Nov 17, 2022 3 min read

We are about half way through this year’s Medicare open enrollment period. It runs every year between Oct. 15 through Dec. 7.

This is a senior’s chance to change their plan for next year. People may have started seeing a new doctor or had a change to their medication. It is important to chose carefully to keep your out-of-pocket costs as low as possible.

Everyone must go on Medicare at age 65 unless they or their spouse are still working for a company with 20 or more employees.

If you do not enroll within three months of your 65th birthday, you will be assessed a 10% penalty which will last for the rest of your life. If you are still working after 65, you have until three months after you retire to avoid the penalty.

You have been paying into Medicare all of your working life. In addition, you must pay a monthly Part B premium. For 2023 it will be $164.90, which is a decrease of $5.20 from this year.

There are two main types of health plans. The first type is Medigap. When you are on this type of policy, your basic coverage is paid for by Medicare. Because it is an 80/20 plan with lots of co-pays and deductibles, you could have a many expensive payments to make. Medigap plans help to fill in for these expenses. Gender, zip code and whether you are a smoker/non-smoker affect your cost.

These plans are standardized for all insurance companies to make it easier for consumers to understand. The plans range from A to G. The first-tier cost less in premiums, but covers fewer expenses. Plans F and G are the most comprehensive, and cover most expenses except for pharmaceuticals. In our area, these plans range in cost from $130 to $300 per month.

When you have a Medigap policy, you will have to buy a separate Part D policy to cover prescription drugs. When selecting the best plan, consider the formulary for each plan. It lists the covered drugs and their cost tier.

The other supplement option is choosing an Advantage Plan. Many of these plans are available at no charge. You still have to pay the Part B premium directly to Medicare. Advantage plans have networks that list which doctors and hospitals are included. Some of these networks are pretty large. Often, your primary care physician is available at no cost, and specialists may have a small co-pay.

Advantage plans often offer extra services not covered by original Medicare or Medigap plans. Some of these might include gym memberships, eye care, hearing and dental. Many also cover prescription costs. These plans also have an out-of-pocket maximum to protect you from large losses.

Medicare is an important health program for seniors who would have to spend much more without it. Consider your options during this open enrollment period. Remember, it ends on Dec. 7.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.