Terry Savage: Navigating Medicare open enrollment

It’s that time of year again, when seniors face the challenges of open enrollment in Medicare, starting October 15. These are the most consequential decisions seniors must make, not only because of the financial impact, but the impact on care they may receive when needed.

Typically, the big decisions on Medicare are made when you first enroll at age 65 — or perhaps at a later date when you retire and no longer have coverage at work, or from a spouse’s employment. But even those who plan to continue working should probably sign up for Medicare Part A at age 65, since it is free. In fact, some employers require it.

Part A covers hospital care, surgery, lab tests and some skilled nursing after you have been discharged from a hospital, as well as hospice and limited home health care. There’s never a need to make changes once you sign up

But other Medicare decisions (including Part D drug plans) must be reviewed on an annual basis. Don’t let the complexity bury you. Here’s a guide to the basics.

Original Medicare or Medicare Advantage

The most important decision revolves around whether to sign up for original Medicare Part B, which covers physician services and outpatient care, as well as durable medical equipment and most preventive tests and services. Part B requires a separate supplement to cover deductibles, and a Part D prescription drug plan. The alternative is the highly advertised all-in-one Medicare Advantage plans.

You can switch between the two types of coverage every year during open enrollment. However, once you’ve chosen an Advantage plan, you are not guaranteed access to the best supplement plan if you return to traditional Medicare — especially if you have developed costly medical conditions. (When you initially sign up for traditional Medicare, you MUST be approved for the most comprehensive supplement, regardless of your health situation.)

You’ve seen those commercials touting the lower costs and appealing benefits of Medicare Advantage, sometimes called “Part C.” The monthly premium for these plans may be so low that if your traditional Part B premium was being deducted from your monthly Social Security check, that deduction will be smaller and your benefit check becomes larger. So tempting!

Now, here’s what you may not realize until you’ve signed up for Advantage and then have a significant health challenge. Your Advantage plan restricts you to physicians and hospitals and specialists that are in their network! You need to go through a lengthy approval process to get out-of-network care. And it will be very costly to you.

The physicians in the network will likely change in future years. They are paid on a very restricted basis, allowing the Advantage provider to keep costs down. With traditional Medicare you can choose any provider who accepts Medicare reimbursement. And your supplement will likely pick up whatever Medicare doesn’t cover.

Who do you think is really paying for those added benefits touted by the commercials — and paying for the commercials themselves? YOU pay — out of the restrictions on your care when you really need it. Advantage plans work well, as long as you are healthy.

Choosing a supplement

This is the easiest part. When you sign up initially, pick the most comprehensive plan, currently Plan F. It pays 100% of the medical costs that traditional Medicare does not cover. All plan providers in this category provide the same coverage. At Medicare.gov, you can find plans that operate in your area and sign up directly.

Prescription drug plans

Unless you have the same drug coverage through your employer, you should sign up for Part D — even if you aren’t currently taking any medications. That’s inexpensive and will avoid penalties for signing up later in life.

You should review your Part D coverage every year during open enrollment, even if your prescriptions haven’t changed. The plan providers change their coverages annually, so you can save money by making a change. The place to go through this process easily is at Medicare.gov.

Many seniors are fearful of using the Internet for those significant decisions. But that’s the way it must be done. Help is available through senior organizations. And if you have a grandma or know a senior citizen, please do offer to help. Your assistance is priceless. And that’s the Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2023 Terry Savage. Distributed by Tribune Content Agency, LLC.