How to maximize your benefits through open enrollment

At 65, you become eligible to enroll in Medicare. You’ll have to make many decisions, including what parts and plan types to enroll in. But after your initial enrollment, it’s important to revisit your plan options yearly.

Every October through December, Medicare participants can take advantage of an open enrollment period. This opportunity allows currently enrolled participants to reevaluate and readjust their coverage.

Whether this is your introduction to Medicare or a critical refresher, here’s what every woman needs to know about maximizing benefits during the open enrollment period.

Understanding Medicare

Medicare is a federal health insurance program for those 65 or older (and specific individuals with eligible medical conditions).

Medicare is an integral part of building out your well-rounded financial plan in retirement, as it can cover a majority of medical expenses. Medicare does not, however, cover every medical cost, so you may want to look at supplemental coverage options during open enrollment based on your needs.

A Brief History of Medicare

Medicare now covers well over 60 million Americans, but how did it get its start?1

The idea of a federal health insurance program was introduced nearly 100 years ago during Theodore Roosevelt’s campaign for the presidency. Again in 1945, President Harry Truman pushed for such a program but was met with disapproval from Congress. President JFK made a bit more progress, creating a task force in 1961 to develop a federal health insurance program.

Finally, in 1964, President Lyndon B. Johnson introduced Medicare, signed into law in 1965.

The need for a health insurance plan for retired Americans grew apparent by the time it met congressional approval, as proven by the 19 million participants who signed up in its first year.

The iteration of Medicare first introduced in 1965 is often referred to as “Original Medicare,” which includes Medicare Part A and Part B. Today’s retirees have even more options to consider when selecting their health coverage, discussed below.

Medicare Parts

When discussing Medicare, your options can sound a bit like alphabet soup. Medicare is broken into “Parts,” with each Part concerning a different category of coverage.

Part A: Hospital insurance, covering inpatient hospital care, home health care, hospice care, and nursing facility care.

Part B: Medical insurance for doctor visits, specific medical equipment like wheelchairs or hospital beds, preventative screenings, vaccines, and outpatient care.

Part D: Drug coverage for prescriptions and shots or vaccines.

Part C: Medicare Advantage plans offered through third-party insurance companies

As mentioned above, Part A and Part B are often grouped to form “Original Medicare.” When choosing what type of Medicare to obtain, you may be presented with two primary options: Original Medicare or Medicare Advantage.

Medicare Advantage is offered through approved private insurers and is typically presented as a “bundled” option. These plans may include Part A, Part B, and Part D, for example. Medicare Advantage plans may also offer additional coverage, including vision, dental, and hearing—services not covered through Original Medicare.

Enrolling in Medicare

If this is your first time enrolling in Medicare, you must know a few essential things before signing up.

You’ll be eligible to sign up three months before turning 65. Starting the process early may be beneficial, as it provides you with plenty of time to review options, identify gaps in coverage, and avoid potential penalties. You have seven months to make your selections, with the initial enrollment period ending three months after the month you turn 65.

When first applying for Medicare, you’ll likely obtain Part A and Part B (or Original Medicare). You may be eligible to receive premium-free Part A, meaning there are no out-of-pocket premium costs for this coverage.

You may face a late enrollment penalty if you choose not to buy Part A or Part B during your initial enrollment period and wish to add it later. Similarly, choosing to add Part D later may incur a penalty added to your monthly premium. This penalty is waived if you have creditable drug coverage similar in value to Part D at the time of open enrollment.

Medicare comes with an array of different expenses. While you may not have to pay a premium for Part A, you will have one for Part B. The standard Part B monthly premium for 2021 is $148.50.

But if you earn over specific income limits, you could experience an income-related monthly adjustment amount (IRMMA). Medicare determines the price you’ll pay by looking at your modified adjusted gross income you reported on your tax return two years prior. Take a look at the Medicare chart to see where you fall. This same type of payment adjustment may also apply to your Part D coverage.

If you’re concerned about signing up for Medicare and avoiding potential penalties, I’m here to help. We can connect with my go-to Medicare expert, Bob Fitzgerald, to better address your coverage concerns about your greater financial picture for retirement.

What If I’m Already Insured Through an Employer?

You may still be obtaining coverage through your (or your spouse’s) workplace when you become eligible for Medicare. If this is the case, a few questions and concerns could arise.

  • Should I drop my workplace coverage or keep it?
  • Am I going to face penalties if I wait to sign-up for Medicare?
  • What about my HSA?

You and I can review these concerns one-on-one, but here are a few things to consider in the meantime.

Generally, you do not need to sign-up for Medicare if you are covered under your current job’s health insurance plan. You can sign-up without incurring penalties once you (or your spouse) leaves the job or loses health insurance coverage.

In our recent podcast episode with Medicare expert Bob Fitzgerald, he explains –

“If you’re on a group plan of over 20 employees, then yes, you can stay on that group plan and delay your part B enrollment without penalty if you do it the right way. But, in a lot of cases, it does make sense to enroll in A; there’s no penalty, you don’t pay for it, so there’s not a reason why you wouldn’t.”

As Bob touched on above, Medicare will work in different ways with your current health coverage, depending on the size of your (or your spouse’s) employer. You’ll want to review these factors with your benefits personnel or HR team to determine how Medicare may affect current coverage.

What About My HSA?

If you are currently on an HSA-eligible health plan, enrolling in any Medicare Part will result in a loss of eligibility. You will no longer be allowed to contribute to your HSA, though you can still withdraw throughout retirement. You should consider this carefully, as your HSA provides significant tax benefits.

In some cases, as Bob points out, taking the penalty for delaying enrollment may be worth the benefit of continuing to contribute to your HSA. Again, this should be determined on an individual basis.

Finding New Opportunities Through Open Enrollment

Medicare open enrollment runs from October 15 through December 7 each year. If you’re over 65, already enrolled in Medicare, but don’t love your coverage, plan details, or financial results, you can make corrections and changes during open enrollment.

Take some time during this period to determine how you can maximize your benefits while reducing out-of-pocket costs. You may decide to reevaluate your Part D prescription drug coverage, for example, to accommodate your needs in retirement better.

This could also be a great time to evaluate your supplement coverage, perhaps choosing to switch from a Medicare Advantage (Part C) plan to Medigap coverage or vice versa.

Maximizing Your Benefits

Working together, you and I can get to the bottom line—what are you paying for and what are you using. Doing this exercise will allow us to identify potential gaps or find opportunities to streamline the coverage. Together let’s make sure your health insurance is working to protect your financial wellbeing in retirement, not work against it.

We may find it helpful to work with a Medicare expert, like Bob, who can help us ensure your current coverage and identify opportunities for improvement.

Considering Your Options? Speak With a Medicare Professional

It can be tempting to just stick to your current Medicare coverage when faced with so many options. But open enrollment is an important opportunity to reevaluate and identify the suitable choices for your needs in retirement, especially if your health concerns have evolved.

If you’re starting to think about your coverage, let’s set up some time to talk. I’d be happy to help navigate your options and connect you with a Medicare expert to best address your concerns.


Sources:

  1.  How did Medicare begin?