Medicare Advantage Open Enrollment Period: The Devil is in the Details

Medicare beneficiaries and their agents likely took a deep breath on Dec. 7th when the Medicare Annual Enrollment Period ended. October 15 to December 7 is the time when all Medicare beneficiaries may enroll in, change or drop Medicare Part D Prescription Drug plans, change to a Medicare Advantage Plan, change from a Medicare Advantage Plan back to Original Medicare or switch from one Medicare Advantage Plan to another, with or without a drug plan included.

This is to be contrasted with the Medicare Advantage Open Enrollment Period (OEP) that runs from January 1 to March 31 each year. This period allows Medicare beneficiaries to make a change only if they are currently enrolled in a Medicare Advantage Plan. The allowed changes are:

• Switch from one Medicare Advantage Plan to another
• Disenroll from a Medicare Advantage Plan and return to Original Medicare
• Switch to original Medicare and join a separate Medicare Prescription Drug Plan

The distinction is that the current period applies only to people that are currently enrolled in a Medicare Advantage Plan. Changes will be effective on the first day of the month following receipt of the request.

Should one disenroll from a Medicare Advantage Plan within 12 months of joining the Medicare Advantage Plan, it is possible to also purchase a Medigap or Medicare Supplement Plan without underwriting. It is important to note that generally speaking this is a one-time opportunity. Should one make the change and return to Original Medicare after the first 12 months, the insurance company may require the applicant to answer health questions in order to qualify for a Supplement plan.

Medicare Advantage Plans (Medicare Part C) have been doing some heavy advertising in our area. Like all advertising the devil is in the details. Advertising for the supplemental benefit cards do not clarify that those benefits are likely not available in our area. If you are going to change plans be sure to verify that the benefits are available in your zip code area. Further, be sure you do a thorough review of the providers available to you and confirm that they are taking new patients.

The challenge becomes that one never really knows how good the plan is until it’s time to use it. Taking advantage of the plan benefits in the first year is probably one of the best tests to see how the plan works.

Employers that sponsor group health plans will also want to pay attention this time of year. Several calculations must be done to keep their plans in compliance.

To comply with the ACA (Affordable Care Act) an employer must determine if it is an “Applicable Large Employer” and would therefore be subject to the mandate to provide qualifying benefits to the employees. The employer must average its workforce size for the 12 months of the preceding calendar year. All Full time and full time equivalent employees are included in the count. If the average is 50 or more then benefits must be provided for the following year going forward.

The ACA defines a Full time Employee (FTE) as one who averages at least 30 hours per week or 130 hours per month. Fractions of FTE are totaled and included.

Another important calculation is the size of the group for continuation of benefits under COBRA (Congressional Omnibus Budget Reconciliation Act. This is the law that mandates that most terminated employees and their dependents have the right to continue health benefits.

There are two types of COBRA benefits: Federal and CA (for companies domiciled in CA). Federal COBRA benefits must be offered by employers that employed at least 20 employees on 50% or more of the typical working days in the prior year. California employers that have employed few that 20 employees on 50% or more of the typical working days are subject to Cal-Cobra laws for all of 2023.

For this calculation full-time and part-time employee are counted, with part-time employees counting as a fraction of the full-time and included in the total.

Once the determination is made it hold for the entire calendar year. There are significant differences between Federal and Cal-Cobra benefits in the area of administration and cost. Federal COBRA administration is an employer responsibility that may be out-sourced to a vendor. But the ultimate responsibility and penalties rest with the employer. The employee is charged no more than 102% of the employer’s active participant rate.

Cal-Cobra administration is performed by the insurer, so it is simpler for the employer. The charge to the employee is 110% of the active participant rate. If an employer has ownership in multiple businesses a tax professional should be consulted to determine the groups’ status under the IRC Section 414 controlled group rules.

Margaret R. Beck

Margaret Beck CLU, ChFC, CEBS started her insurance practice in Redding in 1978. She founded Affiliated Benefit Services.

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