The Annual Enrollment Period (AEP) for 2018 will start on Oct. 15, and will run through Dec. 7. Your clients who are Medicare beneficiaries can take this opportunity to make coverage changes, which they may want to do if their health care needs have changed during the year. It's also a good time to check whether your clients' Part D plan has announced changes to prices or its formulary effective in 2019 to determine whether a change to another plan is warranted.
Many beneficiaries hold misconceptions around Medicare. In particular, they don't realize that Medicare is not a "one and done" decision. They should review their coverage annually. The best time to do this is during the AEP. View the AEP as an opportunity for your clients to be proactive in their Medicare planning.
What clients may not realize about the AEP
Beneficiaries also often misunderstand the purpose of the AEP and what they can and cannot do regarding their Medicare coverage. Because of the media attention the AEP receives while it is ongoing, beneficiaries recognize the term but do not always have a clear idea of its purpose.
You may want to remind your clients of what the AEP means:
What the AEP is not: The AEP has nothing to do with enrolling (or disenrolling) in Medicare Part A or Part B, or making changes to Medicare Supplement (Medigap) plan coverage.
What the AEP is: The AEP provides beneficiaries with an opportunity to make changes to their Medicare Advantage (MA) and Part D coverage. Changes made are effective on Jan. 1 of the following year.
What can be done during the AEP: During the AEP beneficiaries may make the following changes to their Medicare coverage:
* "Creditable" coverage means the alternative prescription drug plan is at least as good as or better than Medicare Part D, as determined by an actuarial study. The plan sponsor should be able to provide that information to you.
Be sure to have clients review their Part D coverage
Of the changes allowed during the AEP, the opportunity to change Part D prescription drug plan coverage is probably the one that affects the most Medicare beneficiaries. It provides beneficiaries with an opportunity to change coverage in the event of changes to their own prescription drug regimen or their current drug plan's formulary or costs (premium, copays, coinsurance).
Even if beneficiaries do nothing else during the AEP, they should check to determine whether their current Part D plan makes sense going into the new year. Many beneficiaries end up paying hundreds or even thousands of dollars more for their medication due to ignoring this annual exercise.
Clients can review Part D plans at medicare.gov by clicking on the Medicare Plan Finder and following the instructions. They can also get assistance with evaluating, selecting, and enrolling in a Part D plan by calling 1-800-Medicare, or their State Health Insurance Assistance Program.
CPAs and clients should be careful, however, if working with a third-party sales professional. In most geographic areas there are 25 to 30 different plans available, but sales professionals may only offer one or two plans. CPAs who have knowledge and skills in this area are well-positioned to provide objective advice to clients. (Check your state laws regarding providing insurance guidance if you are not licensed).
Be aware of the new Medicare Advantage Open Enrollment Period in 2019
The 21st Century Cures Act, signed into law by President Barack Obama on Dec. 13, 2016, eliminates the existing MA disenrollment period that has taken place from Jan. 1 through Feb. 14. Effective for 2019, the act replaces it with a new annual Medicare Advantage open enrollment period (OEP) that will take place from Jan. 1 through March 31. During this period, individuals enrolled in an MA plan may make a one-time election to go to another MA plan or traditional Medicare. Individuals using the OEP to make a change may make a coordinating change to add or drop Part D coverage.
The AEP presents clients with an excellent opportunity to be proactive when it comes to their Medicare coverage. They can then make changes that better fit their current health care needs and household finances. Make sure they take advantage of it.
James Sullivan, CPA/PFS, is a financial planner in Wheaton, Ill. He specializes in working with clients, and the families of clients, suffering from chronic illness. To comment on this article or to suggest an idea for another article, contact Courtney Vien, a JofA senior editor, at Courtney.Vien@aicpa-cima.com.