Medicare open enrollment 2021: Choose wisely

Every year, seniors on Medicare are faced with the task of examining their Medicare coverage and making important decisions. Those who think that Medicare is a one-time enrollment, which then covers everything, are truly mistaken. In fact, Medicare decisions are complex, frequent and far reaching.

For starters, you need to know that Medicare is divided into parts. At the risk of oversimplifying:

— Part A covers costs related to hospitalization.

— Part B offers coverage for physicians and outpatient services. But Part B doesn’t cover all these costs.

— So you’ll need a Medicare supplement plan, which you must chose within six months of signing up for Medicare because during this period you can’t be denied the most comprehensive plan (G) for medical reasons.

— Part D covers the cost of prescription drugs — but not all costs.

— And then there’s Medicare Advantage, which bundles all of the above into a “managed care” program. (See below for details on how costly Advantage plans could be if you become sick.)

Initial enrollment

If you’re retired or have no other health coverage, you may enroll beginning three months before you reach your 65th birthday but the initial enrollment period last only seven months from that time. If you’re still working and covered by an employer health plan, you can delay enrolling in Medicare until your retirement or until that plan ceases to cover you.

Things get complex if you want to keep working and keep your good coverage, or if you have a spouse on your plan, or work for a small business. Then basic Medicare mistakes could impact your lifetime costs.

In these cases, I always recommend a consultation with a Medicare expert, such as Diane Omdahl at www.65incorporated.com, before you make even the first enrollment decision. The cost of a consultation could save you a fortune in the future.

Medicare supplement

Sign up for your Medicare supplement at the same time you sign up for Medicare. These plans are offered in tiers from each major private insurer. The most comprehensive is Plan G. It costs more each month but is worth the slightly higher charge. To get help signing up for your supplement — at no cost — go to www.ehealthMedicare.com.

Medicare drugs: Part D

Even if you don’t take any prescription medicines, you should sign up for Medicare Part D immediately and pay the small monthly charge. But if you do have prescriptions, you must review, and likely change, your coverage every year at this time. That’s because each plan changes the drugs it will cover, and the prices, and the “tiers” (percentage coverage) every year!

Just go to Medicare.gov and click on the home page link to find drug plans. Then line up your prescription bottles and input the names and correct dosage. With a click, you’ll find the plan that has the least out of pocket costs. You can sign up directly from the government website.

Medicare Advantage plans

These days you’re seeing a lot of television commercials promising complete coverage, often with zero monthly premiums or copays. And some of these plans even “subsidize” your Part B premium, allowing them to promise your monthly Social Security check will increase.

Too good to be true? Ask yourself how the insurance companies get the money to pay for all those commercials offering free dental and hearing. Hint: They restrict your health care options, getting paid a fixed fee from the government for each member, and spending less than that on care.

Medicare Advantage plans limit you to their network of physicians and hospitals. Getting outside consultations or services will be an additional expense to you and may require a referral.

And you could wind up paying a lot if you get sick — as much as $7,550 in one year out of pocket on health care costs (or as much as $11,300 including out-of-network services, if your plan allows them). That’s likely far more than what you might have spent on traditional Part B and supplement monthly payments. You only “win” in Advantage plans if you stay healthy.

After trying Advantage for a year, you can always switch back to traditional Medicare. But you won’t get the best supplement plan back if you have existing health issues. If you’re already in an Advantage plan, open enrollment allows you to search for a better one and switch. Do that at www.ehealthMedicare.com.

The open enrollment period for all these changes has begun and will continue through Dec. 7. Read all the fine print because these are critical decisions. And that’s The Savage Truth.

This is he first in a series of columns on health care open enrollment. Next week: Small business special enrollment period.

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.