Your Guide to Navigating Medicare’s Open Enrollment

Medicare is the federal health insurance program for people age 65 and older as well as younger individuals who are receiving Social Security Disability Insurance. Medicare is broken up into four different parts, each one providing coverage for specific medical needs. Understanding how the distinct parts of Medicare interact with each other, what coverage options are available, how copayments work, and what plan provides the best value for your specific situation can be a time-consuming task. Before we jump into how you can navigate this year’s open enrollment period, let’s begin by looking at Medicare’s basics.

Understanding Medicare

The four parts of Medicare are referred to by letter, with the first two parts of Medicare being administered directly by the government, and the latter two parts administered by private insurance companies. Together, Medicare Parts A and B make up what is commonly referred to as “Original Medicare.” Original Medicare is a fee-for-service program, meaning the government pays a fee for each service a beneficiary is provided.

Medicare Part A

Medicare Part A covers hospital stays, care in a skilled nursing facility, hospice care, and some home healthcare. For individuals who have paid 10 years of Social Security taxes, there are no premiums associated with Part A; however, Medicare only pays 80 percent of most covered services leaving individuals to pay the remainder of the bill. With no out-of-pocket caps on copayments, many seniors look to a Medigap plan to ensure they don’t go bankrupt.

Medicare Part B

Medicare Part B covers doctor visits, outpatient care, lab tests, durable medical equipment, mental healthcare services, X-rays, ambulance services and preventive medical services. Seniors pay monthly premiums for Part B coverage.

Medicare Part C

Medicare Part C is commonly referred to as Medicare Advantage. This provision of the law enables private insurance companies to provide Medicare benefits to enrollees. While plans must offer the same benefits as Medicare Parts A and B, they can do so with different rules, costs and coverage restrictions. Typically, Medicare Advantage Plans will provide benefits beyond what Original Medicare provides. Plans often cover dental, hearing and vision services, and usually place a cap on out-of-pocket expenses.

A commonly cited downside to Medicare Advantage Plans is that the private companies that run them can drop doctors and physician specialists from the plan’s list of providers and remove prescription medications from the plan’s covered list, which is often referred to as a formulary.

Medicare Part D

Medicare Part D provides prescription drug benefits that were not included in Original Medicare. Through Part D, the government subsidizes the cost of prescription medications. Individuals who have enrolled in Original Medicare will often opt for a stand-alone Part D plan, while most Medicare Advantage Plans will offer prescription drug benefits. Stand-alone prescription drug plans offered under Part D are commonly referred to as “PDP.”

Medicare Supplement Policies

Commonly referred to as Medigap coverage, these policies are offered by private insurers and cover costs Original Medicare does not cover, such as copayments, coinsurance and deductibles. While Medigap and Medicare Advantage plans can sound similar, they are two different things. Medigap provides supplemental coverage to Original Medicare but does not provide benefits covered by Original Medicare. In contrast, Medicare Advantage plans will offer the same benefits as Original Medicare plus extra benefits depending on the policy.

Individuals with Medicare Advantage Plans cannot have Medigap coverage, so if you are signed up for Medicare Advantage, you can skip evaluating Medigap plans.

Tips for Navigating Open Enrollment

Example Medicare Card

Image Credit: Centers for Medicare and Medicaid Services

Each year, the government offers a window where individuals can move from Original Medicare to a Medicare Advantage Plan, change Medicare Advantage Plans, or move from a Medicare Advantage Plan to Original Medicare. This window is referred to as “Open Enrollment” and runs from October 15 to December 7 with new coverage beginning January 1.

To find the Medicare plan that bests fits your needs, follow these six steps:

1. Don’t Rush

It might be tempting to “just get it over with,” but making a quick decision can lead to inadequate coverage or cost money because there’s more coverage than needed.

2. Think Holistically About Your Healthcare Situation

While it can be difficult to know exactly what healthcare will be needed during the coming year, if you are anticipating a major surgery or other large health expenses, it is a good idea to look for a plan that provides optimal coverage for your upcoming needs. Inversely, if a name-brand medication is becoming a generic, it might be a good idea to find a Medicare Part D or Medicare Advantage Plan that will help you save money with the generic (provided your doctor recommends switching to the generic).

3. Do Your Homework on Medications

Most Medicare Advantage plans will break medications into 5 tiers. These tiers are for preferred generics, other generics, preferred brand drugs, other brand drugs, and expensive specialty medications. The prices can vary wildly between these tiers and between plans. Before you pick a plan or an insurance provider, check to make sure your medications are covered and check different providers to see if they have your medications in a more favorable pricing tier. While this can be a time-consuming task, it helps save money on premiums.

4. Use Medicare’s Official Medicare Plan Finder

While there is no shortage of websites out there offering to help you find a Medicare plan, those websites can range from misleading to outright fraudulent. If you are unsure which website can accurately steer you toward a Medicare Plan that is right for you, use Medicare’s official Medicare Plan Finder located here. There are two versions of the tool. Using the “General Search” requires only your ZIP code, but will return less personalized information. Medicare’s “Personalized Search” requires your ZIP code, Medicare Number, last name, date of birth and the effective date for your Part A coverage. As with all websites, make sure your connection is encrypted before submitting personally identifiable information. Most web browsers will display a padlock when your connection is encrypted.

Graphic showing when a browser's connection is encrypted

A padlock will indicate when your connection to a website is encrypted. Only submit information if you see the padlock.

5. Shop Medigap Plans if You Are Using Original Medicare

There are 10 types of Medigap Plans — Medigap A through N; however, not every letter is available in every state. Each letter variant is standardized, meaning every Medigap Plan written by a private insurer must follow strict federal and state standards; for example, Medigap Plan F is always the high-deductible plan regardless of the private insurer writing the policy.

On the surface, Medigap coverage may seem very straightforward; in practice, it is not. Private insurers may offer discounts on their plans if an individual is a nonsmoker or is married or opts to pay their premiums using electronic funds transfer instead of a check or debit card. Additionally, out-of-pocket limits, copayments and coinsurance rates can vary significantly between insurance companies offering Medigap plans. Moreover, Massachusetts, Minnesota and Wisconsin have chosen to standardize their Medigap Plans differently than the rest of the country.

Given these variables and the sheer number of Medigap Plans, it can be challenging to find the best option. Fortunately, Medicare’s website provides a Medigap Policy Finder to help individuals using Original Medicare find a plan that fits their needs.

6. Enroll in Medicare Using Medicare’s Hotline, 1-800-MEDICARE

The best way to enroll in Medicare is to use the official enrollment phone number. Over the past few years, Medicare has increased staffing during open enrollment periods to avoid long wait times on the phone.

Once you reach a Medicare representative, take careful notes during your conversation, making sure to record any information the Medicare representative gives you during the call. You’ll also want to record the time and date you spoke with the representative, as well as the representative’s name.

Finally, before enrolling, go over all of the information with the representative one last time to make sure everything is accurate.