Healthcare can be expensive for retirees, and not getting the insurance coverage you need to defray the costs could become one of your most costly retirement mistakes.
One of the best ways to ensure you don't end up with a stack of medical bills you can't afford is to shop for Medicare coverage each year during open enrollment. Unfortunately, far too many people miss out on the chance to get the right policy because they fall victim to common myths about Medicare open enrollment.
In particular, here are six misconceptions you may have that could prevent you from getting the best and most affordable healthcare coverage.
Original Medicare and Medicare Advantage Plans are the same
Far too many seniors believe there's just one form of "Medicare" and there's no real difference between the plans. But that simply isn't true. In fact, you have two primary coverage options — and they can be very different.
Original Medicare is Medicare Parts A and B. It's administered by the government, with Part A covering hospital insurance and Part B covering outpatient care (albeit with 20% coinsurance costs, so it pays for only 80% of covered services).
Medicare Advantage is an alternative to original Medicare, and your coverage comes from private insurers. Medicare Advantage Plans must provide the coverage that original Medicare does, but they can also provide additional benefits such as coverage for hearing aids or eye glasses (neither of which are covered by original Medicare). Most Advantage Plans also pay for prescriptions; original Medicare does not unless you also purchase a Medicare Part D plan.
The takeaway: You shouldn't assume original Medicare is right for you without looking at what Advantage plans have to offer.
My current Medicare plan will stay the same
If you already have a Medicare plan you're happy with, you may assume you can just sit out open enrollment without making any changes. Sadly, that's not necessarily the case.
Sometimes your plan’s features and benefits remain the same from year-to-year. But, in other cases, your plan may change dramatically — especially if you have an Advantage Plan. For example, your insurer may narrow their network of providers, so you’d have to switch doctors if you want your insurer to keep paying. Or your insurer may change what's covered or start requiring a referral to see a specialist.
The takeaway: To make sure you don't face any big surprises, always review your new plan documents carefully to see if any changes are being made for the upcoming coverage year.
My costs will stay the same for my current plan
You may assume your Medicare costs will remain steady if you don't make any changes to your plan during open enrollment — but, again, that's not necessarily the case.
Original Medicare Part B premiums routinely increase from year to year. Although lawmakers have proposed holding premiums steady this year due to COVID-19, that hasn't been signed into law. For those whose premiums are taken out of their Social Security checks, the good news is that your premiums can't go up more than your Social Security Cost of Living Adjustment. But the bad news is, you could see most or all of any cost of living increase disappear due to rising Medicare costs.
If you have a Medicare Advantage plan, your premium can also rise. Unlike with original Medicare, there are no provisions to protect you from increased premiums on an Advantage plan.
The takeaway: Don’t assume your Medicare costs won’t change. Find out if your insurer is raising prices and make sure you're still happy with the cost of your coverage.
I can't change Medicare plans
If you're operating under the misconception that there's only one Medicare plan, you’ll be glad to hear that's simply not the case. You can change from original Medicare to one of many different Medicare Advantage plans, if you choose to do so.
However, you can only make a modification during open enrollment, which runs from October 15 to December 7.
Get a free Medicare consultation - there's no obligation to enroll.
The takeaway: If you're hoping to get better coverage or a cheaper policy, you should take action during this window of opportunity.
I can change Medicare plans whenever I want
Unfortunately, many seniors assume they have the flexibility to change Medicare plans whenever they feel the need. This isn't true. If you miss the annual open enrollment period, you're stuck with your coverage until the next year’s October-to-December period.
The rules are a little different for new signups because you don't have to wait for open enrollment. If you're entitled to Medicare coverage when you turn 65, there's a seven-month window during which you can sign up for the policy of your choosing — starting from three months before the month you turn 65, during the month you turn 65, and for up to three months after the month you turn 65.
The takeaway: If you’re not a new enrollee to Medicare, it’s important to understand that the open enrollment period is the only time you can switch plans.
Medicare Advantage plans are too expensive
Many people believe Medicare Advantage plans are too costly because they may have higher premiums than original Medicare. But you can't judge the costs just by the monthly premiums — you have to consider your total expenditures on healthcare.
If you pick the right Medicare Advantage plan, it may cover much more than original Medicare. This would mean you may not incur some large out-of-pocket costs. For example, if your Medicare Advantage plan covers prescription drugs, you could avoid paying for your medicine or having to buy a Medicare Part D plan to secure drug coverage. And if your chosen Medicare Advantage plan has lower coinsurance costs, you may not need to get a Medigap policy to help defray some of the expenses you're stuck with under Medicare Part B.
There is also a lot of variation across the Medicare Advantage plans, so you may find some with cheap premiums if you don't need comprehensive coverage.
The takeaway: The best thing you can do is shop around and keep an open mind so you can find your best and most affordable Medicare plan option.
You owe it to yourself to find out the facts about Medicare open enrollment so you can get the coverage you need. This upcoming open enrollment runs only from Oct. 15, 2021, through Dec. 7, 2021. If you miss the window to shop around for coverage, you have to wait a full year to get another chance.
To choose the best Medicare plan for you, there are a few key steps you'll need to take including:
- Evaluate your care needs. Those who require more medical services may find it's more cost-effective to pay higher premiums for a comprehensive Medicare Advantage plan.
- Review your current coverage. If you're happy with your plan, you may want to keep it — but make sure you understand any changes to coverage or your premiums that may have occurred.
- Shop for Medicare Advantage plans. Look carefully at premiums and what each plan covers to determine if it is a good fit. Pay attention to the plan's network, out-of-pocket expenses, and coverage during domestic and foreign travel. Get free quotes for top Medicare plans - there's no obligation to enroll.
Medicare open enrollment provides a once-annual opportunity to secure the most affordable insurance coverage for you. Don't miss out on it because of misconceptions.