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Medicare Enrollment 2023 Explained

Medicare Enrollment 2023 Explained

Al Waller: Medicare Open Enrollment season has officially arrived. You may find this surprising, but according to the 22nd Annual Transamerica Retirement Survey, only 18% of Baby Boomer workers have what's considered a “great deal” of knowledge about Medicare. And thinking about that – that's only 18 percent of the generation that's nearing or has already entered retirement. What makes it even more astounding is that Medicare is the national health insurance program for all those 65 and older.

Welcome back to ClearPath—Your Roadmap to Health & WealthSM. I’m your host, Al Waller, and joining me today is Mihaela Vincze, public health expert for Transamerica Institute®, to discuss Medicare Open Enrollment season for 2023, which runs from October 15 to December 7. She’ll explain what to expect, how to prepare, as well as some new changes to be aware of.

Before we dive in, if you have ideas for future episodes, comments, or feedback, please email us at [email protected]. We’d love to hear from you.

It’s good to have you with us again, Mihaela.

Mihaela Vincze: Hi Al – It’s good to be here.

Al Waller: As I mentioned at the top, I did find the Boomer's general lack of familiarity with Medicare to be, well, surprising and quite frankly, unexpected – so I'm really looking forward to you shedding more light on this topic.

Perhaps you could start us off by sharing why an understanding of Medicare is important for listeners of all ages and not necessarily just for those 65 and older.

Mihaela Vincze:  Medicare is important for those of all ages and not just those who are 65 and older because Medicare can be complicated – those who are younger, such as myself, may need to step in and help their older family members or friends in their health care & health insurance decision making.

Without Medicare, many families would be unable to afford really important healthcare-related matters, such as doctor’s visits or obtaining necessary prescription drugs. Importantly, many families may not be aware of the costly penalties that can arise from not signing-up for Medicare when they are first eligible.

Al Waller: You make a good point because the date is time sensitive and could carry some serious ramifications – and let's face it, there's no shortage of reminders out there, as many of us are being inundated on TV and through robocalls regarding Medicare plans.

For many, this can actually seem pretty overwhelming to say the least. To that point, why don't we start with a baseline by having you explain what Medicare is.

Mihaela Vincze: Yes, a baseline is always helpful. Medicare is our country’s health insurance program for people aged 65 or older, also for younger people who are receiving Social Security disability benefits, and for those receiving Railroad Retirement Board benefits.

Al Waller: I'm glad you mentioned that, Mihaela. It's important to note that younger people are actually sometimes eligible too. So, why don't we jump right in.

Some of us may have heard about the Medicare alphabet—Parts A, B, C, D. Maybe you could walk us through what they are and how they work together.

Mihaela Vincze: Yes, of course. We have Original Medicare, which many of us may have already heard of and this includes Part A and Part B. Original Medicare is a fee-for-service health plan. Medicare pays its Medicare-approved amount and then you pay your share in deductibles and coinsurance.

For Part A, most people do not have to pay a monthly premium, and it covers inpatient hospital care, as well as some limited coverage of hospice, nursing home care, as well as home health care.

Part B – on the other hand – does have an extra monthly fee or premium, which depends on your income. Part B covers things like outpatient hospital care – such as physical therapy, doctor bills, and preventative care, including screenings, shots, vaccines, and wellness visits.

Al Waller: Now given that Part B covers a considerable number of services, as you've identified, how much should someone anticipate paying in fees for Part B?

Mihaela Vincze: Part B costs are determined by your annual income from two years prior. For example, those who reported $97,000 or less on their IRS tax return in 2021 will pay the standard premium of $164.90 per month in 2023.

Those who made more than $97,000 in 2021 will have higher premium costs, which are determined by their income.

If you're curious about what these are, check out our Transamerica Institute Medicare Guide at transamericainstitute.org/Medicare.

Al Waller: Got it. Now that we’ve covered Part A and Part B, which make up Original Medicare, could you talk to our listeners about Part C?

Mihaela Vincze: Yes, Part C programs are also known as Medicare Advantage plans and are managed by private insurance companies.

Plans may offer some extra benefits that Original Medicare doesn’t— like hearing, vision, and dental services. Costs vary for these types of plans, but most of them include Part D coverage.

Keep in mind that most plans require you to go to their network of doctors and health providers. Out-of-pocket costs can quickly build up over the years if you get sick with this type of plan. So, it might not be the right choice for everyone.

Al Waller: That's important to note – as many people at this stage are more than likely to be living on a fixed income.

Now, what exactly is Part D?

Mihaela Vincze: Part D plans provide extra coverage for prescription drugs, which is easy to remember if you make a mental note to recall “D” for “drugs.” Joining a Medicare prescription drug plan is voluntary, and you pay an extra monthly premium for the coverage. It can also be added to Original Medicare or a Medicare Advantage plan (or a Part C plan).

Al Waller: Since we've taken some time here to unbundle and review Parts A, B, C, and D, what else makes this topic especially important and relevant now?

Mihaela Vincze: Medicare Open Enrollment is here. This is the period when those enrolled in Medicare can make changes to their health plan, and it runs between October 15 and December 7. Now, I want to remind listeners this period is NOT to sign up for Medicare for the first time.

Al Waller: That's a really good point – again, the dates that we're talking about are October 15 through December 7. They're here and they'll be gone before you know it.

Before we unpack Open Enrollment – just to clarify, when can someone initially sign up for Medicare?

Mihaela Vincze: You may initially sign-up for Medicare around your 65th birthday. It’s actually a 7-month period that starts 3 months before you turn 65, includes the month you turn 65, and ends 3 months after you turn 65.

Now, this may overlap with the Open Enrollment period – in that case, that’s fine – and you may actually be eligible for Medicare even earlier, if you have a disability or end-stage renal disease.

However, keep in mind that if you’re close to 65 and are already getting Social Security or Railroad Retirement Board benefits, you’ll automatically enroll in Medicare Part A and Part B Original Medicare coverage once you're eligible – and Part B has the monthly fee or “premium”, which you can drop if you want to.

This initial enrollment is especially important so that you can avoid facing penalties for not enrolling when you’re first eligible, like we mentioned earlier.

Al Waller: Well, penalties – I've never liked the sound of that. Basically, how much would someone expect to be penalized for missing their sign-up window?

Mihaela Vincze: Yes, it can be expensive, and it depends on how long you waited to enroll in Medicare.

For example, if you aren’t eligible for premium-free Part A, and you don’t buy it when you’re first eligible, your monthly premium may go up 10%, which you’ll have to pay for double the time you went without enrolling when you first became eligible.

For Part B, your monthly premium will go up 10% for each 12-months you were eligible for it but didn’t sign up for it.

There is also a penalty for Part D—if you do not enroll when you’re initially eligible for Part D, you’ll have to pay a penalty for as long as you didn’t have what’s called “creditable prescription drug coverage”. This type of coverage is expected to pay as much as Medicare’s prescription drug coverage. So, if you have this type of coverage, it would excuse you from paying a penalty if you decided to enroll in Medicare part D at a later time.

Al Waller: This all sounds positively brutal. I mean, I would like to hope that there's some forgiveness out there – then what do you do if you miss the initial enrollment period?

Mihaela Vincze: Good question. If you missed your Initial Enrollment Period (IEP) and need to enroll in Medicare, you will likely have to enroll during either a Special Enrollment Period (SEP) – where special circumstances allow you to enroll – or during the General Enrollment Period (GEP).

The GEP or General Enrollment Period runs from January 1 through March 31 each year, with coverage starting July 1. You may face a late enrollment penalty and gaps in coverage if you sign up during these timeframes. Whatever plan you end up choosing, just remember, you can always review and change your coverage during the Medicare Open Enrollment period.

Al Waller: Well, given the severity of these penalties, a word to the wise would clearly be to jot down these important dates, as well as circle them on your calendar.

For those wondering, how do you go about applying?

Mihaela Vincze: When you initially want to enroll in Medicare, you can apply online, by mail, or over the phone by contacting your local Social Security office. About 2 weeks after you sign up, Medicare will mail you a welcome package with your Medicare card.

Al Waller: Sounds pretty straightforward. Then, what about those who are already enrolled in Medicare– how do they prepare for the Open Enrollment Period?

Mihaela Vincze: Wonderful question. I’d like to shout out three important documents that you may want to have handy as you prepare for the Medicare open enrollment season.

Al Waller: OK, you've got my intention. Let's roll!

Mihaela Vincze: The first document is the plan annual notice of change (ANOC). If you’re enrolled in a Medicare Advantage plan Part C or a Medicare Part D plan, the insurance company will send you the ANOC about how your plan will change in the coming year—this should have arrived in September. You’ll receive information on things like your provider network, your premium, and your deductible.

The second document is the evidence of coverage (EOC), which is a legal document which contains all the coverage details for the coming year. A lot of times, you’ll see this document online in your insurance portal. These documents can be very long – it’s not uncommon to see a 300-page EOC.

The good news is the last document is the Summary of Benefits—just how the name implies, this document is a high-level summary of your benefits. This document houses the coverage highlights, not all of the detailed information. You can also find this document online in your insurance portal or you can call your insurance company to get this.

Once you have these 3 documents, you will know exactly what your current plan currently entails, and the upcoming changes. Then you can decide if the plan will continue to meet your needs or if you need to make a change. If you do decide that it no longer meets your needs, and you want to change your plan – the Medicare Open Enrollment period is when you will do that. Those changes will go into effect January 1, 2023.

Al Waller: Well, Mihaela, thanks for this. This is all very informative and very comprehensive too. So, with all these different Medicare options, how does one go about choosing which is best for them?

Mihaela Vincze: Make sure to consider all the costs, not just the monthly fee or premium. Think of all and any major medical procedures you expect to have in the coming year when you make this decision.

You may add a Medicare Supplement Insurance plan, also known as Medigap, to Original Medicare to fill in the “gaps” in coverage. Just keep in mind that in most states, you have to apply for Medigap which is based on your health.

Al Waller: I see. …this just in – a listener dropped us a note. They’re asking how the Inflation Reduction Act will affect Medicare?

Mihaela Vincze: Great question. Under the new legislation, the Department of Health and Human Services will be able to negotiate prices for some of the most expensive drugs covered under Medicare Part B and under Medicare Part D. This will lead to lower drug prices for consumers.

Al Waller: Now that's the kind of news I'd like to hear – which brings me to my next question. Are there any services or items not covered by Medicare that listeners should be aware of?

Mihaela Vincze: Yes, there are a few items and services not covered by Medicare, which you might find surprising and maybe expect to be covered. One common misconception is that long-term or custodial care, which includes things like day-to-day activities – including bathing, dressing, and eating – will be covered. Unfortunately, it is not. Other items not covered include hearing aids, eye exams, and routine foot care. So, it’s really important to know what’s covered and what isn’t when you make decisions for your health plan.

Al Waller: Agreed and while it's unfortunate those services and products aren't currently covered by Medicare, it's important, I think, to know the score upfront and then not be blindsided later down the road.

Now switching gears, something I've wondered about is folks who are working when they turn 65. Would they still need to sign up for Medicare if they're currently employed?

Mihaela Vincze: Generally speaking, if you have job-based health insurance through your spouse or through your own job, you don’t need to sign up for Medicare while you or your spouse are still working. You can wait until your spouse or you yourself stop working or you lose your health insurance—whichever comes first.

However, if you have health insurance that’s not available to everyone at the company or you’re self-employed, ask your insurance plan provider if your coverage is and I quote “employer group health plan coverage”. If it’s not employer group health plan coverage, sign up for Medicare when you turn 65 to avoid a monthly late enrollment penalty.

Further, if your employer has less than 20 employees, you should check with your employer to see if you need to sign up for Medicare when you’re first eligible. If you have COBRA coverage, you should sign up for Medicare as soon as you turn 65.

Al Waller: I think it's safe to say, there's quite a bit to consider when one approaches the subject of Medicare. To that point, where should someone turn if they want to access additional resources?

Mihaela Vincze: Medicare.gov is a great tool and is the official U.S. government site for Medicare, which contains the handy Medicare & You 2023 handbook.

The State Health Insurance Assistance Program, known as SHIP, also offers free counseling, which is unbiased and not connected to any health insurance plan. It’s a great resource. Lastly, check out our Transamerica Institute Medicare guide at transamericainstitute.org/Medicare.

Al Waller: Well, it looks like we are out of time, Mihaela. But I really want to thank you again for cutting through the ice regarding all the intricacies and complexities, for that matter, within Medicare. Really well done!

If you have ideas for future episodes, comments, or feedback, please email us at [email protected]. Don’t forget to subscribe to our podcast so you don’t miss upcoming episodes.

Until the next time, I’m your host Al Waller. Stay safe, be well and thanks for listening.

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about health and wellness, employment, financial literacy, longevity, and retirement. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org/podcast.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Mihaela Vincze is a public health expert and experienced health care educator. Serving as Transamerica Institute’s health care content developer, she shares insights on health and wellness on ClearPath—Your Roadmap to Health and WealthSM. Mihaela earned her master’s and bachelor’s degrees in public health at California State University, Northridge.