Here are some very important questions for anyone who has a Medicare Advantage plan.
Did you open the Annual Notice that your Advantage plan sent to you in late September?
If your answer is no, can you dig it out of the recycle bin and read it?
If your answer is yes, do you understand what it’s saying?
Either way, that annual notice is extremely important because almost 3.2 million Medicare Advantage enrollees will lose their plans. You could be one of them
You’ve Got Some Questions, Here Are Some Answers
How can you tell whether your plan is going away?
There are two different situations.
1. Consolidation: Your plan may be going away but the insurance sponsor has another one for you. This is known as consolidation, the plan is merging with another one. Your annual notice will read something like this.
“We are writing to inform you that effective January I, [your plan ] will no longer be offered in your area. To ensure that you do not lose your medical and drug coverage, we are consolidating our plans and automatically transferring you to [new Advantage plan]. Unless you choose a different plan by December, your new coverage will begin January 1.”
If your plan is merging, you have two options.
- Choose the plan identified in the notice. You do not have to do anything since the plan will enroll you in the new one and coverage will start January 1.
- Check other Medicare Advantage plans in your ZIP code. Determine whether another plan will work better in meeting your needs. If you find one, enroll in that by December 7.
2. Termination: In this situation, your plan is not renewing; it is going away and the insurer has no options. Instead of the traditional Annual Notice of Changes that plans must send out every year, a termination notice explains that the plan is terminating and coverage will end December 31. Look for these important sentences:
“You must choose a new Medicare health or drug plan for next year. If you do not choose a new plan, you will still have Original Medicare, but you may lose your extra prescription drug or additional health benefits unless you enroll in a new Medicare Advantage or Part D plan.”
You won’t have a plan as of January 1 unless you pay attention now. So let’s focus on that.
What is the window for making changes?
Probably the best time to decide what to do is during the Open Enrollment Period, which ends December 7. Any new coverage would begin January 1.
If you miss that, you have a Special Enrollment Period that begins December 8 and goes through February 28. The coverage will begin the first day of the next month. However, a word of caution. If you do not decide what to do before the year ends, you will have only Part A and Part B on January 1, a possibly risky situation.
What makes this a special SEP?
This is a Medicare-do-over, with all options on the table just like when you were 65. That’s why it’s very important to understand what’s happening and the possibilities.
What are your options?
There are four.
1. Do nothing.
Here’s what will happen for all those who don’t pay attention and have no idea their plan is leaving.
They will be returned to Medicare Part A and Part B automatically. With this option, they’ll have coverage for inpatient stays in a hospital or skilled nursing facility, home health care, hospice, outpatient services and preventive care. They will be responsible for the costs Medicare doesn’t cover like the Part A and Part B deductibles, and the 20% coinsurance for outpatient procedures. There is no cap or limit on the costs so an illness or injury can create a significant financial burden.
2. Return to Part A and Part B and add a Part D drug plan.
Part A and Part B are automatic, as noted in option 1. Then there is an option to enroll in a Part D plan. However, this is not automatic. It will be necessary to find and enroll in a plan. Choosing this option could result in unlimited out-of-pocket costs for medical care.
3. Choose another Medicare Advantage plan.
Because the current plan is terminating and there are no options for merging with some other plan, any new Advantage plan will be sponsored by another company.
It wouldn’t be surprising if this is the option many choose. They know how Medicare Advantage works, they appreciate the lower premiums and extra benefits, and they see it as the easiest solution.
It’s important to note that this option isn’t available to everyone whose plan is terminating. In 2027, 193 counties in the U.S. will not have a single Medicare Advantage plan.
4. Choose a Medicare supplement plan (Medigap) and Part D drug plan.
This one will no doubt take the most effort. Some of those facing termination have had an Advantage plan for many years. Switching to a supplement and drug plan may be like learning a foreign language. But, based on my experience, it is worth serious consideration.
Why should I consider this last option, enrolling in a Medicare supplement plan?
Every Open Enrollment Period, my company hears from too many Medicare Advantage enrollees who want out of their coverage. Why, what happened? There’s a chance they elected Advantage at age 65, healthy, active and happy with the low premiums and extra benefits.
But then their health changed. A recent JAMA study found that one million who chose to leave their plans voluntarily did so because they developed a new, complex medical condition. They likely encountered network restrictions and couldn’t see the right doctors. Prior authorization may have delayed some important healthcare services. And the unpredictable and increasing costs may have become burdensome.
That’s when a Medicare supplement plan looks attractive. The premiums are no doubt higher but the costs are predicable. There are no networks or changing doctors. However, when applying for the Medicare supplement, those giving up an Advantage plan can run into the medical underwriting roadblock. Medigap policies in most states can deny an application because of health. KFF found that nearly three-quarters of Medicare Advantage enrollees in 2023 had a pre-existing medical condition that could result in a denial of the supplement application.
Think of it this way. When a Medicare Advantage enrollee voluntarily quits the plan and applies for a Medicare supplement, medical underwriting can come into play.
However, when the plan quits and leaves its members in a lurch, underwriting goes out the window. The Special Enrollment Period for a Medicare Advantage plan termination comes with a guaranteed issue right to get a Medigap plan. That means the insurance company cannot deny the application, delay coverage or raise premiums because of a pre-existing condition.
Where do I start if I choose the Medicare supplement route?
- The Medicare Plan Finder lists Medigap plans in your area, along with a range of premiums.
- Get an introduction to Medigap policies here.
- Choosing a Medigap Policy, a Medicare booklet, discusses many important issues – three ways to price the plans, the standardization method with 10 lettered plans that’s used in 47 states, a bit on the unique models in Massachusetts, Minnesota and Wisconsin and more. Once you have a basic understanding and some idea of what you want, a SHIP counselor or an independent agent can help.
You cannot take on a Medigap policy until the Medicare Advantage plan has ended on December 31. However, once you’ve done your research and made your selection, you can apply for the policy at any time before December 31, specifying the effective date for coverage as January 1.
The Important Take-Aways if Your Plan Is Terminating
- Decide which option to choose. Here are a few thoughts from my experienced perspective. Forget option 1, do nothing. You would face unlimited costs. Also bypass option 2, add a drug plan. You would have help with drug costs but face unlimited medical costs.
- If there are other Medicare Advantage plans still available to you, check them out closely. One of the biggest concerns will likely be the all-new provider network. Are important physicians and facilities in the network or will it be necessary to find new healthcare providers? Will the new plan have the supplemental benefits that are important?
- Give the last option serious consideration and investigate a Medigap policy. Medicare Advantage plans have changed dramatically in the last five to 10 years. Maybe the coverage isn’t what you signed up for in the beginning. If you have reason to worry about your health, this may be a great opportunity that probably won’t come again.
- Finally, the clock is ticking. Start right now and figure out what to do. Even though you could drag your feet into February, don’t.
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