If you are over the age of 65, it’s that time of year to review your Medicare plans. Once a year from November 15 through December 31, those eligible for Medicare have the option to change existing Medicare Part D prescription plans and Medicare Part C Advantage plans. This period is called the Annual Election Period or AEP. During the six-week period when changes can be made, you owe it to yourself to evaluate your options.
Medicare consists of four parts — Part A, Part B, Part C and Part D. Most Medicare enrollees have Part A and Part B. In addition you may have an employer-sponsored supplement or a private pay Medigap policy to go along with Part A and Part B. The fourth part of Medicare is Part D or prescription drug coverage. You may think that the “D” in Part D is because of the word “drugs.” Actually it’s because there is a Part C.
Part C is the Medicare Advantage Program. It was started in 2003 as part of the Medicare Modernization Act, the same Act that created the Medicare Part D prescription drug coverage. If you have Medicare Advantage, Medicare pays a private insurance company to take over and administer your Medicare benefits. You are still a part of the Medicare system. You do not leave the system. You are simply now receiving your benefits from a private company, not the government.
There is also another period of time from January 1 through March 31 that is called the Open Enrollment Period or OEP. During OEP, a person can enroll in Advantage but cannot change Part D status, meaning if there is just a Part D, a change or cancellation to the drug plan cannot occur at this time. If there is a Medicare Advantage plan with Prescription Drug coverage (MAPD), a change can be made by purchasing another MAPD. Or, if there is just prescription coverage, an MAPD can be purchased. Going the other direction from an MAPD to prescription coverage only, is not allowed.
On April 1 and thereafter, Medicare institutes a lock-in period. During this time, no changes to drug coverage or an MAPD are allowed. As with most government programs there are a few exceptions to the rule. If you have moved out of the area the plan operates in, or if you become a resident in any long term care facility, or if you involuntarily lose coverage, you can enroll for new coverage under a Special Election Period or SEP. Finally, if you are eligible for or are on Medicaid, you can usually change coverage whenever you choose.
So what’s the big deal? Why do you need to be aware each year of what is going on? The reason is the insurance companies that sponsor the Medicare Part C and Part D plans have the option to change what they offer each year. Changes may come as a result of directives from Medicare, from previous years’ claims experience, or from a multitude of other issues.
Medicare allows the insurance companies to start marketing their plans to the public on October 1 when the companies can release information on intended changes to existing plans. For any pending changes, you should receive an Annual Notice of Change (ANOC), usually in November. You need to take the time to review changes to be aware of the plan you are in and the benefits it provides when you might need to use the coverage.
Medicare has changed the rules on how companies can induce people to change. In the past, you could be invited to attend presentations where you received free meals as an inducement to attend. Starting in 2009, only snacks can be provided. Preliminary indications are that coffee, donuts and fresh fruit are on the menu. Personally, I love fresh fruit and it keeps me regular.
By: Matthew M. Wallace CPA, JD
Published edited October 26, 2008 in The Times Herald newspaper, Port Huron, Michigan as: Get facts before Medicare deadline