Medicare Open Enrollment

Medicare open enrollment season, which runs from October 15 to December 7 this year, is a good time to review your medical plan coverage. Making the right choices can save you thousands of dollars and minimize headaches should you need expensive medical coverage during 2016.

During open enrollment season, you can make changes to your medical plan, leave your plan entirely for a different plan or keep your current plan if you’re satisfied with the coverage. Any changes you make will take effect on Jan. 1, 2016.

Traditional Medicare or Medicare Advantage?

If you choose to change your coverage during open enrollment season, a basic choice is whether to enroll in a Medicare Advantage (MA) plan or traditional Medicare. In either case, you’ll need to pay a monthly premium for  Part B coverage, which for most retirees is $104.90 in 2015. MA plans or Medigap policies cover some medical costs not covered by Medicare.

Enrolling in a traditional Medicare plan allows you to select your own doctors, provided they accept Medicare-approved amounts as full reimbursement for covered services. If you buy a Medigap policy, it will cover a portion of expenses not covered by Medicare — deductibles and copayments should you incur medical expenses from doctors who participate in Medicare.

MA plans provide basic medical services covered by Medicare, plus some costs that would normally be paid out-of-pocket if you didn’t have any supplemental coverage. MA plans generally require you to use health care facilities, doctors and other professionals in the MA plan’s existing network, although some plans may cover out-of-network expenses. The total premiums paid for Medicare and MA plans combined are often lower than the total premiums combined of the traditional Medicare plan and supplemental Medigap plans.

If you enroll in traditional Medicare, you’ll need to buy Part D coverage (coverage for prescription drug costs) separately. Most MA plans cover the cost of prescription drugs, although some may require that you buy Part D coverage separately.

One basic tradeoff is the freedom of choice you have regarding doctors and facilities under traditional Medicare plus Medigap insurance, which also comes with generally higher total monthly premiums, versus the lower total monthly premiums of an MA plan with the resulting restriction of choice regarding doctors and health care facilities.