Medicare Open Enrollment Is Coming, Are You Ready?

By Kurt Wiegert, CFP®, Wealth Manager and Partner, Merit Financial Advisors

Medicare, the federal health insurance program for Americans ages 65 and older, covers more than 70 million people, and fall is a busy time for the program.

Like retirement planning, understanding Medicare takes time and success depends heavily on your personal choices. There are four parts to consider:

• Part A covers hospital stays, skilled nursing care, hospice, and some home health care.
• Part B pays for doctor visits, outpatient care, medical supplies, and preventive services.
• Part D helps pay for prescription drugs.
• Part C, or Medicare Advantage, is offered by private companies approved by Medicare combining Part A, Part B, and usually Part D, and often include extra benefits like dental and vision.
• Medigap, also known as Medicare Supplement Insurance, should not be confused with Medicare Advantage. Medigap works alongside Original Medicare (Parts A and B) and helps cover out-of-pocket costs such as deductibles, copays, and coinsurance. It supplements Original Medicare rather than replacing it.

With Medicare Open Enrollment starting in October, here are the main things you should know and consider.

What is Medicare Open Enrollment and who is eligible?

Despite the name, Open Enrollment is a short annual window for people already on Medicare, and it runs from October 15 to December 7. This is not the first time you sign up at age 65; instead, it’s a chance to review your Part D prescription drug plan, check for changes in coverage or costs, or switch between or into Medicare Advantage plans from private companies. These plans are network-based and work differently from traditional Medicare.

There aren’t major changes to Open Enrollment itself, but bigger changes in the Medicare program can still affect your plan. For example, earlier this year, Humana said it would drop some of its Advantage plans. This could give some people a unique opportunity to switch back to traditional Medicare without extra medical approval questions.

What are the most avoidable mistakes when it comes to Medicare Open Enrollment?

One of the biggest Medicare mistakes is signing up at 65 and then never reviewing your coverage over the years. Many people don’t realize how much costs can go up over time. Out-of-pocket expenses and premiums often rise 10-15% each year, so it’s important to include these increases in your planning.

Another thing people often overlook is IRMAA, or Income-Related Monthly Adjustment Amount. This extra charge is added to Medicare Part B and Part D premiums for higher-income people, and it affects more people than you might expect, highlighting the importance of planning for Medicare early as part of your overall health insurance planning. Since IRMAA is based on your income from two years ago, it’s important to begin planning before age 63, especially if you’re considering Roth conversions, realizing capital gains, or other strategies that could increase taxable income. If you experience a major life event, such as retirement, the loss of a spouse, or certain other qualifying circumstances, you can appeal IRMAA by filing form SSA-44.

Also, remember the Birthday Rule. In many states, if you have a supplement plan, you can switch to any policy of equal or lesser benefits without medical underwriting within a limited window around your birthday. For example, if you have Plan G with UnitedHealthcare and your premium goes up, you can switch to another company’s Plan G around your birthday without answering health questions or undergoing medical underwriting. Eligibility and timing rules vary by state.

Finally, plan ahead. One of the biggest mistakes is focusing only on the monthly premium or choosing the plan that looks best for a single year. Medicare Advantage plans often offer extra benefits, low or no premiums, and bundled drug coverage. However, if your healthcare needs increase over time, you may face higher out-of-pocket costs through copays and coinsurance costs. If you later want to switch back to Medicare Supplement (Medigap) coverage to help pay out-of-pocket costs, you may need to go through medical underwriting, which might be difficult if your health has declined.

What should people do before Open Enrollment begins?

Licensed Medicare agents or brokers are paid professionals who help people navigate this selection process but are especially busy during this time. To make things easier, it helps to prepare ahead. Agents will want to know the following:

1. Which doctors have you met with in the past year?

2. What are your pharmacy preferences?

3. Which drugs are you taking?

4. How much have you already spent on out-of-pocket expenses this calendar year?

Medicare has changed how agents are compensated in recent years. One area of concern involves Part D prescription drug plans, where it is becoming increasingly difficult to find agents who will help review and compare plan options each year. As a result, some consumers may have less access to personalized guidance when evaluating coverage and prescription costs.

All that to say, doing your homework can save you a lot of money. You can use the Medicare.gov website to check and compare prescription prices yourself, or your Medicare agent can help.

How can financial advisors support Medicare planning?

Advisors can play an important role in helping clients evaluate Medicare decisions as part of their overall financial plan. Healthcare costs, coverage choices, IRMAA surcharges, and prescription drug expenses can all affect retirement cash flow and long-term planning. By incorporating Medicare into the broader financial planning process, clients can make more informed decisions that align with their goals and circumstances.

Because healthcare needs and plan options can change from year to year, it is important to periodically review your coverage to determine whether it still meets your needs. Medicare should not be viewed in isolation. Coverage decisions should be evaluated alongside taxes, retirement income planning, and overall financial objectives.

Don’t let Medicare run on autopilot—work with a professional to connect your coverage, taxes, and premium costs. Interested in reviewing your Medicare plans? Merit Financial Advisors offers complimentary consultations to help bring clarity and structure to your financial life. Let’s start the conversation today.