How to compare Medicare plans and pick the best one for you
By Robert Powell
The changing and competitive nature of the Medicare market is the major reason for comparing plans. Medicare’s annual election period runs from Oct. 15 through Dec. 7.
This is the time that the 60 million-plus Medicare beneficiaries can switch from traditional Medicare to a Medicare Advantage plan (or vice versa), switch between Medicare Advantage plans, and elect or switch between Medicare Part D prescription drug plans.
How should Medicare beneficiaries go about comparing plans and deciding what’s in their best interest?
Review your ANOC
In September, you should have received your annual notice of change (ANOC) and your Evidence of Coverage (EOC). And, if you haven’t reviewed your ANOC already, you should do so now. The ANOC lists the changes in your plan, such as the premium and copays, and will compare the benefits in 2024 with those in 2023, according to Mitchell Clark, the director of digital strategy and communications at Medicare Rights Center.
Next, you should compare your Medicare coverage with other available options to ensure you get the best plan tailored to your needs. You can do this using Medicare’s plan comparison tool.
Of note, seven in 10 beneficiaries, especially those with lower incomes, Hispanic ethnicity, older age, or dual eligibility, often overlook this annual review, according to KFF. And this oversight can lead to increased costs, limited provider access, inadequate drug coverage, and potential late enrollment penalties.
“We know most people on Medicare do not switch Medicare Advantage or Part D plans and find the process of reviewing options tedious and intimidating, but for some, the juice is worth the squeeze,” said Tricia Neuman, a senior vice president with KFF.
“With so many Medicare plan options now available, it’s generally a good idea for beneficiaries to take a look at other available plans because they may find a plan that provides better coverage for lower costs,” said Neuman.
The ever-changing and competitive nature of the Medicare market is the major reason for comparing plans. Plans change their costs and benefits every year, and new plans may be available.
Not comparing plans might mean missing out on better benefits at similar or even lower costs, according to Jae Oh, author of Maximize Your Medicare.
Clark also emphasized the importance of shopping around, as plans frequently change, and last year’s best option might not be the most suitable for the coming year. “Shop around to find a plan that best meets your needs and makes the most financial sense to you,” he said.
Beneficiaries should be especially aware of the new plans from their current insurer or the new plans from other insurers introduced each year. “The Medicare market is very competitive among insurers, and they frequently introduce new, enticing plans to attract new people without specifically offering them to their existing customers,”said Elaine Floyd, author of Savvy Medicare Planning for Boomers.
The task of searching for and selecting a plan isn’t easy, especially now, since the normal competitiveness among plans is accelerating. “If anything, more carriers will be entering into more locations, there are going to be additional benefits which can be useful to certain people based on the plan that you select,” Oh said.
In fact, beneficiaries should not expect to see the same old plans they reviewed when selecting a plan in 2023. “There are going to be new entrants into new locations,” he said. “And the role for the beneficiary is to make sure they’re getting the most for their hard-earned dollar.”
Beneficiaries with original Medicare, a Medigap plan and a Part D prescription drug plan don’t really need to review their Medigap plan during Medicare’s annual election period if they are satisfied with their Medigap plan, said Joanne Giardini-Russell, the owner of Giardini Medicare, an independent Medicare insurance agency. They should, however, compare Part D prescription drug plans. “The only thing I want my Medigap people to do is pay attention to their drug plan and make sure that’s going to be accurate for 2024,” she said.
A daunting task
Using Medicare’s plan comparison tool is also a daunting task. The average Medicare beneficiary in 2023 has access to 43 Medicare Advantage plans, the largest number of options ever, according to KFF.
Plus, beneficiaries in each state had the choice of multiple stand-alone prescription drug plans, ranging from 19 in New York to 28 in Arizona. 22 million seniors have stand-alone Medicare drug plan coverage (Part D).
There are also Medigap plans currently offered in most of the U.S., though two are no longer available for new enrollees under age 65.
Add to this the fact that you’re only allowed to compare Medicare Advantage plan against Medicare Advantage plan, or drug plan against drug plan, or Medigap policy against Medigap policy. There’s no way, using the plan comparison tool, to compare one Medicare Advantage plan against an original Medicare plan with a Medigap and stand-alone Part D plan.
“Medicare’s Plan Compare tool is the best in class,” said Katy Votava, president of Goodcare.com and author of Making the Most of Medicare: A Guide for Baby Boomers. “That said, the class is woefully behind the curve…It is the best of the worst.”
So, given the complexity of the task (and the fact that just one in 10 beneficiaries switch Medicare Advantage plans each year), what should you focus on? Experts say there are five things to consider when comparing options and deciding which plan to select for 2024.
Make sure you understand how any plan you are considering works and that you take the time to ask questions.
Coverage and benefits
Beneficiaries should compare the coverage and benefits offered by different plans to determine which plan best meets their needs.
Some beneficiaries, for example, may need a plan that covers dental or vision care or gym membership or transportation, benefits offered by Medicare Advantage plans but not covered by original Medicare. Others may need a plan that covers specific prescription drugs and still others, those who have a chronic or disabling condition such as stroke, cancer, or dementia, may need a special needs plan.
Beneficiaries should especially review their Medicare Advantage and/or Part D plan even if they are happy with their current coverage and benefits. “Plans change their costs and benefits every year,” said Clark.
Network of doctors and hospitals
Beneficiaries can use the Medicare plan comparison tool to search for plans that include their preferred doctors and hospitals. And they should confirm their specialists and pharmacies are in-network for the new plan. That’s especially important for beneficiaries who prefer Medicare Advantage over original Medicare.
In addition, check whether doctors and other providers in the plan’s network are taking new patients. Check too if referrals are required to see specialists for the different plans.
“If you want to be able to see any doctor who accepts Medicare, stick with original Medicare and a good supplement like Plan G,” Floyd said. (Plan G is a Medigap plan that covers nearly all gaps in Original Medicare coverage except for the Part B deductible.)
Of note, some physicians are opting out of the Medicare program, according to KFF. About 1% of all non-pediatric physicians have formally opted-out of the Medicare program in 2023, with the share varying somewhat by specialty type, and highest for psychiatrists (7.7%).
Prescription drug coverage
Beneficiaries should compare the formularies of different plans to make sure that all their prescription drugs are covered and how much they will cost.
They should also compare drug costs such as copays and coinsurance between plans. And they should check, if there’s cost to their drugs, to note how costs may vary from one pharmacy to another.
Clark also said beneficiaries with Part D plans could lower their costs by shopping among plans each year. “There could be another Part D plan in your area that covers all of the medications you take with fewer restrictions and/or lower prices,” he said.
You can use Medicare’s planning tool to find the stand-alone drug plan or Medicare Advantage plan with a prescription drug plan that has the lowest out-of-pocket costs for the drugs you take.
Of note, the Inflation Reduction Act affects Part D coverage in many ways, according to KFF. For instance, the law adds a hard cap on out-of-pocket drug spending under Part D of $2,000 in 2025. And Part D enrollees pay no more than $35 per month for covered insulin products in all Part D plans.
Costs and premiums
Beneficiaries should compare the premiums, deductibles, copays, coinsurance, and the maximum out-of-pocket costs associated with different Medicare Advantage plans, as well as the value of extra benefits.
Some Medicare Advantage plans, for instance, offer extra benefits, such as prescription drug coverage or dental, vision, hearing, transportation, fitness benefits, telehealth, worldwide emergency and over-the-counter drugs at no additional cost.
Beneficiaries should also compare what, if any, prescription drug coverage costs there are.
Floyd noted that while Medicare Advantage plans often have lower monthly premiums compared with Medigap policies, “those with conditions requiring frequent doctor visits and tests might face higher out-of-pocket costs with a Medicare Advantage plan.”
For instance, in 2023, the maximum out-of-pocket for Medicare Advantage Plans was $8,300, according to Medicare Interactive. By contrast, the average monthly premium for Medigap plans ranges from $150-$200 per month on average, or $2400 per year.
Review how much it will cost to see your primary care physician as well as specialists.
Plan ratings and reviews
Beneficiaries can compare the quality ratings of different Medicare plans on the Medicare website. Medicare uses ratings from 1–5 stars to help you compare plans based on quality and performance.
Star ratings are given annually to measure the quality of health and drug services received by consumers enrolled in Medicare Advantage and Prescription Drug Plans, said Giardini-Russell.
The star ratings for Medicare Advantage with prescription drug coverage plan are based on several quality measures such as consumer satisfaction, complaints against the plan, members’ problems getting services, and the like. “The higher the star rating, the higher the quality bonus payments to the carrier,” she noted. “But carriers can attempt to increase the ratings since they know it’ll increase funds and gain new members at the same time.”
For example, she noted that a plan can offer a monetary bonus for someone getting a physical and people adhering to getting physicals can be a component of achieving higher star ratings.
“We just suggest that people don’t ‘chase’ 5-star plans unnecessarily and realize that a 3½ -star plan can work very well for them. Focus on the plan offerings, your doctor accepting the plan and your medication pricing before focusing on star ratings.”
Of note, if a Medicare Advantage Plan, Medicare drug plan, or Medicare Cost Plan with a 5-star quality rating is available in your area, you can use the 5-star Special Enrollment Period to switch from your current Medicare plan to a Medicare plan with a 5-star quality rating.
Beneficiaries may also want to consider factors such as how easy it is to get customer service and whether the plan offers online features such as the ability to view claims and prescription drug coverage.
A Medicare beneficiary doesn’t need to compare or evaluate their Medigap plan during Medicare’s annual election period, according to Medicare Interactive. The annual election period is primarily for making changes to Medicare Advantage or Part D plans.
But experts say policy owners should review their Medigap plan at least annually or as circumstances change.
Things to consider
- New coverage begins on Jan. 1, 2024, if you made a change. And, if you kept your existing coverage and your plan’s costs or benefits changed, those changes also start on this date.
- When you are choosing between traditional Medicare and Medicare Advantage or between Medicare Advantage Plans, there’s a long list of questions to consider. When choosing among Medicare Advantage plans versus traditional Medicare, most beneficiaries focus on premiums, said Neuman. “But premiums are a lousy proxy for annual costs,” she said.
- Those who are enrolled in a Medicare Advantage plan can switch back to original Medicare and, if desired, enroll in a stand-alone Part D prescription drug plan. But those who do “must undergo an intricate dance” and “take on a big financial risk without a Medigap plan,” said Votava. She recommends the following sequence for those who switching:
- Look first to see if you are eligible for a guaranteed issue Medigap. The rules vary by state and other circumstances.
- If a person is not eligible for guaranteed issue Medigap, they might still qualify for coverage.
- Apply for Medigap first, be accepted, then enroll in Medicare Part D.
- If you’re planning to switch to traditional Medicare only or a Medicare Advantage plan without a prescription-drug plan, note that you will not be able to “restart” that easily, said Oh. “You’ll have to wait until the next year, and then the late enrollment penalty will be assessed,” he said, noting that there’s a complicated formula to calculate the Part D late enrollment penalty.
- If you’re thinking about switching from a Medicare Advantage plan to original Medicare with a Medigap plan, Neuman said you should be mindful of Medigap rules that allow insurers to deny coverage for people with pre-existing conditions. “This is an important consideration for people first going on Medicare but could also be an issue for people thinking about switching to traditional Medicare,” she said.
- Outside of the annual election period, beneficiaries may qualify for special enrollment periods if they have certain life events like moving residences or losing other coverage.
- Beneficiaries who are planning to travel should consider choosing a plan that has a nationwide network of providers.