Medicare has opened its Open Enrollment Period and will take place through December 7. Every year at this time, it is wise to reevaluate your Medicare coverage, making certain that it still suits your needs. Those needs can change, and insurance coverage should change with them. Many seniors reach Medicare age having few health problems, taking few medications, and requiring no special care at all. As they age, this situation may alter, so it is wise to think about health insurance needs.

In 2020, The Kaiser Family Foundation (a non-profit organization that tracks healthcare issues) reported that 61 percent of all Medicare beneficiaries still preferred to remain on Original Medicare Parts A and B. This means that almost 39 million seniors were receiving Part B benefits that year. Medicare Parts A and B remain pillars of senior health care in the United States, and this coverage is well suited to many people.  However, while Part B is good insurance, it is not complete coverage. Part B alone is not adequate.

Let’s recall some basic facts about Medicare Part B:

  • Medicare Part B covers outpatient care and all doctors’ fees
  • Part B premiums are required of everyone. There are higher premiums for those whose modified adjusted gross income exceeds $88,000 for single taxpayers or $176,000 for joint filers
  • Part B has an annual deductible, and it requires a 20 percent cost-sharing expense after the deductible has been met
  • Part B does not pay for prescription medications

Those are the bare-bones facts about Part B, but where does that leave gaps? How can those gaps be filled?

The first uncovered expense is the annual deductible, $205 in 2021. In the past, Medicare beneficiaries could buy “Medigap” insurance that paid for Medicare’s Part B deductibles. However, as a result of legislation passed by Congress, starting in 2020 Medigap plans are no longer allowed to cover the Part B deductible. Policyholders who purchased this coverage before 2020 will still be eligible for the deductible coverage, but the option is closed to new beneficiaries. There is no longer a way to fill this relatively minor gap with a newly purchased Medigap plan, but some Medicare Advantage plans (Part C of Medicare) may offer a zero-deductible feature that saves this expense. The details of Advantage plans can vary widely so compare carefully if you are shopping.

The Part B deductible is a relatively small expense compared to the 20 percent copay for outpatient services like doctor visits, lab tests, diagnostic procedures, therapeutic procedures, or outpatient surgery. This 20 percent adds up to thousands of dollars each year. Many Medicare patients get coverage for this risk via one of the Medigap letter plan offerings. Medigap plans offer varying degrees of protection from the 20 percent copay.

An alternative is a Part C, Advantage plan. The upcoming Open Enrollment Period is a good time to consider one of these plans, but you should shop carefully and be certain that you understand the consequences of leaving an existing Medigap plan. If you purchased this plan during your Initial Enrollment Period, you were guaranteed acceptance with no medical underwriting needed. If you leave and try to return, this may not be the case, so get knowledgeable advice about the pros and cons of leaving Medigap for an Advantage plan.

For many seniors, the most expensive hole in Part B coverage was prescription drug costs. This is another expense that can amount to thousands of dollars each year.  Before 2006, most Medicare patients paid 100 percent of their prescription drug costs. Medicare Part D is the last component of Original Medicare, and it helps to pay these expenses.

Part D plans are run by private insurance companies under Medicare guidelines. They are similar to the structure of Medigap plans, but there is a big difference. All Medigap plans are the same, but Part D plans can differ significantly. A range of monthly premiums is set by Medicare, but each insurance company can set prices within that range. There is a separate Part D deductible each year, and Medicare establishes a maximum deductible amount. Individual plans are free to use that maximum, a smaller amount or no deductible at all. For 2021, the maximum Part D deductible was set at $445.

The annual deductible, the 20 percent coinsurance payment and prescription drug costs are the major holes in Part B coverage. These risks can be covered in two ways:

  • By purchasing a Medigap plan and a Part D drug plan if you want to remain with Original Medicare.
  • Or by replacing Parts A and B with an Advantage plan. Most Advantage plans also cover drug expenses, so no Part D plan is needed.

There are also many medical-related expenses not covered by Part B, notably dental, vision and hearing care, but also health maintenance programs like yoga lessons or gym memberships. Advantage plans may not only fill the gaps in Part B, but they may also offer benefits that cover these expenses.

Advantage plans vary widely in benefits and costs. Some have no monthly premium beyond the Part B payment you would have with Original Medicare. Some have different copayments for primary care doctors and specialists, while others charge no copayment at all. They all have networks of providers from which you must choose your care. They all have an annual out-of-pocket spending limit, which is the absolute maximum you can pay in any given year. This is not the case with Original Medicare.