Here’s how to navigate the complex world of Medicare

Enrollment in Medicare is most important for the 4.1 million Americans turning 65 this year — a record number.

Medicare is the primary health insurance for 67 million people in the US, including adults 65 and older and younger adults with long-term disabilities.

Medicare benefits coverage is provided through either traditional private Medicare plans or private Medicare Advantage plans. And it’s complicated.

“Medicare provides great insurance, but it’s not a universal program,” Philip Moeller, a Medicare and Social Security expert and author of the new book, “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize.” Your costs,” said Yahoo Finance. “It’s easy to get lost in the complexity of the program.”

Medicare coverage begins for most Americans at age 65 who are not covered by an employer-provided health care plan. The initial enrollment period is the three months before, the month and the three months after the 65th birthday. Lose enrollment and start accruing late enrollment penalties and risk gaps in coverage.

Medicare’s annual open enrollment period runs from October 15 to December 7 each year. Enrollees can then make changes to their coverage, which take effect on January 1 of the following year.

Changes include switching from a traditional Medicare plan to a Medicare Advantage plan (or vice versa), changing Medicare Advantage plans, and choosing or switching between Medicare Part D prescription drug plans. The average Medicare beneficiary has access to 43 Medicare Advantage plans in 2024 and can choose from plans offered by eight companies.

Read more: What is the retirement age for Social Security, 401(k) and IRA withdrawals?

Here’s what Moeller had to say about Medicare navigation, edited for length and clarity:

Kerry Hannon: You say there are three sets of decisions that, if handled correctly, increase the chances that Medicare will work for people. Elaborate?

Philip Moeller: First, sign up at the right time. Second, get the right coverage package for you. And third, spend some time learning how to use the coverage. Medicare is a very comprehensive program, but if you don’t know what it covers and how to use it, its value to you is reduced.

So, going back to the first thing, you need to understand the different Medicare enrollment periods, whether you’re aging into the program because you’re turning 65 or whether or not you’ve worked and decided to retire at that age. 65 or later.

There are two traditional pathways into Medicare. One is traditional Medicare with a Part D drug plan and usually a Medicare Supplement or Medigap plan. The second approach, which has become increasingly popular, is Medicare Advantage.

The story continues

What’s the biggest hurdle for people shopping for Medicare during open enrollment?

The most important tip is not to be intimidated by the apparent complexity of Medicare. So many people are kind of frozen. They fought hard to make their initial Medicare decision. It was hard for them to do. And they just said, OK, I’m done. I did that. I made my initial decision. And he keeps his plan from year to year.

The reality is that Medicare plans change substantially from year to year and there is a great benefit to actually shopping around for your plan. My mantra is, “Take half an hour to save $500.”

A few years ago, I waited until the end to look at my drug plan for the next year. And it turns out that the very expensive medicine I was taking was dropped. I would not have been covered for that drug. It would have cost me thousands and thousands of dollars. I discovered it the day before open enrollment ended.

Do you have a favorite tool to help people navigate all the plans and coverage available?

My favorite tool is the Medicare Plan Finder. Each fall, before open enrollment, Medicare uploads all private plan data into this tool. So your private Part D drug plans, your private Medicare Advantage plans, even Medigap plans, which are run by the states.

You can go to Plan Finder, enter the drugs you take, and it will show you if the drugs you take are covered by the plan. When you look at the different plans available where you live, you’ll see annual cost estimates for that plan based on the drugs you’ve entered into the tool.

People often buy based on the low premiums alone, which are very attractive, but I urge people to look at the total out-of-pocket costs over the course of the year.

What does Medicare not cover that shocks people?

It does not cover so-called non-medical custodial care. This means that Medicare does not cover long-term care in a nursing home. If you need this care, you either have to pay for it, you may have a long-term care policy, or, in many cases, people with these needs over time spend their resources and qualify for Medicaid.

Anticipating the cost of long-term care is a major financial planning challenge that people often don’t even think about until they are close to needing it.

The other important thing is that traditional Medicare only pays 80% of covered expenses for approved claims, which is why many people need a Medigap policy. So I urge people to look carefully at their Medigap plans.

I personally believe that traditional Medicare with a Medigap plan is the best coverage you can get in Medicare. He takes care of most of the goals. Original Medicare allows you to call any doctor in the country. They rarely require prior approval, while Medicare Advantage plans limit you to care in network providers. They often have substantial barriers to accessing care. The most notable is prior authorization where you can’t just walk in to get care.

How can someone appeal a denial of Medicare Advantage care?

The best thing people can do is work carefully with their doctors to make sure a procedure is covered before making the decision to commit to the procedure. That said, probably the best cure for this problem with Medicare Advantage is sunlight, and Medicare Advantage plans have received tremendous negative attention because of this prior authorization process, where it turns out that they have denied millions of legitimate applications for coverage.

As this word gets out, the public reaction was unsurprisingly very strong and negative. Medicare regulators responded by basically saying they plan to gather their papers. And it will be really interesting during this year’s open enrollment period to see how the plans are marketed to see if there are more misleading claims about what the plans will or will not cover.

Have a question about retirement? Personal finance? Something career related? Click here to send Kerry Hannon a note.

You have a chapter called “A Ray of Hope for Drug Prices.” Could you elaborate on that?

Most people’s attention for open enrollment is focused on prescription drugs. The Inflation Relief Act that was passed in 2022 does several things. First, he did a great job of lowering insulin prices and putting a $35 monthly cap on insulin. It’s a good deal for diabetics. Second, it allowed Medicare for the first time to negotiate drug prices with drug manufacturers. And in fact, they’ve already negotiated new prices for a range of 10 widely used drugs. These new prices will go into effect in 2026. And then for several years after that, new drugs will be added to the list. This will be especially important for these miracle weight loss drugs because I expect they will be at the forefront of drugs that Medicare wants to negotiate prices for.

The third thing that is important for next year is the law that changes the nature of the Part D insurance rules, which have been very complicated. Next year they become much easier. The maximum out-of-pocket costs any Medicare person with a Part D plan will incur has been set at $2,000. This is a big deal.

From a business standpoint, it’s not a situation where the drug companies just say, oh, we’re just going to pay this money. They will try wherever they can to change the rules. So everyone with a Part D plan needs to be on high alert. They have to look for higher premiums, higher out-of-pocket deductibles. They have to look for reduced coverage for their medications. Some drugs may be removed from the formulary entirely. Other drugs may be moved to more expensive price levels.

Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “In Control at 50+: How to Succeed in the New World of Work” and “Never Too Old To Get Rich.” Follow X @kerryhannon.

Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement and more

Read the latest financial and business news from Yahoo Finance