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How to save money during Medicare open enrollment

You can save hundreds or even thousands of dollars by doing some smart shopping for your health care coverage under Medicare. During Medicare's open-enrollment period, which begins on Oct. 15 and ends on Dec. 7, you have the opportunity to make changes in your plan for 2016. Many people don't bother to shop for a plan and automatically re-enroll in their current one, but doing so might cost you an opportunity to save money next year.

The open-enrollment period applies to people who have previously signed up for Medicare, which includes individuals age 65 and older and certain younger people who qualify due to a disability. Special enrollment rules apply for the calendar year during which you attain age 65.

First, let's review your two basic choices when enrolling in Medicare:

  • Traditional, or original Medicare, where medical care is provided on a fee-for-service basis and you can choose your medical providers (as long as they accept Medicare patients).
  • Medicare Advantage (MA), where you typically receive medical services through a provider network, similar to an HMO or PPO.

Traditional Medicare has significant deductibles and co-insurance, so you'll want to purchase a separate, supplemental plan to cover expenses not paid by Medicare (called a Medigap plan). Because traditional Medicare doesn't pay for prescription drugs, you'll also need to purchase a second separate plan under Medicare's Part D. Both Medigap and Part D plans require additional monthly premiums.

MA plans typically provide more comprehensive coverage than traditional Medicare, so there's no need to purchase a supplemental plan. MA plans still have co-payments, co-insurance and out-of-pocket limits, however, and most MA plans also cover prescription drugs, delivering one-stop shopping for your health care coverage. The downside to MA plans is that you're restricted to using the health care providers in the plan's network.

Some MA plans are called "zero premium plans," meaning there's no additional premium above the Part B Medicare premium, although such plans might have higher co-payments, co-insurance and out-of-pocket limits compared to MA plans that require an additional premium.

By now, most Medicare beneficiaries have received notices of premium increases for 2016 and any notices of changes in coverage. You'll want to carefully review these communications to see how they might affect you.

In addition to premium increases, you might see the following changes this year:

  • Increases in co-payments, co-insurance and out-of-pocket limits.
  • Health care providers being dropped or added.
  • Changes in prescription drug "formularies," which identify the reimbursement schedule for specific drugs.

In some cases, providers are dropping certain plans and are automatically enrolling you in a substitute plan. If this happens to you, you'll want to carefully look at the features of your new plan to identify any added restrictions or requirements.

During open enrollment, you can switch from traditional Medicare and Medigap to a MA plan, or vice versa. You can also switch from one MA plan to another, or change your prescription drug plan under Part D. In most cases, you'll be locked into your choices for 2016 and won't be able to make changes again until the open-enrollment period for 2017.

If you're intimidated by the complexity of shopping for health care coverage under Medicare, you can get assistance. Medicare's website contains a wealth of information, including an online plan shopper and tools to find doctors, hospitals and other health care providers.

If you want to work with a consultant, be careful to find one who's unbiased and will truly research all the available plans. If you get an offer of free help, the advisor is likely an insurance agent or representative of an insurance company or MA plan. It's best to pay a truly independent consultant, such as those who work for Sixty-Five Incorporated. Often, the money you save can far outweigh the cost of the consultation.

Some nonprofit organizations, such as your local Area Agency on Aging or a local senior center, might help you shop for health care coverage without charge. These agencies are often staffed by volunteers, so you'll want to ask about their expertise, training and tools to make sure they can help you make the best choice.

Given that your health and well-being are at stake, it's well worth your time to shop for the best health care coverage.

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