The important Medicare letter you should read now
Your ANOC, or plan annual notice of change, tells you everything you need to know about your Medicare plan. But it helps to know what to look for.
If you have Medicare Advantage or a Part D drug plan, you should have received a plan annual notice of change (ANOC) in late September. This is an important document. It informs you of any changes in your coverage and costs for the next calendar year.
If you opened the envelope and immediately filed away your ANOC, go get it now. This is a paper you’ll want to review carefully. Because when you look over the changes, you may discover something you don’t like. And your window to make a change is closing.
The Medicare annual open enrollment period (AEP) runs from Oct. 15 to Dec. 7. During this time, you can make changes to your Medicare Advantage and Part D drug plans. If you make changes now, they’ll take effect on Jan. 1 of next year. If not, your existing plan — along with the updates outlined in your ANOC — will most likely renew automatically.
(Another way to prepare for a new year of health care: Download the Optum Perks mobile app. You may find medication coupons cheaper than your copay.)
Unfortunately, people don’t always review their ANOC. They find it overwhelming. “Let’s be real, no one is excited about sifting through 160 pages with a bunch of health care insurance lingo that’s hard to understand,” says Danielle K. Roberts, a Medicare insurance expert and author of 10 Costly Medicare Mistakes You Can’t Afford to Make.
“A lot of people take one look at that document and toss it in the corner. Because of that, they don’t learn about big changes to their plans until they come into effect the following year,” says Roberts.
Bottom line? You never want to let your policy auto-renew without checking that all your needs are covered. So before the AEP window closes, grab your ANOC. Then use it to check these 6 things.
1. Look at your deductible
Whether you have a Part D or Medicare Advantage Plan, your premium will probably change for next year. And if you have a Medicare Advantage HMO (health maintenance organization), there’s a good chance you have a $0 premium, says Roberts. But it’s not uncommon to have that $0 jump to, say, $20. If that’s about to happen, your ANOC will let you know.
Roberts suggests that if your premium goes up by $5, it probably doesn’t warrant the hassle of changing your plan entirely. But if it goes up by $20 or more, you might want to reconsider based on your personal finances.
The other thing you want to look for is a change to your deductible. The Part D deductible can vary from plan to plan, but in 2021, Medicare dictated that the maximum deductible was $445, Roberts says. For 2022, it’s going up to $480. (Check out our guide to deductibles.)
Most Medicare Advantage plans include prescription medication coverage. So you’ll need to check your deductible on your Part A and Part B services, and on the built-in Part D plan.
“People often forget about the Part D plan inside the Medicare Advantage Plan,” Roberts says. “So when you receive your ANOC, there will be columns showing any costs that are changing for next year. For example, if your deductible is changing, it will list your deductible for this year and your deductible for next year side by side. It will also show what you paid for services this year and what you will pay for services the following year if the rate for those services is changing.” Make sure you’re not missing any hidden costs.
2. Scan the formulary for your prescriptions
Medicare Advantage prescription drug plans and stand-alone Part D plans both have a medication formulary, Roberts explains. This is the complete list of medications that will be covered under the plan in the coming year.
Here’s why you should look at that list: It can change from year to year, she says. Some medications are added, while others are removed.
If you’re taking any medications, you want to make sure they’re still covered next year. “This is super important, because say you have a $600 insulin pen for your diabetes and your plan drops that particular medication,” Roberts says. “If you miss that in your ANOC, you’re going to have to pay for that out of pocket starting in January, or try to file for a drug exception, which has no guarantee of approval.”
You don’t want to wait until you’re standing in line at the pharmacy to learn that. (If that happens, you may want to have the Optum Perks discount card in your wallet. Just show it to the pharmacist and you may get an instant discount at checkout.)
3. Check out your copay
In addition to moving on or off the formulary, medications can move to different tiers, Roberts says. And that can affect how much you’ll pay.
Here’s how that works: Insurance companies usually have 4 to 6 drug tiers. The general rule of thumb is that medication on a low tier has a lower copayment.
“Let’s say that this year your medication is in Tier 2, which means you have a relatively inexpensive copayment,” says Roberts. “But next year, your medication will be moved to Tier 4, which typically has a much higher copay. Now you’re going to be spending twice as much on your medication.”
If you catch a change like that on your ANOC, you may want to look for a new plan.
Suggested reading: 6 health insurance benefits you might not know about
4. Look for your preferred providers
You should always check to make sure that your go-to health care providers, hospitals and pharmacies are still in network, says Roberts. These don’t change often. But if you want to be safe, Roberts suggests calling your preferred providers to verify that they’ll still be working with your insurer for the coming year.
If you’re not picky about your providers, this may not apply to you. But if you love your doctors and hospital staff, you’ll want to make sure you’re not losing access to them.
(Pharmacists are an untapped health care resource. Here are 5 questions you can always ask as you’re picking up medication.)
5. Confirm that your out-of-pocket limit is still acceptable
Unlike Original Medicare, Medicare Advantage plans have a maximum out-of-pocket limit. This is the most you can spend in any calendar year.
For example, if your limit is $5,000, you won’t pay more than that for in-network Part A and B services in a calendar year. Every time you spend $10 to go to the doctor or $200 to stay overnight at the hospital, your payment will count toward the limit.
“Then when you hit your maximum out-of-pocket cost, your Medicare Advantage Plan will cover all future Part A and B costs,” says Roberts.
But your out-of-pocket limit can change each year. “One year your plan could have a $3,000 out-of-pocket limit, and the following year, it could go up to $6,000,” Roberts says. This change will appear in your ANOC, so make sure you have a look.
6. Ask yourself: Is your current plan still meeting all your needs?
A lot of people choose to stick to their health care plans at the end of each year. And that might be the right choice. But it’s worth asking yourself: Are you really happy with yours?
Roberts shares an example: “If you’re on a Medicare Advantage HMO plan, maybe you’re tired of needing a referral from a primary care doctor to go to a specialist. You might want the ability to choose your own providers. That’s a scenario where you might want to change to a Medicare Advantage PPO plan [preferred provider organization] that will allow you to do that.”
Remember: The AEP window closes Dec. 7. If you’re making changes, you’ll want to do it before then. So pour a cup of coffee, grab your ANOC and make sure you’ve checked all the items on this list.
And before you leave, download the Optum Perks mobile app. You can use it to search medication coupons that work at more than 64,000 U.S. pharmacies.
Basics of ANOCs: Medicare.gov, Plan Annual Notice of Change (ANOC)
Open enrollment: Medicare.gov, Joining a health or drug plan
Coverage options: Medicare.gov, Your Medicare coverage choices
Costs: Medicare.gov, Costs for Medicare Advantage Plans
Drug tiers: Blue Cross Blue Shield Blue Care Network, How do drug tiers work?