Original article written by Elaine Floyd, CFP® – Director of Retirement and Life Planning at Horsesmouth, LLC.
Turn on your television at any time of the day or night now and you are likely to get hit with ads confirming that, yes, we are in the midst of the Medicare annual open enrollment period.
If you’re between the ages of 60 and 65, it’s important to start preparing for changes to your health insurance when you turn 65. If you won’t be working at that time, meaning you’ll have COBRA, a retiree plan, or ACA insurance, you’ll need to enroll in Medicare and make sure it starts the month you turn 65. If you have a retiree plan, you’ll likely be able to keep it for supplemental insurance and perhaps for drug coverage, while Medicare becomes your primary payer. If you have COBRA or ACA insurance, you’ll need to transition to the open market and purchase supplemental insurance that becomes effective when you turn 65. (While it’s technically possible to keep COBRA or ACA after 65, the costs are generally much higher than supplemental insurance. The key point is that you must have Medicare once you reach 65.) Also, start planning now for the IRMAA: try to complete Roth conversions or asset sales before age 63 due to the two-year look-back period.
If you’re 65 or older and still working, remember that you’re eligible for Medicare and can enroll at any time. Employer insurance probably costs less than Medicare right now, especially if you’d be subject to IRMAA. Keep in mind that Part A is premium-free and provides hospital coverage; there’s no downside to signing up for Part A unless your employer plan is an HSA. If you want to keep contributing to your HSA, don’t enroll in any part of Medicare. Unless you plan to leave your employer plan and get a Medigap policy, don’t enroll in Part B just yet. If you sign up for Part B and six months go by, you’ll be outside of your Medigap open enrollment period and may have to go through underwriting. Most people simply wait until retirement to transition to Medicare. Several months before your retirement date, shop for a Medigap policy and drug plan so they’re ready to take effect when your Medicare starts the month after you retire.
If you’re 65 or older and think you’re “all set” with your Medicare, remember there are always options. Medicare Advantage plans change every year. Drug plans change every year. Sometimes these changes aren’t obvious. Insurance companies often focus on things like low premiums and extra benefits (like vision and dental), but these aren’t always what matter most when you’re sick. When you need care, you want control over which doctor you see and you don’t want delays or denials for recommended treatments. You also don’t want to travel hundreds of miles for specialist care. These are the types of restrictions Medicare Advantage plans may impose to maximize profits.
For example, Richard and Donna, who are 77 and 79, were happy with their United Healthcare Medicare Advantage plan until they received a notice that it was changing from a PPO to an HMO. Some of their favorite doctors would no longer be in-network, which was a dealbreaker for them.
They’d heard about Medigap Plan G and wanted to switch. Usually, switching involves underwriting, meaning the insurer reviews your medical records and medications to decide whether to issue a policy. While there are some federally mandated guaranteed-issue situations, switching from a PPO to an HMO isn’t one of them. (If the insurer stopped offering Medicare Advantage plans altogether where you live, it would be, but just changing from PPO to HMO doesn’t qualify.)
However, Richard and Donna live in California, which offers expanded guaranteed-issue rights. If your Medicare Advantage plan reduces benefits, raises premiums or copays by 15% or more, or drops a provider with whom you have an active relationship, you can buy a Medigap policy—either from the same insurer, if it offers one, or another company—without health underwriting. Always check your state’s rules regarding Medigap guaranteed-issue.
Richard and Donna considered getting their Medigap policy through United Healthcare, the insurer they’d been with. They reviewed Medigap policies with their advisor on medicare.gov and found a Plan G from Cigna for $245 per month versus $303 from United Healthcare. All Plan G policies offer the same coverage, so they decided to change to a new insurer offering a lower cost. They also searched for drug plans and found a zero-premium plan with good coverage for their medications. When they called Cigna to get their Medigap policy, they learned Cigna also offered a drug plan with zero premium that covered their drugs well.
Richard and Donna will still need to review their drug plan again next year. The plan’s formulary might change, one of them might need a new medication, or a new plan could appear that offers better coverage. The lesson is never to become complacent about your health insurance after moving to Medicare. Pay attention to your Medicare Advantage and drug plans every year, because offerings and your health needs will likely change.
You also shouldn’t rely solely on the annual notice of change documents you get in the mail. Provider network changes, for example, may not be obvious from these notices. If your doctors matter to you, ask for an updated provider list before deciding whether to keep your current plan or switch for next year.
We’re seeing many changes among drug plans. Some now simply don’t cover certain drugs. Since annual out-of-pocket costs are capped at $2,100 (up from $2,000 in 2025), insurers are managing this by not covering some medications. If you need one of these drugs, you’ll pay much more than $2,000 a year—even with a Part D plan—because the drug isn’t covered at all. In those cases, it’s as if you don’t have insurance for that drug. Changes in the formulary aren’t always clear from the annual notice, so you need to dig deeper. Request a current drug list from your insurance company or use the plan finder at medicare.gov, then call the plan to confirm if your medication is covered.
Although the open enrollment period extends until December 7, try to get your changes in by December 1 to allow for processing time.
And remember that the Medicare Advantage open enrollment period, which should more properly be called the Medicare Advantage DISenrollment period, runs from January 1 through March 31, 2026. If you erroneously let your MA plan renew for another year, or if you sign up for a MA plan that you decide you don’t like, you can get out of it during this period. Once you disenroll from that plan you can sign up for a different Medicare Advantage plan or just have Medicare A and B (Original Medicare). However, if you want a Medigap policy you may be subject to underwriting unless there is an exception.
Disclosure:
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