Key Information for Medicare Open Enrollment

By Brett Gottlieb

Safeguarding both your health and your retirement savings is of the utmost importance—and understanding the fundamentals of Medicare is key to that end. The Medicare open enrollment period is critical for making informed financial decisions that can affect the rest of your retirement.

Since open enrollment is an essential step in your overall financial plan, it’s the perfect time to review your current coverage and align the plan options with your needs and future goals. We know that the many enrollment options can be overwhelming; so we’ve created this guide to break down what you need to know and make the process easier.

The Four Parts of Medicare

Medicare coverage is divided into 4 parts, each with a different coverage level:

• Medicare Part A: Also known as hospital insurance, Medicare Part A covers inpatient hospital care and some nursing care coverage. If you or your spouse paid Medicare payroll taxes during your working years for at least 10 years, Part A is free for you. If you didn’t, you can still get coverage by paying a monthly premium.
  
  
• Medicare Part B: Part B is medical insurance coverage for some medical conditions and preventative care, including doctor visits and other outpatient services. You will pay a monthly premium for Part B coverage. Together, Parts A and B are known as Original Medicare.
  
  
• Medicare Part C: Known as Medicare Advantage Plan, this is an alternative to Original Medicare that is offered through Medicare-approved private companies. This plan bundles Part A and Part B and often includes Part D as well. Medicare Advantage plans also often cover additional services not covered by Part A, Part B, or Part D, including vision, hearing, and dental visits.
  
  
• Medicare Part D: This optional private insurance add-on includes drug coverage. Not to make things even more confusing, but Part D has a late enrollment penalty. Even if you don’t need prescription coverage when you are first eligible for Medicare, enroll in the plan to avoid extra long-term costs.

Your Choices During Open Enrollment

Remember, open enrollment is not for individuals who have yet to enroll in Medicare. If you fall into this category, your initial enrollment period is determined by your birthday, not a specific calendar date. You should sign up for Medicare during the seven-month window that starts three months before the month you turn 65 and ends three months after your 65th birthday.

The open enrollment period impacts each Medicare part separately. Here’s how you can adjust your Medicare coverage:

• If you have Medicare Parts A & B, you can switch to Part C.
• If you have Medicare Part C, you can switch back to Original Medicare or change to a different Medicare Advantage Plan.
• If you have Part D, you can switch to a different Part D plan or drop your prescription drug plan.

You can also use this time to enroll in Part C and Part D for the first time.

Changes Coming in 2025

Starting in 2025, out-of-pocket (OOP) spending for Medicare Part D beneficiaries will be capped at $2,000. This is great news for people with high prescription costs, as once you reach this limit, there will be no additional cost-sharing for the rest of the year. The “donut hole,” or coverage gap phase, will also be eliminated, simplifying Part D coverage. The new structure will now have three phases: the deductible phase, the initial coverage phase, and the catastrophic phase, with no coverage gap in between. This change means your initial coverage will extend until you hit the $2,000 OOP maximum, at which point the catastrophic phase kicks in.

Additionally, the Coverage Gap Discount Program will be replaced by the Manufacturer Discount Program in 2025. Under this new program, drug manufacturers will contribute to the cost of brand-name drugs and biologics by offering a 10% discount during the initial coverage phase and a 20% discount during the catastrophic phase. This shift in how costs are shared can help reduce the financial burden on beneficiaries. Moreover, the reinsurance payments that used to cover 80% of costs after the OOP threshold is reached will drop to 20% for brand-name drugs and 40% for generics, shifting more of the cost management to plans and government subsidies. All these changes aim to lower overall spending for beneficiaries and make prescription coverage more manageable.

When Are These Changes Allowed?

Medicare open enrollment runs from October 15th to December 7th each year. During this period, you have the flexibility to make changes to your Medicare plan that will affect your coverage for 2025.

It’s important to distinguish this from the Medicare Advantage open enrollment period, which takes place from January 1st to March 31st. During the Medicare Advantage open enrollment, individuals with Part C can switch to a different Part C plan or revert to Original Medicare (Parts A and B). Any other adjustments to your Medicare coverage must be made during the October-to-December enrollment period.

Feeling Confused? Let Us Lend a Hand.

Reviewing Medicare enrollment options can be overwhelming, but it’s a crucial decision that can significantly affect your financial circumstances in retirement. While it may seem complicated, remember: you don’t have to navigate it by yourself.

At Comprehensive Advisor, we’re here to guide you through the process and help you choose the plan that best suits your needs and financial goals. Get your Medicare open enrollment questions answered today by reaching out to us at info@ComprehensiveAdvisor.com or calling (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees, in business administration and economics, and is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals, and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

Our team of qualified professionals have experience in the financial service industry, and our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial strategies for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a comprehensive retirement roadmap to help ensure their assets are preserved and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. Insurance products are offered through the insurance business C.A. Financial & Insurance Services.Comprehensive Advisor, LLC is an Investment Advisory practice that offers products and services through AE Wealth Management LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by C.A. Financial & Insurance Services are not subject to investment Advisor requirements. CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc., generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.  2612285 – 9/24