How to decide whether to switch Medicare plans

"Picking a Medicare plan is my favorite thing to do,” says pretty much no one. So the decision to switch plans is a big one. You’ll shop around, compare costs and benefits, and then possibly pick again. In the end you may decide to just stick with what you have.

You can pick a new plan, if you decide to, during the Medicare Annual Enrollment Period, which runs from Oct. 15 to Dec. 7 every year.

So should you keep your Medicare plan? Should you switch to a new Medicare plan? You really only have to answer three questions about your current plan to decide whether to keep it or to switch. If you answer “no” to one or more of the three, then you’ll probably want to explore other plan options.

To answer this question, you need to look at the benefits the plan provides and learn how your plan could be changing for next year, if at all. Insurance companies review – and may change – their Part D and Medicare Advantage (Part C) plans every year. This means you could have different benefits and services added and/or removed each year.

Your plan will notify you about plan coverage and cost changes in an Annual Notice of Changes letter, or ANOC for short. Be sure to read it and pay attention to coverage changes that may affect you. Most plans send ANOCs out in September.

Key things to watch out for:

• Part D formulary changes, such as certain medications moving from one formulary tier to another. (Low-tier drugs generally cost you less than high-tier drugs.)
• Any new prior authorization or step therapy requirements. Plans may use them as cost-saving measures, which could be helpful to you. But, if you’re affected, you’ll want to be sure you know what to expect come January.
• Health benefits and features you have used that have been removed. If they’ve been taken off your plan, consider if you need them still and how to get them.
• New health benefits and features that have been added. These may make your plan worth keeping.

Your costs for Medicare can also change year-over-year. Both Original Medicare (Parts A & B) and private Medicare plans (Medicare Advantage, Part D, etc.) can change their premiums, deductibles and other costs annually. Those costs are worth noting.

Consider too how much you spent in the last year out-of-pocket and how your deductible, copay and coinsurance amounts played a role in that.

• If you have a plan with a deductible, then you’re responsible for the cost of your care up to that amount. After that, your plan coverage starts to kick in. Check for any changes to your plan deductible and how that will affect your budget.
• Copays and coinsurance are charged when you receive a service. You might pay $20, for example, when you go to the doctor. Or you could pay a set percentage of your plan’s cost – coinsurance – for a test or exam.

Tip: Use your estimated costs to help you decide if your plan fits your financial situation.

Think about the health care services you’re likely to use next year and use your plan’s quoted costs to estimate what you may have to pay. Factor in any planned procedures or services related to new or changing health conditions.

Then you’ll need to add these estimated costs (deductibles, copays and coinsurance) and your annual premium cost (monthly premium x 12). This will give you a pretty good estimate of your total Medicare costs for the year so you can decide how that amount works within your budget.

Plans can also change their provider and pharmacy networks from year to year. You need to check your plan details carefully to make sure that your doctor and other providers are still in the network. If they aren’t, you could pay more if your plan considers them out-of-network.

You can usually get the full network list on the plan provider’s web site. Otherwise call the provider using the number on the back of your insurance member card.

Picking a Medicare plan may not top your list of fun fall activities, but you owe it to yourself to shop if you find that your current plan falls short of your needs.

On that, here are some great tips to help you get ready for the Medicare Annual Enrollment Period.