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Medicare Open Enrollment Is Coming. Here's What You Need to Know

By Dan Caplinger - Sep 27, 2015 at 8:00AM

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It's time for your annual chance to make changes to your Medicare coverage. Here's how to make the most of it.


Image: Medicare.gov.

The vast majority of Americans over 65 take advantage of Medicare to help with their healthcare costs. Yet as helpful as Medicare is, it does involve some key choices, and every year, Medicare participants get a chance to consider changes to aspects of their coverage during the annual open enrollment period. With open enrollment coming up, let's take a closer look at when it starts and what you need to know to make smart decisions about your Medicare coverage.

The basics of Medicare open enrollment
Open enrollment starts every year on Oct. 15, and it runs through December 7. The choices that you make during open enrollment don't take effect immediately, but they set you up well in advance for the beginning of 2016.

You can do a number of things during the Medicare open enrollment period. With respect to hospital and medical coverage, you're allowed to switch from traditional Medicare to a Medicare Advantage Plan, or from Medicare Advantage back to traditional Medicare. You're also allowed to swap one Medicare Advantage Plan for another.

Open enrollment is also important for prescription drug coverage. During the period, you can switch from a Medicare Advantage Plan that does offer drug coverage to one that doesn't, or vice versa. Similarly, you can sign up for Medicare Part D prescription drug coverage, switch from one Part D plan to another, or drop your Part D coverage entirely.

How to be smart about open enrollment
The first thing to realize about Medicare open enrollment is that it can be far more complicated than you realize. Different plan options can have entirely different coverage, and your total costs can vary greatly. Since you can't predict your future healthcare needs, it's impossible to come up with a choice that's guaranteed to work out to be the best one you could have made.

That said, there are several things you can do to put the odds in your favor. First and most importantly, it's vital to look beyond simple premium costs and consider instead the total costs of your care. In some cases, a Medicare Advantage Plan with a higher premium will have lower deductibles and copays, leaving you with a lower net cost. For others, the lower-premium plan will be the smartest choice, especially if you're relatively healthy and need little in the way of healthcare services.

Moreover, although traditional Medicare differs in many respects from Medicare Advantage Plans, you can still make a cost comparison. To do so, you might want to take into account what if anything you spend for a Medicare Supplemental Insurance policy, which many people use to fill in some of the gaps in the coverage that traditional Medicare has.

Think about your health
Perhaps the most important element of a successful open enrollment period is taking into account any recent changes in your own health. The advantage of open enrollment is that if you have a plan that no longer covers your needs in the best way possible, you can look for other solutions that have a better fit.

This is especially clear in the prescription drug coverage realm. Some Part D plans are best for those who have few or no drug needs, providing low-cost coverage just in case something unexpected comes up during the year. Yet if you discover that you'll need to start taking prescription drugs regularly, then shifting to a more comprehensive plan that covers more of the costs could be a smarter financial move. It pays to run the numbers using the information you have on your various drug-plan options to figure out which one matches up best for the specific medications and amounts you'll need.

Finally, keep in mind that from time to time, insurance companies stop offering certain coverage options. If that's the case, then you might be forced to consider other plans. That can be a stressful time, but you should simply use the same process that you'd otherwise want to go through to search for better coverage anyway.

Medicare provides solid healthcare coverage for older Americans, but you have to make the most of the choices you have. By taking advantage of open enrollment, you can ensure that you'll have the healthcare protection you need in 2016.

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