A great money-saving opportunity is coming your way if you’re currently enrolled in a medical coverage plan or are contemplating signing up. Medicare’s annual open enrollment period begins tomorrow, extending an opportunity for Medicare subscribers to make changes to their medical plans, and potentially save some money.
During the open enrollment period from October 15th to December 7th, enrollees will be permitted to switch between traditional Medicare plans and Medicare Advantage plans (available through private health plans), as well as make changes to their drug plans.
Though it may seem a tedious chore like filing your taxes, there is a potential cost savings in it for you. A report by the non-profit Kaiser Family Foundation alerts Medicare enrollees to many changes across the universe of medical insurance plans:
“Changes in Medicare Advantage and Part D plan availability, premiums, cost-sharing and benefits could require some beneficiaries to find alternative coverage and lead others to pay more if they continue with their existing coverage,” the report cautions.
That’s all the incentive we need. Let’s have a look at some of these changes and see how they might affect your situation.
Plans Dropping Out
First up are changes in the plans you have to choose from. Of the 2,014 plans available in 2014 (there’s a neat coincidence in numbers), 378 plans are being discontinued and will not be available in 2015.
“More than four in ten PFFS plans (43%) and more than two in ten local PPOs (24%) are exiting the market in 2015,” the Kaiser report reveals. “These changes are primarily weeding out plans that did not attract many enrollees and plans that received relatively low quality ratings.”
Among the departing plans are many PFFS (private-fee-for-service) plans, which “have attracted fewer enrollees over the years, dropping from a high of more than 2 million in 2009 to about 300,000 in 2014 – confirming the waning role of PFFS plans in the Medicare Advantage market.”
Thankfully, then, “most of the plans that are departing from the market (excluding those that consolidated into new plans) at the end of 2014, have relatively low enrolllment”. Even so, some 318,707 members will lose coverage when their plans are discontinued at the end of this year, “and will need to find an alternative source of Medicare coverage – either another Medicare Advantage plan or traditional Medicare,” the report advises.
A total of 48 states will have some discontinued plans. In most states, less than 5% of enrollees will be affected, while more than 10% will be affected in the states of Idaho, Montana and South Carolina, and a whopping 61% will be affected in Hawaii.
If you are one who will be displaced by a departing plan, your opportunity to find a replacement begins tomorrow. For 2015, you’ll have 1,945 plans to choose from.
Yet even if you are not one of those affected by a discontinued plan, it would still be wise to peruse through next year’s selection, as it may save you some money.
Plans Jumping In
There are some 309 new plans being added for 2015, many of which will likely charge lower premiums, as they will be “vying for beneficiaries”, the Kaiser report adds.
Moreover, “companies may have adjusted their business strategies and tightened their belts in response to the changes in the ACA and the sequestration of Medicare spending put in place under the Budget Control Act of 2011”.
This means you are likely to find some bargains among the newer entries.
While you’re there, don’t forget to look through the many prescription drug plans, or Medicare Part D, as availability and premiums have changed there as well, potentially costing you more – or saving you more – on medication costs.
Changes to Medicare Part-D Plans
While most Medicare Advantage plans offer their own prescription drug plans (PDPs), many stand-alone plans are also available. For 2015, there will be 1,001 such stand-alone PDPs, averaging some 30 plans to choose from in each region.
Of course, with inflation always running a little higher in health matters than elsewhere in the economy, enrollees will be facing higher average PDP premiums in 2015. “The average premium… is expected to increase by 4 percent across all PDPs from 2014 to 2015, from $37.27 to $38.83 per month,” the report delivers the bad news.
But there is some good news too. While “enrollees in six of the ten most popular PDPs will experience double-digit premium increases if they stay in the same plans in 2015… enrollees in three of the ten most popular PDPs will see double-digit premium decreases.”
As more good news, “nearly all PDPs (87 percent) use pharmacy networks with preferred (lower) cost sharing offered in selected network pharmacies”, allowing you to save on your prescriptions if you shop at those participating pharmacies. You just have to make sure your PDP is one of the 87% that offer these discounts.
What is more, “for the first time in 2015, all PDPs will use tiered cost sharing”, charging different costs for different quality medication. “Most PDPs will use five tiers: two for generic drugs, two for brand-name drugs, and one for higher-cost specialty drugs,” the report explains.
Of course, health is one place you simply can’t afford to skimp. But when it comes to medication, replica generic drugs are just as effective as the better-known brands. The ingredients are virtually the same; it’s just the name that differs. Oh, yes, and of course, the price differs too… considerably!
So take advantage of your PDP’s lower cost on generic drugs, after confirming with your doctor that the medication is acceptable, of course. The cost savings from brand-name to generic can be as much as 50% or more.
Search and Save
Searching through the hundreds of plans available in your region may seem like a tiresome task, but you owe it to yourself to reduce your expenses wherever possible, especially if you are nearing or in retirement, when income can be limited and strictly budgeted.
Health care plan provider e-Health Medicare revealed that of the 22,000 online consumers who recently used eHealth’s cost-comparison tool that helps shoppers compare medical plans, only 5% were enrolled in plans with the lowest total out-of-pocket cost. That leaves 95% of enrollees paying more than should be for their medical and prescription expenses down the road.
The reason? Shopping around for medical coverage is a new experience for most people, as their employers had a plan package all laid out for them. “We’re just really not well-schooled… on how to do this,” explained Ross Blair, senior vice president at eHealth Medicare.
One mistake enrollees make is to select plans that charge the lowest monthly premiums. Yet we must remember that the reason they can offer such low premiums is because they charge patients more for treatments and hospitalization. Hence, we must consider “total out-of-pocket” expenses, not just the upfront monthly premiums.
So fire up your spreadsheet and get ready to search for the medical plan that best suits your needs and budget, as tomorrow opens your window of opportunity to switch to a better plan and save some expenses.
Just remember the goal is to achieve total savings among premiums, prescriptions and future care – not just on upfront premiums alone.
Joseph Cafariello
