Halfway Point of the Annual Election Period

The Medicare Annual Election Period ends in 4 weeks on December 7th. Current Medicare beneficiaries have the unrestricted right to change Part D (stand-alone prescription drug) plans, and Medicare Advantage plans.

Observations from the Market

There are many reasons that one should review their benefits annually. The main one is that since Medicare Part D and Medicare Advantage plans are annual contracts, all terms and conditions are subject to change. That means premiums and cost-sharing can change. The approved drug lists, otherwise known as the formulary, can also change. In fact, it would be reasonable to conclude that the moving parts are likely to change. Let’s examine why.

First, Medicare itself can change the list of approved medications for a particular medical condition. Second, beneficiaries should be aware that the carriers are trying to balance the costs of their respective plan, and remain competitive in a very competitive world. This can be observed in the market, that certain plans have improved, on an overall cost basis, when compared to others. It isn’t all good news: the average number of plans have declined per region for 2016, when compared to 2015. Further, premiums have increased, from an average of $33.41 in 2015 to an average of $34.10 in 2016. This also means that the Late Enrollment Penalty for Part D has increased from .3341 to .3410 a month (which you multiply by months, and then round to the nearest $0.10).

Networks in Medicare Advantage Can Change

This can be both positive and negative. There are subtle changes among the many Medicare Advantage plans in the market. The “not subtle” changes centers on the providers in a network. While premiums have remained relatively steady, you may notice that providers that accept a particular Medicare Advantage plan in one year, may not the next year. Every January and throughout the first quarter, beneficiaries are frequently surprised when the provider that they have seen may not be included in a network in the following year. That will result in either a) higher out-of-pocket expenses if you have a PPO, or b) no coverage at all for certain HMO Medicare Advantage plans.

Assisted Living / Skilled Nursing Facilities Remain Tricky

If you live in an assisted living facility, but do not require skilled nursing facility care, then Medicare Advantage can be challenging to administer. In many cases, there are on-site, or on-call medical providers at the facility. The facility and the provider may separately be considered in or out of network. Trying to get the accurate information regarding the network “status” can be very frustrating for a Medicare beneficiary and his/her family members. Further, diagnostic tests may be conducted off-site, or an in-network doctor may be required to use a testing facility that is out-of-network. The handling of this can vary wildly from facility to facility. Given that these are all subject to change annually, a Medicare Advantage beneficiary may want to check as many of these as he/she can, in advance.

It’s Not Likely to Ease

Recent headlines regarding a potential Medicare premium increase for existing beneficiaries, as well as the last-minute measures to prevent this (in 2015) have highlighted one central fact: the demographic and fiscal challenges remain to both Social Security and Medicare, and beneficiaries will need to keep informed for the changes that result.