a switch to an MA plan that includes prescription drug coverage and telemedicine, fitness, dental, hearing, and/or vision coverage.
Medicare Advantage (MA)
  • Switch to an MA plan where your doctor or facility is in-network if your current plan no longer includes them.
  • Move to an MA plan with better coverage and/or services for the same price (or even lower).
Medicare Supplement (Medigap) Plans
  • Drop it if you're paying for extra coverage you don't need, you don't travel a lot, and you prefer local doctors available to you.
  • Switch or drop coverage if you move to a new state and your coverage cost goes up, but keep in mind you may have to answer questions about your health history if you make a change.
Medicare Part D prescription drug plans (PDPs)
  • Switch to a lower-cost plan, even if you might not be taking any prescription drugs now.
  • Make a change if your regular pharmacy is no longer considered in-network.
  • Drop and switch to MA with drug coverage if you want to consolidate coverage options and not maintain separate PDP coverage.

For illustrative purposes only.

Helpful Medicare enrollment reminders

As you think about possible changes to your coverage for the upcoming year during AEP, keep in mind:

  • Medicare Part B covers official COVID-19 testing at no charge, as well as certain medications and equipment used for COVID-19 treatment. Medicare Part A covers 100% of COVID-19 hospitalizations for up to 60 days.
  • Medicare Part B and Medicare Advantage plans provide coverage for telehealth services for COVID-19. If you switch from Medicare Advantage to Original Medicare, you'll need to add a PDP and/or a Medicare Supplement plan to supplement your coverage.
  • If you have a pre-existing condition, switching to Medicare Supplement coverage may require medical underwriting (although you can enroll in a Medicare Supplement plan without medical underwriting if it's the first time you enroll in Medicare when you turn 65).
  • Your Medicare decision is made separately from that of your spouse's. There's no such thing as Medicare family coverage.
  • If you're adding a PDP for the first time during AEP, and you over age 65, you may be at risk for a PDP penalty added to your monthly premium since you didn't sign up for a PDP when you were first eligible at age 65.
  • Remember, if you already have Medicare coverage and do nothing during AEP, your current coverage will auto-renew January 1 of the upcoming year.

Summary

Although you might be gearing up for a busy holiday season, now is the time to take a fresh look at your Medicare options. Remember, you have from October 15 through December 7 each year to decide what your plan will be for the upcoming year, so don't delay.

If you have Medicare Advantage, or Original Medicare (with optional Medicare Supplement and/or PDP prescription drug coverage), that isn't providing the level of coverage you need at a cost that's affordable, AEP is your chance to course correct.

"Yearly Medicare decisions are an important part of your ongoing retirement and financial planning process," says Sharma. "Life is full of changes—whether changes to health conditions, adjustments to the coverage, or changes to financial wellbeing—so do your homework, seek help, and look for any gaps between what you need and what your Medicare coverage provides."

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