Medicare open enrollment for 2021 is underway, and both new enrollees and veteran ones should be aware of some key changes.
During this period, you can change your Medicare health or drug coverage for 2021 as well as switch from a Medicare Advantage Plan to original Medicare. It’s important to look at your options because plans change from one year to the next. You have until December 7 to make changes for next year.
“It’s a concerning trend for me that few people actually review their coverage year per year, while insurance companies often change doctors in or out of the network,” said Melinda Caughill, co-founder of Medicare 65, a medicare software and consulting firm. “I often hear clients say my plan works great this year, but just because the plan was good doesn’t mean it will be next year.”
Here’s what to know.
Changes to premiums, deductibles, and out-of-pocket limits
Most increases should be expected, said Tyler End, CEO of Retireable, a financial advice platform.
“Where most people go wrong is they don’t think that healthcare costs grow as they age,” End said. “These costs are going to increase health insurance and Medicare.”
Medicare Parts A and B: Original Medicare includes parts A and B, which accommodate hospital and medical insurance, respectively.
Most people don’t have to pay premiums for Part A as long as they have 40 quarters of work history. Those who don’t may see an increased in premiums in 2020, but the CMS has not finalized that yet. The deductible for Part A was $1,408 in 2020. Again, the CMS has not released 2021’s deductible yet.
In October, the federal government enacted a short-term spending bill that included a provision, capping the premium increase for Part B in 2021. The increase is limited to 25% of what it could have been. In 2020, Part B premiums were $144.60 a month for most people, and its deductible was $198 in 2020. Rates for 2021 have not yet been publicly shared.
Medicare Part D: Those seeking prescription drug coverage can opt for Medicare Part D. These plans may also include vaccinations and are run by private companies. Part D is also bundled in Medicare Advantage plans.
The initial deductible for Medicare Part D will increase by $10 to $445 in 2021, while the initial coverage limit will tick up to $4,130 from $4,020 last year. The initial coverage limit is how much in the retail value of formulary drugs you can purchase before you enter Medicare Part D’s coverage gap.
The out-of-pocket threshold for drugs increased to $6,550 from $6,350 last year. Between $4,130 and $6,550 — the coverage gap — you’re responsible for paying 25% for brand name and generic of drugs.
Medicare Advantage Plans: These plans are administered by private insurers, rather than the federal government.
The out-of-pocket maximum for in-network co-payments, deductibles and coinsurance for in-network care and services related to Medicare Advantage Plans has increased to $7,550 for 2021 from $6,700. This is the amount you pay before your health plan pays 100% of the costs of covered benefits. The out-of-network expenses for Medicare Advantage Plans will have a limit of $11,300 for 2021, up from $10,000 in 2020. This limit excludes medication and monthly premiums.
The average monthly premium for Medicare Advantage plans is expected to decrease 11 percent to an estimated $21 in 2021 from an average of $23.63 in 2020, according to the Centers for Medicare and Medicaid Services.
More options for end-stage renal disease
As of 2021, those individuals with end-stage renal disease, the last stage of kidney failure, can take advantage of Medicare Advantage Plans.
“Previously if you were someone waiting for a transplant or on dialysis, you couldn’t do Medicare Advantage,” said Danielle Roberts, co-founder of Boomer Benefits, an insurance agency. “But the thing for them to think about is that many Medicare Advantage Plans will charge up to 20% of dialysis.”
Before you select a Medicare Advantage Plan, you should know that the majority of them require prior authorization if you want to be admitted in a hospital. Medicare Advantage Plans also have a tighter network of physicians to choose from than original Medicare.
“If you do not get prior authorization when it is required and you go ahead with the service, you are responsible for 100% of the costs regardless of the out-of-pocket spending limits,” Caughill said.
More options for those who take insulin
This year, the CMS introduced the Part D Senior Savings Model, a program that limits the cost of insulin to $35 for a 30-day supply, saving an average of $446 in annual out-of-pocket costs for insulin, according to the American Diabetes Association. The program goes into effect January 1.
Not all plans offer this benefit, but more than 1,600 prescription drug plans will participate in the program, according to a recent CMS release. So, you may need to switch plans to get this new benefit.
Those interested can utilize the Medicare Plan Finder during the open enrollment period and opt into the “Insulin Savings” filter to find a plan.
More supplemental benefits
A study by Medicare consulting firm Avalare finds that more Medicare Advantage plans will offer supplemental benefits in 2021.
For instance in 2018, the percentage of Medicare Advantage plans that offered supplemental benefits stood at 83%, but that percentage in 2021 is expected to increase to 94%.
Telehealth remains a standout benefit on the list with 94% of plans offering this benefit next year. In 2020, that number was 59%.
The onset of the pandemic has pushed 1 in 3 Medicare Advantage plans to include COVID-19 related benefits, such as care/relief packages, waived or reduced cost-sharing for COVID-19 treatment, and personal protective equipment.
It’s still vital to do your due diligence before you commit to a plan.
“Don’t fall victim to shiny object syndrome as this is the time of year you’re going to see all sorts of commercials with sports legends telling you about coverage,” Roberts said. “It’s easy to fall victim to the shiny object, but people forget to check if their doctor or drug is in-network or covered in the formulary.”