aep

The Annual Enrollment Period: What Medicare Beneficiaries Need to Know Before December 7

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Every year, from October 15 through December 7, millions of Medicare beneficiaries face a decision that directly impacts their healthcare costs and coverage for the following year. The Medicare Annual Enrollment Period, known as AEP, is not a time to simply renew what you already have. It is the only window each year when most people with Medicare can switch from Original Medicare to Medicare Advantage, move from one Medicare Advantage plan to another, join or drop a prescription drug plan, or return to Original Medicare from a Medicare Advantage plan. In 2023, over 30.8 million Americans were enrolled in Medicare Advantage plans, and that number continues to grow. Yet studies show that a significant portion of beneficiaries do not review their plan options annually, potentially leaving hundreds or even thousands of dollars in savings on the table. Understanding how AEP works, what you are allowed to do, and what questions to ask can mean the difference between a plan that fits your health needs and one that creates unexpected financial strain.

What the Annual Enrollment Period Actually Covers

The Annual Enrollment Period applies specifically to people who are already enrolled in Medicare. If you are turning 65 soon, this is not your window. Your Initial Enrollment Period surrounds your 65th birthday, and AEP is for those who are already in the system. During AEP, you can change your Medicare Advantage plan, switch between Medicare Advantage and Original Medicare, or enroll in or drop a standalone Part D prescription drug plan. You cannot use AEP to sign up for Medicare for the first time if you missed your Initial Enrollment Period. In 2024, the Centers for Medicare and Medicaid Services reported that over 10 million beneficiaries made some form of plan change during AEP, yet that represents only a fraction of the total Medicare population. The changes you make during AEP take effect on January 1 of the following year. This means if you switch from a Medicare Advantage plan with a zero-dollar premium to a Medicare Supplement plan paired with a Part D plan, your new coverage starts January 1 and your old coverage ends December 31. There is no gap, but there is also no going back until the next AEP unless you qualify for a Special Enrollment Period.

Why Your Current Plan May Not Be Right for Next Year

Medicare plans change every single year. Premiums rise, provider networks shrink, formularies adjust which medications are covered, and cost-sharing structures shift. In 2024, the average monthly premium for Medicare Advantage plans was approximately $18.50, but some plans increased their premiums by over 20 percent from the previous year. More importantly, out-of-pocket maximums for Medicare Advantage plans can vary dramatically. In 2025, the maximum out-of-pocket limit for in-network services in Medicare Advantage plans is set at $9,350, though many plans set lower limits. If your plan increased its out-of-pocket maximum from $4,500 to $7,500 and you have a chronic condition requiring regular specialist visits, that change alone could cost you thousands. Prescription drug plans are equally volatile. A medication that was in Tier 1 last year might move to Tier 3 this year, raising your copay from $5 to $47 per month. If you take three prescriptions and two of them changed tiers, your annual pharmacy costs could jump by over $1,000. Insurance companies are required to send you an Annual Notice of Change by September 30 each year. This document, often overlooked, details exactly what is changing in your plan. Reading it is not optional if you want to avoid surprise costs.

The Real Difference Between Medicare Advantage and Original Medicare During AEP

One of the most consequential decisions you can make during AEP is whether to stay in Original Medicare or switch to Medicare Advantage, or vice versa. Original Medicare consists of Part A, hospital insurance, and Part B, medical insurance. It does not include prescription drug coverage unless you add a separate Part D plan, and it does not cap your annual out-of-pocket spending. That is why most people add a Medicare Supplement plan, also called Medigap, to cover the 20 percent coinsurance and deductibles that Part B leaves behind. In contrast, Medicare Advantage bundles Part A, Part B, and usually Part D into one plan. In 2024, about 54 percent of Medicare beneficiaries had chosen Medicare Advantage over Original Medicare. These plans often include extra benefits like dental, vision, and hearing coverage. However, they use provider networks. If your preferred cardiologist is out-of-network next year because your Medicare Advantage plan narrowed its network, you could pay full price or be forced to change doctors. Original Medicare with a Supplement plan lets you see any provider who accepts Medicare nationwide. During AEP, if you are in Original Medicare, you can switch to Medicare Advantage. If you are in Medicare Advantage, you can return to Original Medicare. But here is a critical detail: if you have been in Medicare Advantage for more than 12 months and want to buy a Medigap plan when you return to Original Medicare, insurers in most states can deny you coverage or charge higher premiums based on your health history. This makes the AEP decision especially weighty for anyone considering leaving Medicare Advantage.

How Part D Prescription Drug Plans Change and Why It Matters

Standalone Part D prescription drug plans are among the most frequently changed aspects of Medicare coverage during AEP, and for good reason. The average number of Part D plans available per beneficiary in 2025 is around 20 to 25 depending on your state, and they are not priced or structured the same. In 2024, the average monthly Part D premium was approximately $34.70, but the range spanned from under $10 to over $100 per month. Beyond premium, the deductible is what catches people off guard. The maximum allowable Part D deductible in 2025 is $545, up from $545 in 2024, and some plans charge the full amount while others have a zero-dollar deductible. If you take brand-name medications, you need to look at whether your specific drugs are even on the plan formulary. A 2023 analysis by the Kaiser Family Foundation found that among the top 10 most commonly prescribed medications for Medicare beneficiaries, coverage varied significantly across plans, and placement in different tiers led to dramatically different out-of-pocket costs. The coverage gap, once called the donut hole, has been closed in terms of how costs are calculated, but beneficiaries still pay 25 percent of the cost of brand-name drugs after spending $5,030 in 2025 until reaching catastrophic coverage. Once catastrophic coverage kicks in, you pay nothing for covered drugs for the rest of the year. But getting to that point can require thousands in out-of-pocket spending, making the choice of Part D plan one of the most financially significant decisions you will make during AEP.

Common and Costly Mistakes People Make During AEP

The most expensive mistake people make during AEP is doing nothing. Assuming your plan will stay the same is a gamble that rarely pays off. A second major error is choosing a plan based solely on the monthly premium. A zero-premium Medicare Advantage plan sounds attractive until you realize your primary care physician is no longer in-network and your specialist visits require referrals you did not need before. Another frequent misstep is ignoring the prescription drug formulary. Beneficiaries often check whether their pharmacy is in-network but fail to verify whether their exact medications, dosages, and frequencies are covered at favorable tiers. A drug covered at a $5 copay in one plan might cost $90 in another. Some people also miss the fact that preferred pharmacies within a network offer lower prices. In 2024, using a preferred pharmacy instead of a standard one could save the average beneficiary over $300 annually on prescription costs. Another damaging mistake is disenrolling from a Medicare Advantage plan to return to Original Medicare without securing a Medigap policy first. If you apply for Medigap after leaving Medicare Advantage, medical underwriting may prevent you from getting coverage at all. Finally, many people wait until the last week of AEP to make changes, encounter website slowdowns or phone queues, and miss the December 7 deadline entirely. Once AEP closes, your choices are locked in unless a Special Enrollment Period applies, which requires specific life events like moving out of your plan service area or losing other coverage.

How to Check Your Own Situation Before Making Changes

Before you make any changes during AEP, you need a clear picture of where you stand today. Start by gathering your Medicare card, your current plan ID card, and a list of every medication you take including dosages and frequencies. Next, collect the names of every doctor you saw in the past year, including specialists, and verify whether they are in-network for any new plan you are considering. Medicare.gov offers a plan finder tool that lets you enter your zip code, medications, and pharmacy preferences to compare estimated annual costs across plans available in your area. In 2024, beneficiaries who used the plan finder to compare options rather than automatically re-enrolling saved an average of $500 to $1,000 per year. When using the tool, pay attention to the estimated total annual cost, not just the premium. This figure includes deductibles, copays, and coinsurance based on your specific drug list. Call your doctors' offices directly to confirm network status for 2025, because online directories are not always updated in real time. Also review how many times you visited the doctor, had lab work, or went to the hospital this year. If your health has changed, a plan with a lower out-of-pocket maximum might now be worth the higher premium. If you rarely visit doctors, a lower-premium plan with higher cost-sharing could save you money. The key is matching the plan structure to your actual usage, not to an imagined average.

What the Numbers Tell Us About Shopping During AEP

The data on AEP shopping behavior reveals a clear pattern: those who comparison shop end up with better financial outcomes. According to CMS data, beneficiaries who switched from their current Medicare Advantage plan to a higher-rated plan saved an average of $300 to $600 annually in out-of-pocket costs. For prescription drug plans, the savings were even more pronounced. A 2023 study found that the average beneficiary who switched Part D plans reduced their annual drug spending by 20 to 30 percent. Yet despite these potential savings, the Medicare Payment Advisory Commission reported that only about 10 percent of Medicare Advantage enrollees voluntarily switch plans each year, and even fewer switch Part D plans. Part of the reason is complexity. The average beneficiary is presented with dozens of plan options, each with different combinations of premiums, deductibles, copays, and network restrictions. Another factor is inertia. People who have been in the same plan for five years often say they do not have time to comparison shop, yet they are the ones most likely to be overpaying. Star ratings also matter. Medicare assigns plans a rating from one to five stars based on quality and customer service. In 2025, plans with four stars or higher may receive bonus payments from CMS, and these plans often reinvest that money into better benefits or lower costs for members. Checking a plan's star rating takes seconds and can signal whether a plan is well-managed or chronically problematic.

Special Situations That Extend Beyond Standard AEP Rules

While AEP runs from October 15 to December 7 for most people, certain circumstances create additional opportunities to change coverage. If you move outside your Medicare Advantage plan's service area, you receive a Special Enrollment Period that lets you switch plans outside of AEP. The same applies if you move into, out of, or live in an institution like a skilled nursing facility, or if you qualify for Extra Help, a federal program that assists with Part D costs for people with limited income and resources. In 2024, over 13 million Medicare beneficiaries qualified for Extra Help, yet many did not realize they could switch to a plan with lower prescription costs once they were approved. Another scenario involves plan termination. If your Medicare Advantage or Part D plan stops serving your area or ceases operation entirely, you receive a Special Enrollment Period to choose new coverage. Employer-sponsored coverage also interacts with Medicare in ways that affect AEP decisions. If you are still working at age 65 and covered by an employer plan, your Initial Enrollment Period and Special Enrollment Period rules differ from the standard timeline. You generally do not need to enroll in Part B while covered by employer insurance, but once that coverage ends, you have eight months to sign up for Part B without penalty. Confusing employer coverage rules with AEP rules can lead to lifetime Part B premium penalties of 10 percent for every 12-month period you were eligible but did not enroll.

What Happens After You Make Your Selection

Once you select a new plan during AEP, the process does not end on December 7. Your new plan must confirm your enrollment, and you should receive a welcome packet and new ID cards by early January. If you do not receive confirmation by January 10, contact the plan directly. Your new coverage starts January 1, and your old coverage ends automatically on December 31. There is no action needed on your part on the transition date. However, if you switched from one Medicare Advantage plan to another, make sure your primary care physician and specialists have your new plan information before your first appointment. If you moved from Medicare Advantage back to Original Medicare and purchased a Medigap policy, your Medigap coverage also begins January 1. One detail many people overlook is that if you had a Medicare Advantage plan that included Part D, and you return to Original Medicare, you must actively enroll in a standalone Part D plan during AEP to avoid a gap in prescription coverage. Going without creditable prescription coverage for more than 63 days can trigger a late enrollment penalty of 1 percent of the national base beneficiary premium, which was $34.70 in 2024, multiplied by the number of months you went without coverage. That penalty stays with you permanently. Keep copies of all enrollment confirmations, and if you enrolled by phone, note the representative's name, the date, and any confirmation number provided.

Conclusion and Practical Next Steps

The Annual Enrollment Period is not merely an administrative formality. It is an annual opportunity to align your Medicare coverage with your current health needs and financial situation. The decisions you make between October 15 and December 7 will shape your healthcare costs for the entire following year. Start by reading your Annual Notice of Change. Use the Medicare Plan Finder to compare total estimated costs, not just premiums. Verify that your doctors and medications are covered under any plan you are considering. Consider whether your health status has changed in a way that makes a different plan structure more appropriate. If you are overwhelmed by options, remember that help is available at no cost. The State Health Insurance Assistance Program, or SHIP, provides free, unbiased Medicare counseling in every state. In 2024, SHIP counselors assisted over 3 million Medicare beneficiaries with plan comparisons and enrollment questions. You can reach your local SHIP by calling 1-800-MEDICARE or visiting shiphelp.org.

Speak With a Licensed Agent Before the Deadline

Medicare rules are complex, and the right plan depends on your unique health profile, medication list, doctor preferences, and budget. A licensed insurance agent who specializes in Medicare can walk you through your specific options, explain differences between plans available in your county, and help you avoid common pitfalls like network gaps and prescription tier surprises. There is no cost to speak with an agent, and there is no obligation to enroll. Before December 7, take the time to review your coverage and ask questions. Your health and your wallet will thank you.

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Published 2026-11-10 12:13:06.545692+00:00