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Medicare open enrollment is still almost two months away, but if you want to save some money next year, now’s the time to act.
Open enrollment for Medicare and Part D prescription coverage runs each year from Oct. 15 through Dec. 7. It’s a critical period for seniors, as this is when they can shop around for plans that will do a better job of meeting their needs next year.
Changes you can make include swapping from original Medicare (Part A hospital insurance and Part B medical coverage) to a private Medicare Advantage plan.
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You can also switch from one Medicare Advantage plan to another, as well as join a prescription drug plan.
Determining what’s appropriate is no small feat for consumers, who might not know the details of their coverage off the top of their head.
“Many of us at work have a personnel department that curates the plan options, so you have a menu of two to three different things,” said Andrew Shea, senior vice president of consumer marketing at eHealth.
“If you go into the world of Medicare, now you’re the personnel department and here are 700 unique combinations of benefits.”
It pays to shop around. eHealth, an insurance marketplace, analyzed 111,000 user sessions over the course of open enrollment in 2019.
The firm found that customers who used eHealth’s prescription drug coverage comparison tool to shop for Medicare Advantage prescription drug plans had an average annual potential savings of $982.
Here are three steps that can help you make the plan selection process a little less daunting.
1. Get to know your plan
As September rolls around, keep an eye on your mailbox for an “annual notice of change” from your Medicare plan.
This letter details all the changes coming up for your plan in the new year, including coverage and costs such as premiums, deductibles and copays.
You only get this notice if you’re already on Medicare, regardless of whether you’re employed.
There’s more to managing your costs than merely reviewing your premiums. Pull together your medical expenses over the last six months and get a list of the doctors you see regularly and the medications you need.
“The drugs that you take are correlated with the conditions you have and the doctors you see,” said Shea.
2. Compare plans
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Once you’ve figured out the ins and outs of your plan, start shopping.
The Medicare Plan Finder is an online tool from the government to help you select a plan. It’ll ask you for your ZIP code and the details on the medications you take, including whether you receive them by mail.
You can also try the State Health Insurance Assistance Programs, which offer local counseling to enrollees for free.
Don’t assume that you can just repeat the prior year’s coverage.
“Most people don’t think it’s a delightful experience to study your plan options and pick one,” said Shea. “But benefits and networks can change.
“Your health conditions can change, too.”
3. Get into the habit of planning ahead
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Medicare is essential to retirement planning. Working with your financial advisor can help you manage your premium costs.
Premiums for some parts of Medicare are based on your modified adjusted gross income from two years ago. MAGI also adds in capital gains, Social Security and required minimum distributions from individual retirement accounts and 401(k) plans.
That means premiums you’ll be paying in 2021 are going to be based on 2019’s income tax return.
There isn’t much you can do right now to modify your 2019 income. However, you still have time to plan ahead for 2022’s premium expenses.
Talk to your advisor now to see what you can do to manage your income for this year. It can help you curtail Medicare costs in the future.
“Nobody says I want a single dollar more of taxable income in exchange for $1,000 of additional Medicare costs,” said Jamie Hopkins, director of retirement research at Carson Group.
One of those steps includes taking the rare opportunity to “reverse” an RMD out of your IRA or 401(k) – a provision in the CARES Act that’s in effect for only this year. You have until Aug. 31 to do it.