Medicare Update – Senior Planet from AARP
Expect changes in Medicare this year. Look for higher drug prices, higher co-pays, and even doctors and hospitals being dropped from Medicare Advantage plans.
This is a hectic time of the year for Medicare recipients. The ads and telemarketing calls begin, marking the start of Medicare Open Enrollment. This period offers the 69 million Medicare beneficiaries the chance to review their coverages and make necessary changes.
Fast Facts about Open Enrollment
Despite its significance, many people overlook Open Enrollment, which runs from October 15 through December 7. This is a mistake. For both Medicare Advantage and Original Medicare, costs and coverage can change significantly from year to year. Every senior should at least explore their options rather than allowing their current plan to roll over automatically.
What exactly is Open Enrollment and why is it important?
Open Enrollment is the only time of year when Original Medicare and Medicare Advantage enrollees can make changes to their plans. Original Medicare enrollees can switch their Part D prescription plan or opt for a Medicare Advantage Plan. Meanwhile, Medicare Advantage enrollees can switch to another Medicare Advantage plan or revert to Original Medicare.
What is the difference between Original Medicare and Medicare Advantage Plans?
Original Medicare is the foundational health care plan for seniors aged 65 and older. In contrast, Medicare Advantage Plans are operated by private insurers, such as UnitedHealthcare and Humana.
While Original Medicare may have higher costs, it offers a wider choice of doctors and hospitals. According to Louise Norris, a health policy analyst with MedicareResources.org, “If you’re in Original Medicare, you still need to purchase some private coverage—prescription drug coverage (Part D) and a Medicare Supplement policy, also known as Medigap.”
Medicare Advantage plans are generally less expensive but limit you to doctors and hospitals within their network. These plans often include dental and vision coverage, which Original Medicare does not provide. The popularity of Medicare Advantage plans is growing rapidly, with roughly half of Medicare recipients currently enrolled.
One significant drawback of Medicare Advantage is the requirement for prior authorization. If you need to see a specialist outside the network, you must obtain prior approval, or you may face out-of-pocket costs. This approval process and associated paperwork are common complaints among MA plan users.
What are people most confused about when it comes to Original Medicare?
“When people initially enroll in Medicare, there is often a lack of awareness regarding Medigap plans,” Norris explains. “You only get one chance to enroll in those plans without your medical history being a factor, and that’s when you first enroll in Medicare at age 65. You have a six-month window to choose a Medigap Plan that will cover some or all out-of-pocket costs. After this period, in most states, you will not have another opportunity to buy a Medigap plan unless you experience a specific qualifying life event.”
This means that if you initially choose a Medicare Advantage plan and later wish to switch to Original Medicare, “you might not be able to obtain a Medigap plan, as it will depend on your medical history,” Norris adds.
Why would someone want to switch plans?
“A common mistake is that people select their coverage when they first enter Medicare and then let it continue year after year without actively comparing their Medicare Advantage or Medicare Part D coverage,” Norris states. “If you do nothing during Open Enrollment, your Medicare Advantage plan will simply renew, or your Medicare Part D drug plan will renew. However, premiums, benefits, provider networks, and covered drugs may change.”
For instance, UnitedHealthcare and Johns Hopkins Medicine ended their network contract in August, meaning that most Johns Hopkins facilities and providers are now out of network for UnitedHealthcare Medicare Advantage patients. The same could happen with your primary care physician.
What is the Annual Notice of Change and why is it important?
In September, you should have received your Annual Notice of Change from your Medicare insurers, either via email or regular mail. This document outlines changes in coverage and costs for the upcoming year.
“Whether you’re in Medicare Advantage or Medicare Part D, you receive a Notice of Change from your insurance company in September,” Norris explains. “This notice details all the ways your policy will change for the coming year—premium changes, provider network changes, and benefit changes. Ignoring this notice could lead to surprises when you go to fill a prescription in January, as your coverage may differ from what you were accustomed to the previous year.”
Stymied about Medicare? Join Senior Planet’s Medicare webinar on ‘Navigating Medicare Resources Online” on Wednesday, Nov. 26, to learn how to find Medicare information online. (Note: this does not include advice or endorsement of any Medicare enrollment or plans.) Registration is required; details are here.
What are the important changes coming for Medicare next year?
This year, more insurers than usual are making changes—withdrawals from certain states or regions, premium adjustments, and alterations to co-pays and annual deductibles.
The Inflation Reduction Act (IRA) of 2022 allows Medicare to negotiate prices for the most expensive drugs. The first set of negotiated drug prices will take effect in 2026, potentially saving Medicare beneficiaries an estimated $1.5 billion in annual out-of-pocket costs. These negotiated prices are expected to be at least 38% lower than the 2023 list price.
Additionally, for the first time due to the IRA, there will be a cap on out-of-pocket expenses in Part D Prescription Drug Plans. Starting in 2025, there will be a maximum out-of-pocket cap of $2,000 for covered drugs. Once you reach this limit, your covered drugs will be fully covered for the remainder of the year. This cap will increase to $2,100 next year, as it is indexed for inflation.
Norris notes that some drug plans may have a deductible. This year, the maximum deductible is $590, which will rise to $615 next year. “It’s crucial to review the notice you receive from your plan, as not all plans will increase their deductible to the maximum amount,” she advises.
YOUR TURN
What do you think about the changes in Medicare? Are you enrolled in an Advantage Plan or Original Medicare? Let us know in the comments!
Stay on top of your finances with Senior Planet from AARP. Join us for live lectures on finance, money management, budgeting tips, articles, and more. Check out all our offerings here. Questions? Call our Senior Planet Tech Hotline: 888-713-3495.
Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post, and USA TODAY and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America,” was released in 2024. He is also the author of “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com.
Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services from AARP make no claim or promise of any result or success.
Expect changes in Medicare this year. Look for higher drug prices, higher co-pays, and even doctors and hospitals being dropped from Medicare Advantage plans.
This is a hectic time of the year for Medicare recipients. The ads and telemarketing calls begin, marking the start of Medicare Open Enrollment. This period offers the 69 million Medicare beneficiaries the chance to review their coverages and make necessary changes.
Fast Facts about Open Enrollment
Despite its significance, many people overlook Open Enrollment, which runs from October 15 through December 7. This is a mistake. For both Medicare Advantage and Original Medicare, costs and coverage can change significantly from year to year. Every senior should at least explore their options rather than allowing their current plan to roll over automatically.
What exactly is Open Enrollment and why is it important?
Open Enrollment is the only time of year when Original Medicare and Medicare Advantage enrollees can make changes to their plans. Original Medicare enrollees can switch their Part D prescription plan or opt for a Medicare Advantage Plan. Meanwhile, Medicare Advantage enrollees can switch to another Medicare Advantage plan or revert to Original Medicare.
What is the difference between Original Medicare and Medicare Advantage Plans?
Original Medicare is the foundational health care plan for seniors aged 65 and older. In contrast, Medicare Advantage Plans are operated by private insurers, such as UnitedHealthcare and Humana.
While Original Medicare may have higher costs, it offers a wider choice of doctors and hospitals. According to Louise Norris, a health policy analyst with MedicareResources.org, “If you’re in Original Medicare, you still need to purchase some private coverage—prescription drug coverage (Part D) and a Medicare Supplement policy, also known as Medigap.”
Medicare Advantage plans are generally less expensive but limit you to doctors and hospitals within their network. These plans often include dental and vision coverage, which Original Medicare does not provide. The popularity of Medicare Advantage plans is growing rapidly, with roughly half of Medicare recipients currently enrolled.
One significant drawback of Medicare Advantage is the requirement for prior authorization. If you need to see a specialist outside the network, you must obtain prior approval, or you may face out-of-pocket costs. This approval process and associated paperwork are common complaints among MA plan users.
What are people most confused about when it comes to Original Medicare?
“When people initially enroll in Medicare, there is often a lack of awareness regarding Medigap plans,” Norris explains. “You only get one chance to enroll in those plans without your medical history being a factor, and that’s when you first enroll in Medicare at age 65. You have a six-month window to choose a Medigap Plan that will cover some or all out-of-pocket costs. After this period, in most states, you will not have another opportunity to buy a Medigap plan unless you experience a specific qualifying life event.”
This means that if you initially choose a Medicare Advantage plan and later wish to switch to Original Medicare, “you might not be able to obtain a Medigap plan, as it will depend on your medical history,” Norris adds.
Why would someone want to switch plans?
“A common mistake is that people select their coverage when they first enter Medicare and then let it continue year after year without actively comparing their Medicare Advantage or Medicare Part D coverage,” Norris states. “If you do nothing during Open Enrollment, your Medicare Advantage plan will simply renew, or your Medicare Part D drug plan will renew. However, premiums, benefits, provider networks, and covered drugs may change.”
For instance, UnitedHealthcare and Johns Hopkins Medicine ended their network contract in August, meaning that most Johns Hopkins facilities and providers are now out of network for UnitedHealthcare Medicare Advantage patients. The same could happen with your primary care physician.
What is the Annual Notice of Change and why is it important?
In September, you should have received your Annual Notice of Change from your Medicare insurers, either via email or regular mail. This document outlines changes in coverage and costs for the upcoming year.
“Whether you’re in Medicare Advantage or Medicare Part D, you receive a Notice of Change from your insurance company in September,” Norris explains. “This notice details all the ways your policy will change for the coming year—premium changes, provider network changes, and benefit changes. Ignoring this notice could lead to surprises when you go to fill a prescription in January, as your coverage may differ from what you were accustomed to the previous year.”
Stymied about Medicare? Join Senior Planet’s Medicare webinar on ‘Navigating Medicare Resources Online” on Wednesday, Nov. 26, to learn how to find Medicare information online. (Note: this does not include advice or endorsement of any Medicare enrollment or plans.) Registration is required; details are here.
What are the important changes coming for Medicare next year?
This year, more insurers than usual are making changes—withdrawals from certain states or regions, premium adjustments, and alterations to co-pays and annual deductibles.
The Inflation Reduction Act (IRA) of 2022 allows Medicare to negotiate prices for the most expensive drugs. The first set of negotiated drug prices will take effect in 2026, potentially saving Medicare beneficiaries an estimated $1.5 billion in annual out-of-pocket costs. These negotiated prices are expected to be at least 38% lower than the 2023 list price.
Additionally, for the first time due to the IRA, there will be a cap on out-of-pocket expenses in Part D Prescription Drug Plans. Starting in 2025, there will be a maximum out-of-pocket cap of $2,000 for covered drugs. Once you reach this limit, your covered drugs will be fully covered for the remainder of the year. This cap will increase to $2,100 next year, as it is indexed for inflation.
Norris notes that some drug plans may have a deductible. This year, the maximum deductible is $590, which will rise to $615 next year. “It’s crucial to review the notice you receive from your plan, as not all plans will increase their deductible to the maximum amount,” she advises.
YOUR TURN
What do you think about the changes in Medicare? Are you enrolled in an Advantage Plan or Original Medicare? Let us know in the comments!
Stay on top of your finances with Senior Planet from AARP. Join us for live lectures on finance, money management, budgeting tips, articles, and more. Check out all our offerings here. Questions? Call our Senior Planet Tech Hotline: 888-713-3495.
Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post, and USA TODAY and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America,” was released in 2024. He is also the author of “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com.
Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services from AARP make no claim or promise of any result or success.
