Key Differences Between Medicare and Open Enrollments
People often use the term open enrollment as a catch-all phrase that bears the exact definition in all applications, yet its true meaning lies in its application. Depending on the context, open enrollment may refer to Medicare, Medicare Advantage, or health insurance plans. While insurance agents and brokers understand this distinction, clients may not.
As diligently as the federal government has worked to make health insurance accessible and affordable for all, 26 million Americans remained uninsured in 2023. While the cost is the primary issue, the lack of understanding about open enrollment periods can also delay obtaining quality health insurance.
We’ll dig into the various types of health insurance options and hit the highlights of what you need to share with clients about the applicable open enrollment periods.
Shortcuts:
Understanding Medicare Enrollment
- What Is Medicare?
- Medicare Enrollment Periods
- Medicare: Late Enrollment Penalties for Parts A, B, and D
Understanding Open Enrollment Period (OEP)
Key Differences Between Medicare and Open Enrollment
Common Misconceptions and FAQs About Enrollment Periods
Consequences of Missing Enrollment Periods
Final Tips for Navigating Enrollment Periods
Understanding Medicare Enrollment
Adding to the inherent confusion about health plan enrollments, Medicare offers four distinct enrollment periods. Each is designed to cover enrollments at specific times for particular circumstances.
We’ll provide an overview of the Medicare program to help you explain the various Medicare Enrollment Periods and when they apply.
What Is Medicare?
Before 1965, older Americans struggled to meet their medical needs after retiring. For many, leaving a job also meant losing access to health insurance. The same is true today.
Upon signing the Medicare program into law, President Lyndon B. Johnson enabled seniors and other vulnerable populations access to health coverage, which was all or partially subsidized with federal funds.
Medicare consists of four parts:
- Part A covers hospitalization costs
- Part B covers medical services
- Part C refers to Medicare Advantage plans
- Part D covers prescription drugs
People over age 65 and people with certain disabilities or End-Stage Renal Disease (ESRD) can enroll in Medicare.
Those who receive monthly Social Security or Railroad Retirement Board cash benefits will be automatically enrolled in Medicare when they turn 65 at no cost. Other individuals can apply for Medicare by contacting the Social Security Administration.
Only Medicare Advantage plans cover extra benefits, such as vision, dental, and hearing services. Medicare Advantage may also cover the expense of fitness or other health programs.
Those who opt for Original Medicare (Parts A and B) can purchase a Medicare Supplement plan to cover services the plan doesn’t cover.
Medicare Enrollment Periods
The government established an initial enrollment period (IEP) for Medicare-eligible individuals. Those who miss IEP or lose health coverage due to certain qualifying circumstances can still enroll at another time.
Medicare Advantage plans have their own enrollment periods.
Here’s how the four enrollment periods break down:
- Initial Enrollment Period (IEP): The first opportunity to enroll in Medicare. This period starts three months before a person’s birth month, and ends three months after their birth month.
- General Enrollment Period (GEP): Those who missed their IEP can enroll in Medicare from January 1st until March 31st.
- Special Enrollment Period (SEP): Certain significant life events like moving outside your plan’s geographic area, losing employer health coverage, a change in Medicaid coverage, or leaving a nursing home qualifies individuals for a special enrollment period.
- Annual Enrollment Period (AEP): This is a dedicated enrollment period for Medicare Advantage plans. It runs from October 15th until December 7th.
Medicare: Late Enrollment Penalties for Parts A, B, and D
Your clients need to know that not enrolling in Medicare during the appropriate time can cost them more than living without health insurance. The government can assess a penalty for not abiding by their rules.
Medicare Advantage is optional coverage, and there are no penalties for not enrolling in a plan.
By failing to enroll in Medicare Part A, clients will have to pay a penalty equal to 10% of their monthly premium for twice the number of years they were eligible and didn’t enroll. The penalty applies for two years.
Part B also carries a penalty for failing to enroll. The penalty is an extra 10% of their premium for each year they could have enrolled. For example, if they waited two years to enroll, the penalty would be 20%. Depending on their income, they may have to pay an even higher premium.
The penalty for not enrolling (or enrolling late) for Part D is an extra 1% per month. The penalty applies if they don’t get Part D along with Part A or don’t have creditable drug coverage after 63 days. The penalty doesn’t apply if they have creditable drug coverage or qualify for a federal program called Extra Help.
Understanding Open Enrollment Period (OEP)
When someone talks about an open enrollment period in a general sense, they’re likely referring to an annual open enrollment period related to an employer-sponsored group health plan or a Marketplace plan under the Affordable Care Act (ACA).
What Is the Open Enrollment Period (OEP)?
Simply put, anyone can enroll in a health plan on the ACA marketplace during the open enrollment period. Employees enrolled in an employer-sponsored group health plan have an opportunity to make changes to their existing coverage during OEP.
Open Enrollment Timeline
The timeframe for the open enrollment largely depends on where the clients live. In most cases, the open enrollment period runs from November 1st until January 15th, but there are exceptions.
If they miss the applicable OEP timeframe, they may qualify for a Special Enrollment Period if they have a qualifying life event.
Qualifying life events include:
- Getting married
- Getting divorced
- Giving birth or adopting a child
- Moving to a new area
- Gaining citizenship
- Leaving incarceration
- Losing employer-provided health insurance
The federal government allows states to create a state-based marketplace if they wish. States that chose this option can set their own rules and deadlines for OEP.
To find more information about the options for marketplace plans and deadlines in a particular state, go to the HealthCare.gov site and click on the link for the state’s page.
Who Is Eligible for OEP?
Those who don’t have access to an employer-based plan, Medicare, or Medicaid are eligible to enroll during OEP for a marketplace plan.
Remember that the timing to enroll may differ between a group plan and plans on the marketplace.
Key Differences Between Medicare and Open Enrollment
We can easily break down the key differences between Medicare and OEP into eligibility, coverage scope, enrollment deadlines, and plan structure.
Eligibility
Anyone seeking to obtain a health insurance policy under the ACA marketplace can do so during OEP.
By contrast, only the following circumstances qualify someone for the Medicare program:
- Individuals age 65 or older
- Disabled individuals
- Anyone receiving Social Security Disability benefits for 24 months or longer
- Those living with ESRD
- Those living with Amyotrophic Lateral Sclerosis (ALS)
The Social Security Administration established the definition of a disability as:
- An individual who cannot engage in any substantial gainful activity
- A physical or mental impairment that can be expected to result in death
- A physical or mental impairment that has lasted or can be expected to last for at least a year
Coverage Scope
Medicare caters to the needs of seniors, people with disabilities, and chronically ill people who need a combination of hospital, medical, and drug coverage.
Medicare enrollees have the option of enrolling in Parts A, B, and D, which is considered Original Medicare.
The other option is to enroll in a Medicare Advantage plan (Part C), which includes Parts A and B, as well as other benefits and coverages. Medicare Advantage can also include a drug plan.
ACA and employer-sponsored group plans offer a broader range of plans for individuals of all ages. Many employers of today also offer their employees a range of voluntary benefits as part of their health plans (e.g., group life insurance, group disability insurance, critical illness insurance, and more).
Enrollment Deadlines
All enrollment deadlines for Medicare, group plans, and ACA plans have designated windows for when individuals can enroll.
Medicare has four periods during which clients can enroll. ACA plans have open enrollment and special enrollment periods. Group-sponsored health plans only have one enrollment period.
Plan Structure
It’s critical to understand each health plan’s structure so clients know who to contact with questions or problems.
The federal government administers all parts of Medicare, Medicare Supplement plans, and Medicare Advantage plans.
Clients should contact the phone number on their plan if they have questions about covered health services. If they don’t feel they’ve gotten an adequate response, they can call 1-800-MEDICARE and speak with the Medicare Beneficiary Ombudsman.
Each state also has a State Health Insurance Assistance Program (SHIP) that offers free health insurance counseling for Medicare beneficiaries. The SHIP website provides a state-by-state listing of each state’s contact information.
Employees who are enrolled in a group health plan provided by their employers should contact their plan administrator for questions and assistance.
A key benefit of ACA plans is the opportunity to have the federal government pay some of their premiums by way of subsidies. There are two types of subsidies, which are subject to income thresholds.
The first type of subsidy is an advanced premium credit that reduces monthly premium costs. The second type is cost-sharing reductions, which help to lower deductibles, copays, and coinsurance.
Your clients’ first plan of action if they have a problem or concern with an ACA marketplace plan is to contact the provider.
The federal government also offers an ACA Marketplace Call Center.) that answers questions about coverages, submitting applications, getting provider contact information, and reporting suspicious activity. The call center phone number is 1-800-318-2596.
Common Misconceptions and FAQs About Enrollment Periods
Without a doubt, understanding the most appropriate health plans and coordinating enrollment periods is complicated at best. It’s easy to get it wrong.
With that in mind, we’re answering common frequently asked questions about enrollments.
Can I switch between Medicare and marketplace plans?
Yes. You can cancel your marketplace plan when you qualify for Medicare. Note that it’s not possible to have both plans active at the same time. You may lose premium tax credits for doing so.
Do both Medicare and marketplace plans qualify as “creditable coverage”?
Medicare plans set the standard as creditable coverage. Every Marketplace plan must meet ACA standards. The government defines creditable coverage as coverage that offers at least as much as Medicare Part D coverage.
If you have creditable coverage, you may be able to delay Medicare enrollment.
Private insurance companies must notify you in writing if their plan isn’t considered a creditable plan.
How do subsidies and cost-sharing reductions under the ACA compare to Medicare premium assistance programs?
Medicare offers four programs to help Medicare beneficiaries with healthcare costs. They include:
- Medicaid
- Medicare Savings Programs
- Supplemental Security Income benefits (SSI)
- Extra Help
With the availability of healthcare subsidies and programs that help with premiums, nearly all individuals should be able to access an affordable health insurance plan.
Consequences of Missing Enrollment Periods
We have already discussed the problem of having to pay penalties if clients miss an important enrollment period.
More importantly, clients could delay the opportunity to obtain health coverage, causing a gap in healthcare coverage.
The consequence of not having health insurance may mean clients fail to obtain health services when they need them. A resulting problem is a decline in their health.
Regardless of the type of health insurance you’re helping clients with, they need to understand their options, coverages, and potential penalties.
The best way to do that with virtual sales appointments is by outlining the enrollment periods and other information on slides and sharing your screen with them. People remember 50% of what they see and hear.
By leveraging CrankWheel’s screen-sharing tool, you can transform phone calls into visual presentations for health insurance. It’s secure, easy to use, and works on any device. You can give control of the slides over to customers and record sessions if you wish. Our software also allows you to record consent with an electronic signature in a screen-sharing session to enroll clients faster.
Final Tips for Navigating Enrollment Periods
Laws and rules evolve with every passing year, making it challenging to keep up with them.
Be sure to visit HealthCare.gov and Medicare.gov for the latest updates on changes in enrollment periods and other important information.
Another good tip is to add reminders for enrollment deadlines on your calendar to be sure your clients don’t unintentionally miss them.
Given the complexity and confusion surrounding open enrollments, consider how a screen-sharing tool can help your clients visualize how the rules apply to them. CrankWheel’s instant screen sharing solution can help demystify open enrollments by adding facts and images to enhance your presentations. Learn more and give CrankWheel a try for free today.