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If you're tired of Medicare Advantage, now is the time to ditch

Key Points
  • If you are leaving your Advantage Plan and going back to original Medicare, make sure to get Part D prescription drug coverage if you don't already have a stand-alone plan.
  • If you are signing up for Parts A and B after your initial sign-up period, you might face a late-enrollment penalty.
  • Coverage for late sign-ups begins July 1.

If you missed your initial Medicare enrollment period or want to dump your Advantage Plan altogether, now's the time to do it.

While early December marked the end of open enrollment — when Medicare recipients can make changes related to their Advantage Plan (Part C) and prescription drug coverage (Part D) — two separate windows opened Jan. 1 for people in certain situations.

The first is the wordy Medicare Advantage Disenrollment Period, which lasts until Feb. 14. This is for people enrolled in an Advantage Plan for 2018 who want to switch to original Medicare (Part A hospital coverage and Part B outpatient coverage). The change takes effect the first day of the month after the request is received.

A patient is monitored in an examination room inside the Clinical Decision Unit at Kaiser Permanente's Capitol Hill Medical Center in Washington, D.C.
Brooks Kraft LLC | Corbis | Getty Images

"Maybe someone has buyer's remorse, or they might not have been aware of the pros and cons or restrictions of their Advantage Plan, like their doctor or hospital isn't in network," said Elizabeth Gavino, founder of Lewin & Gavino in New York and an independent broker and general agent for Medicare plans.

The second window, called the General Enrollment Period, lasts through March 31 and is for those who missed their initial enrollment period or are not eligible for year-round special enrollment. Eligibility for that option is based on special circumstances, such as moving outside of your plan's service area.

For people who use the General Enrollment Period, coverage begins July 1.

Health care faces even more change in 2018
Health care faces even more change in 2018

Also note: Natural-disaster victims who were unable to enroll in Medicare last year have until May 31 to sign up. To check if you meet the requirements, you can call the Social Security Administration at 1-800-772-1213 or visit your local Social Security office.

For people using one of the two windows that just opened, here are some things to consider.

Dropping an Advantage Plan 

If you go back to original Medicare, you also will have to enroll in a Part D prescription drug plan if your Advantage Plan included such coverage — i.e., you do not already have a stand-alone drug plan.

This matters, because if you go 63 days without Part D coverage, you may face a lifelong penalty that is tacked onto your premiums. Basically, it's 1 percent of the national base premium, which is $35.02 in 2018, multiplied by the number of months you lacked Part D or other acceptable drug coverage.

Also, if you switch back to just Parts A and B and want to get a Medicare supplemental plan (also called Medigap), you might need to be approved by the insurer, depending on where you live and exactly how long you've had your Advantage Plan.

Underwriting can take a couple months.The worst-case scenario is that you have Parts A and B until you get the supplemental policy.
Elizabeth Gavino
Founder of Lewin & Gavino

Basically, a Medigap policy covers some of the costs that original Medicare does not cover — such as copayments, coinsurance and deductibles — or uncovered services, such as medical care when you're traveling abroad.

When you first qualify for Medicare, you get a six-month window to purchase a Medigap policy without undergoing medical underwriting. This means the insurer cannot deny coverage based on existing conditions or charge you a higher premium.

After that initial window, however, Medigap insurers typically will evaluate your medical history and can charge you more or decline coverage altogether.

Even if you know you'll breeze through the evaluation, it still can take time for all your records to reach the insurer.

"Underwriting can take a couple months," Gavino said. "The worst-case scenario is that you have Parts A and B until you get the supplemental policy."

Photo by PeopleImages via Getty Images

General Enrollment

If you missed your initial enrollment period, you can sign up for coverage during this annual window. It could come with a penalty, however.

Your seven-month initial enrollment period typically begins three months before the month of your 65th birthday and ends three months after your birth month, a total of seven months. Generally speaking, you must sign up for Part A — unless you meet certain exclusions — and Part B during your initial enrollment. You can also sign up for Parts C and D at that point.

If you fail to enroll when you're first eligible, you can face late-enrollment penalties unless you qualify for an exclusion, such as working full time and getting insurance through your employer.

If you get Part A for free — most retired workers do — there's no penalty if you enroll late. But if you are not eligible for free Part A and don't buy it when you're initially eligible, your monthly premium could go up by 10 percent. You'll pay the higher amount for twice the number of years you went without Part A coverage when you were eligible.

Making Medicare Work For You
Making Medicare Work For You

If you don't sign up for Part B during your initial sign-up window, you also could face a late-enrollment penalty (again, unless you meet an exclusion). In this case, the premium will be increased by 10 percent for each full 12-month period that you could have had Part B but did not. The penalty also is lifelong.

Additionally, if you are in this boat, you might also have missed your window for signing up for Part D prescription drug coverage without a late-enrollment penalty.

Remember that signing up through the general enrollment period means your coverage kicks in July 1.

Your options for insurance until then depend on your situation. Gavino said, for instance, there might be short-term medical plans available to tide you over, or if you are already covered through other insurance — i.e., employer-sponsored or through a health exchange — you might be able to retain coverage until then.

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