Records show that organ donation elections vary dramatically from country to country. Even bordering countries with similar cultures have huge differences in the percentage of citizens who participate in organ donation programs. Consider two countries that neighbor Germany: Austria and Belgium. 99.9% of Austrian citizens and 98% of Belgian citizens are registered organ donors. In Germany, only 12% of citizens are organ donors. It turns out that these dramatic differences are the result of opt-in or opt-out choices. In Austria and Belgium, citizens have to check a box to opt-out of the organ donation program. In Germany, citizens have to opt-in to the program. Rather than make a decision or change, people tend to take the path of least resistance.
Insurance companies are not dumb to the tendencies of consumers. Get consumers to sign up for a plan and then change the terms, deductibles, price, etc. in future years knowing that consumers are unlikely to change to a competing plan. As a result of these consumer tendencies, the Medicare insurance providers are economically motivated to create low cost plans that attract consumers over a 1-2 year stretch and then flip the economics upside down in favor of the insurance company, knowing the consumer propensity is to renew again next year.
It may be natural to think that since you’re not taking any additional medications and you have not changed doctors, that you can likewise put Medicare on auto-pilot during open enrollment. This, in fact, tends to be a costly decision for nearly 9 out of 10 individuals.
With the annual Medicare open enrollment period (October 15 – December 7) upon us, we thought it would be useful to highlight five common and expensive mistakes of Medicare open enrollment season. The biggest mistakes tend to be relying on auto-pilot but there are other important mistakes that consumers make each year during open enrollment. If you are on Medicare, you would be well served to assess whether any of these mistakes apply to your situation and to seek guidance if you are unsure before the open enrollment period is over.
1) You automatically renew last year’s Medicare Part D Prescription Drug plan without reviewing other options.
Prescription drug plans can and do change dramatically from year-to-year. Yet research estimates that 87% of Medicare participants enroll in the same prescription drug plan as the prior year. Consider some of the most common Medicare Part D plan changes from one year to the next:
- Significant premium increases;
- New deductible hurdles before covering your medication;
- Changes to the preferred pharmacies; or
- Increased share of costs consumers must cover for drugs.
The discouraging reality is that only 13% of Medicare D participants change plans from one year to the next but 88% of participants have a better plan available to them with the savings ranging from $276 to $562 per year. This means that more than 3 out of 4 Medicare participants are throwing away several hundred dollars per year by ignoring the opportunity to re-evaluate coverage.
The remedy for Medicare participants is simple. If you are enrolled in a Medicare Part D prescription drug plan, you should, without fail, visit the Medicare Plan Finder every year during the open enrollment period or have someone (a relative or health insurance agent) do it on your behalf. The plan finder makes it easy to enter your current medications, dosages, and preferred pharmacy and then to compare the costs of all plan options in your area. The interface is user-friendly and the outputs, as demonstrated below, provide a convenient way to compare options. Even if you have not changed medications or you are not taking prescription medications, the best plan for you last year may be far more costly than the best Medicare D plan this year.
One note of caution when comparing plans is to ignore the “Annual Drug Deductible” as this is a misleading data point (the deductible may not apply to all prescription drugs and ignores the copay). Instead, use the “Estimate of What YOU Will Pay for Drug Plan Premiums and Drug Costs” to determine the lowest cost option that is personalized to your unique situation.
2) You purchase the same Medicare D Prescription Drug Plan as your spouse.
You have been trained through life to buy insurance together with your spouse on a single policy through the same carrier to reduce costs and minimize complexity. This is generally not an ideal strategy when it comes to Medicare D Prescription Drug plans. If neither you nor your spouse are taking any prescription medications, then it may be appropriate to be on the same low cost plan. Otherwise, both of you should independently go through the annual review process during open enrollment season to determine the best plan for each of you. There are no benefits to enrolling in the same plan since there are no Medicare Part D family discounts and you will be billed separately (usually deducted from your respective Social Security payments).
3) You fail to use the mail order option or enter your pharmacy(ies) of choice when using the Medicare Plan Finder to search Prescription Drug plans.
It is not uncommon for there to be significant price differences – hundreds of dollars per year – for prescription drugs, depending on where you get your medications. The Plan Finder makes it simple to evaluate the costs for mail order or for nearby pharmacies. In the real-life 2017 example above, prices for the far right plan option range from $183 to $1,097 per year, depending on the pharmacy where medications are purchased. Do not think that just because a prescription drug plan covers your medications and has a low monthly premium means that it will work well for you if you are not willing to travel to specific pharmacies.
4) You leave your Medicare Advantage plan on autopilot.
If you are enrolled in a Medicare Advantage plan, you are allowed to switch to a different Advantage plan during open enrollment each year without underwriting. As with the Medicare Prescription Drug plan, anyone enrolled in a Medicare Advantage plan should compare options each year during this open enrollment period. You can again use the same helpful Medicare Plan Finder to compare Medicare Advantage options in your area. It is valuable to compare premiums and out-of-pocket costs for the different options, which the Medicare Plan Finder makes simple. Moreover, you should verify each year that your preferred doctors, hospitals, and other health care providers are covered within your chosen plan. Medical insurance experts suggest that you call the office of your preferred physician or medical provider and ask to speak with the person at the front desk who files insurance claims. This person will be the most expert and reliable source to understand which Medicare Advantage plans are accepted.
5) You go it alone.
Whereas the Medicare Plan Finder may be an easy-to-use tool for many, that does not mean it is an easy-to-use tool for all. The reality is that many Medicare participants do not use computers or may struggle to effectively navigate the Plan Finder tool. Medicare can be a maze and it is wise to ask for help each year. We assist clients in the annual evaluation of Medicare plan choices and there are insurance agents who are more equipped that us to tackle this evaluation. Given the high costs of choosing an ill-fitting plan – either in dollars or in the inconvenience of learning later that your doctor is no longer covered by your Medicare Advantage plan – Medicare participants owe it to themselves to get help in this annual process.
What do you think? Have questions on your specific situation? Leave your comments, questions, or ideas below. Also, we owe many thanks to Dan Boaz of HealthLife Group, LLC (678-395-4052, firstname.lastname@example.org) for his contributions to this article. Dan provides a wealth of information on Medicare, health insurance and other insurances and has been a great resource for RPG clients over many years.