By Adam Brooks, CFP® and Brandon Perlow, CFP®
Transcript
There’s a letter in your mailbox right now that most people set aside and never open. It’s called the Annual Notice of Change, and it tells you what your Medicare coverage will cost you next year.
Adam Brooks: Hi, I’m Adam Brooks with ABLE Financial Group, joined by Brandon Perlow, a CERTIFIED FINANCIAL PLANNER® professional on our team who specializes in Medicare planning.
When Is Medicare Open Enrollment for 2027?
Adam Brooks: Brandon, enrollment opens October 15th. Where do people get tripped up?
Brandon Perlow: There are a couple of different places, and the first is the calendar. People hear “open enrollment” and think there’s one long window. In reality, there are a couple of different windows.
The one that counts is the Annual Enrollment Period, October 15th through December 7th. Whatever you decide during that period takes effect January 1st, 2027.
There’s a separate window for Medicare Advantage in the spring. That one gives you far fewer options.
Why Reviewing Your Medicare Coverage Matters
Adam Brooks: And what’s the second place?
Brandon Perlow: The second place is doing nothing. If you skip the window entirely, your coverage is going to roll over automatically. That feels like the safe choice, but your plan could change even if you didn’t.
The 2027 changes are significant, and we want to make sure people are aware of their options.
Medicare Part D Changes for 2027: Prescription Drug Costs and Deductibles
Adam Brooks: Very interesting. Let’s walk through the changes, starting with prescriptions, Brandon.
Brandon Perlow: There are two numbers you need to know.
The first is your annual out-of-pocket maximum limit on covered drugs for your Part D plan. That’s going up to $2,400 a year from $2,100 this year. Once you reach that limit, you don’t pay anything more for covered prescriptions.
And then there’s the deductible. The maximum deductible today is $615. That’s going up to $700 in 2027. Again, that could be a big jump if you hit those thresholds.
How the End of Medicare Part D Premium Subsidies Could Affect Costs
Adam Brooks: There’s a subsidy that ends after this year. What’s driving that?
Brandon Perlow: This is something very few people are discussing.
For the last couple of years, the Centers for Medicare & Medicaid Services (CMS) have been subsidizing Part D prescription drug plan premiums, bringing those costs down.
On average, premiums have been about $15 to $25 lower than they otherwise would have been. That ends at the end of this year.
So, even if you don’t do anything at all, starting in 2027, your Part D prescription drug costs could rise.
Medicare Part B Premiums and Deductibles for 2027
Adam Brooks: And I understand that Part B costs are headed in the wrong direction too. What’s happening with Part B?
Brandon Perlow: With Part B, we need to be careful. We don’t have the official numbers yet. Those are due to be released later in October or November.
But the Medicare trustees are projecting that Part B premiums will go up from $202.90 to $209.50 per month starting next year. The deductible could increase from $283 to as high as $310, potentially even more.
Again, these are estimates. We’ll know the actual numbers a little later, but the key takeaway is that we’re projecting costs to go up.
How IRMAA Affects Medicare Costs for Business Owners and High-Income Earners
Adam Brooks: Many of the people we serve are business owners and senior executives. Is there something here that speaks to them directly?
Brandon Perlow: Absolutely. High earners pay a surcharge on top of the standard Part B and Part D premiums.
Medicare calls this IRMAA, which stands for Income-Related Monthly Adjustment Amount.
Social Security calculates this using a two-year lookback. Your modified adjusted gross income from two years ago determines the IRMAA you pay today.
So, your 2027 surcharge is based on your income from 2025.
If you sell a company this year or have another big taxable event, that’s going to impact your IRMAA in 2028.
That connection can be very easy to miss in the middle of a larger transaction.
Filing an IRMAA Appeal After Retirement or a Change in Income
Adam Brooks: That’s planning we try to handle well before enrollment opens. But what if someone has already had one of those big income years?
Brandon Perlow: The good news is that we can help file an appeal.
The IRMAA appeal uses Form SSA-44.
If you’ve recently retired or stopped working, Social Security considers that a life-changing event. Your surcharge may be recalculated based on your current, lower income instead of what it was a couple of years prior.
We’ve helped many clients navigate and file these appeals when they transition into retirement.
If you sell a business, that can be a little trickier if you stay on. But if you sell a business and stop working, we can file an appeal on that basis as well.
How the Medicare Prescription Payment Plan Works
Adam Brooks: Before we wrap up, is there an option people can request from their plan that most people don’t know exists?
Brandon Perlow: Yes, the Medicare Prescription Payment Plan.
If you take an expensive medication and don’t want to pay that big deductible or large expense in January at the beginning of the year, you can spread those costs into monthly payments over the entire year.
It’s free to join, and every plan has to offer this option by law.
You do have to elect it every year, so if it’s something you want to do, now’s the time.
Reviewing Your Medicare Annual Notice of Change Before December 7
Adam Brooks: So, what’s the first step, Brandon?
Brandon Perlow: The first step is that Annual Notice of Change letter.
That letter arrives in the mail by the end of September each year. If you haven’t received it already, it should be arriving soon.
It’s going to show the changes to your premium, deductible, and prescriptions covered under the plan.
You want to read this letter and compare it with the prescriptions you’re taking.
You have between October 15th and December 7th to make a change.
Medicare Planning Assistance From ABLE Financial Group
Adam Brooks: Brandon, thank you.
If you’d like help with your coverage, planning around the income surcharge, or filing an IRMAA appeal to potentially lower your Medicare costs, reach out to our team.
Call ABLE Financial Group at 480-258-6104 or email adam@ablefinancialgroup.com.
We’ll see you next time here at The Exchange.
