Begin Your Annual Medicare Coverage Review During Open Enrollment Period

Medicare allows its beneficiaries to change their Medicare coverages and once a year. This year that period began October 15 and ends December 7. Every year Medicare adjusts its payout amounts and insurance companies adjust their rates, deductibles and co-pays.

This review period coincides with notice from Social Security that there will be no COLA adjustment this year.

We urge clients, therefore, to review how these changes affect them personally. A 2014 study showed that almost 90% of Medicare beneficiaries are NOT taking advantage of the lowest cost plan available. While cost isn’t even the primary factor in choosing plans, be sure you are making the best choices available rather than accepting changes that work against your best interests.

Further reading: “Most Medicare beneficiaries overspend on out-of-pocket costs,” Investment News.

Medicare Overview

Part A. Hospitalization. This is the amount that Medicare reimburses your hospital for your visits—both inpatient and outpatient. Please note this does not necessarily mean the doctors who treat you.

Part B. Other Medical. This is what is paid for doctor visits, treatments, immunizations, therapies, and basically anything other than medicine.

Part C. Medicare Advantage. This is Medicare coverage for parts A and B through private insurers which might include HMOs, PPOs and other types of plans.

Part D. Prescription Drugs. The is the part of Medicare that covers your prescription drug expenses.

There are some specific issues to be sure you review and adjust accordingly if necessary.

Raises in Part B Premiums and Deductibles

Projections are that monthly premiums will increase around from $104 to $159. The same is likely to be true with annual deductibles increasing from $147 to $223. Co-insurance payments are going up as well. See a simple, informative outline of the new benefits. Clients’ actual out-of-pocket costs will vary depending on who their other insurance providers are. For some people this will mean they are paying a little more for a little less benefit. The increase in payments to healthcare providers is scheduled to be less than 4% this year.

For all these reasons, this year is an especially important year for clients to review their health insurance situation with their insurance professional.

Changes in Private Insurance Benefits

Along with Medicare changes, most retirees who have health insurance through their former employers as well as those who have Medicare Supplemental insurance through a private insurer will see changes to their costs, co-pays and deductibles as well. The amount of those changes will vary widely however based upon the claims experience and performance of the private insurer.

For all these reasons, this year is an especially important year for clients to review their health insurance situation with their insurance professional.

Changes to Part D

Part D is the prescription drug benefit to Medicare that is a separate benefit program that was enacted effective January 1, 2006. Clients can always purchase prescription drug coverage from private insurers; however, for most elderly clients, it was cost prohibitive. So Part D was added to make drug coverage benefits available at a lower cost. For 2016, expect increases to the premium for part D coverage as well as an increase of up to $40 in the annual deductible.

Every client has had to deal with the difference between the Medicare “allowable charges” for prescription medicine and the actual charges. Currently, depending on the medicine and whether it is a brand or generic, the amount a client will have to pay (in addition to the annual deductible) is either just at 45% or just over 55%. The Affordable Care Act limits the maximum “out-of-pocket” costs for drugs to $4,850 for 2016. This declines every year until it reaches $3,310 in 2020. To help absorb some of these costs, we again recommend clients contact their health insurance providers to uncover options. Read a nice review of the these changes by the Detroit Free Press.

Preventative Services

Also under the Affordable Care Act, you are not charged for certain preventative health measures. This includes an annual check-up, some immunizations, and certain cancer screenings. That remains in place this year. Some other things that might be called preventative measures, other than the types mentioned above, may not be covered. For this reason, we have included a link to the Medicare Booklet for 2016.

Health insurance, whether you are retired or soon to retiree, has become an increasingly difficult topic to follow the last few years. This year shows little sign of abating; our goal is to encourage you to take an active role in finding the best coverage available to you.