Ways to Save During Medicare Open Enrollment

In normal years, few seniors change their Medicare elections in the program's annual open enrollment period. According to studies of past consumer choices, sticking with existing coverage plans may be a comfortable choice. But it costs consumers billions of dollars and saddles many with inferior health coverage at a bad price.

This year, a reeling economy, health reform, and shifting insurer business priorities make the upcoming open enrollment period anything but normal. For starters, it begins and ends earlier than normal, running from October 15 to December 7. This shift will allow consumer choices to take effect when the new program year begins January 1. That's a welcome change, but it means new and existing Medicare beneficiaries have little time to prepare for their 2012 coverage decisions.

[See 10 Ways to Boost Your Social Security Checks.]

In addition, consumers have only limited options for changing their 2012 coverage decisions during a brief period early next year. In past years, Medicare permitted more substantial changes to plans.

But perhaps the biggest change in 2012 plans is how much many of them will differ from 2011 choices. Even if your current plan was your best choice when you got it, don't assume it will continue to be the best deal for you. With money tight for most retirees, spending a few hours in return for hundreds of dollars in savings on health insurance is time well spent.

Medicare actually consists of several insurance programs, known as Parts A, B, C, and D. Medicare has already announced that insurance premiums for Medicare Part D prescription drug plans will not rise next year and that premiums for Medicare Advantage plans (Part C of Medicare) will actually fall by about 4 percent. Last year, there were nearly 47.5 million total Medicare beneficiaries, including 34.5 million with prescription drug plans (as either a standalone policy or in combination with other Medicare coverage) and about 11.7 million Medicare Advantage policyholders. Another roughly 9 million people bought private insurance policies that supplemented their basic Medicare coverage.

[See Medicare Drug Premiums Won't Rise in 2012.]

Part A costs, for basic Medicare hospital and other in-patient expenses, are fully paid by the government and thus involve no premiums. The 2012 changes for Part B premiums, covering physician and other out-patient expenses, will be announced soon by Medicare, an agency spokesman says. Its online Medicare Plan Finder is supposed to be updated by October 1 with 2012 Medicare insurance choices, the agency says.

Part B Medicare premiums for existing beneficiaries have been frozen the past two years. That's because Medicare rules prevent annual Part B increases from exceeding annual changes in Social Security's cost of living adjustment (COLA). Because of low levels of inflation, the Social Security COLA was zero in 2010 and 2011. However, it's expected to rise by roughly three percentage points in 2012. The announcement of the 2012 COLA is expected in the third week of October. Medicare beneficiaries receiving Social Security benefits should consider waiting to see details of the 2012 COLA before making Medicare enrollment decisions.

When looking at specific Medicare insurance plans, experts advise consumers and their families to include several cost factors when comparing insurance plans:

Co-pays. Basic Medicare includes 20 percent consumer co-pays with no out-of-pocket limits. Many consumers look to supplemental Medicare policies (also called Medigap) to limit their co-pay exposures. Look for details on such protection when comparing plans.

[See Get Ready for 2012 Social Security, Medicare Changes.]

Out-of-pocket maximums. Paying a low premium for a Medicare policy may be a false bargain if you're exposed to large annual payment ceilings. Make sure you check for your worst-case exposure when shopping for 2012 coverage.

Prescription drug costs. Insurers may have different charges for the same drugs plus different levels of co-pays and out-of-pocket ceilings. There has been a serious gap in prescription drug coverage, known as the donut hole. It makes consumers responsible for all drug costs after they've reached an initial coverage trigger (estimated at $2,930 in 2012, according to benefits' consultant Allsup) and extends until they've spent $4,700. Because of provisions in the health reform law, Allsup notes, Medicare beneficiaries in the donut hole will get a 14 percent discount on generic drugs (up from 7 percent in 2011) and a 50 percent discount on brand-name drugs (the same as in 2011).

Twitter: @PhilMoeller