How to Read Your Medicare Annual Notice of Change

By Patricia Barry

Copyright © 2015 AARP

The Annual Notice of Change (ANOC) is arguably the most important mailing you’ll receive from your Medicare plan each year, and you should definitely read it.

The fact is that almost every plan makes some changes for the new year, so the costs and benefits in place on December 31 may well be dramatically different on January 1. Here are changes that may or may not occur:

  • The plan may not be there next year. Plans sometimes withdraw from certain service areas or don’t renew their contracts with Medicare. Some occasionally go out of business or are terminated by Medicare.

  • The insurance company that sponsors the plan may not offer this particular plan next year.

  • The plan may alter its benefit design next year. For example, it may cease or start offering extra coverage in the doughnut hole.

  • The plan may change its charges for premiums, deductibles, and co-pays or switch drugs to different tiers so the co-pays change.

  • The plan may alter its formulary (the list of drugs it covers) by dropping some drugs or adding others.

  • The plan may change the restrictions it places on some drugs (prior authorizations, quantity limits, or step therapy) by lifting them from some meds and imposing them on others.

How do you know whether any of these changes will affect you? In the case of the first possibility — that your plan won’t exist next year — the plan (or maybe Medicare) will notify you in good time. In that case, you have to enroll in another plan to continue coverage. For other changes, the plan must send you details in an ANOC.

The plan must ensure that you get your ANOC no later than September 30 so that you can compare its cost and benefit details for next year with those of other plans. These details are posted on Medicare’s plan finder website from October 1 onward, in preparation for the open enrollment period. If you haven’t received your ANOC by the first week of October, call your plan and ask for it.

Reading the Annual Notice of Change (ANOC) your plan sends is really important! Here are examples of what happened to someone who didn’t and someone who did:

  • Suzie stayed in the same Part D plan from one year to the next. The following summer, she emailed, very steamed: “I deliberately chose this plan because it covered my drugs in the doughnut hole,” she wrote. “Now I’m in it, and the plan won’t pay. I feel tricked.” Her plan’s benefit design had changed on January 1 — no longer giving any gap coverage — and the ANOC she’d received the previous fall warned her of the changes. Suzie fessed up that she hadn’t read it. “I won’t make that mistake again,” she said.

  • Thomas began flipping through his ANOC without much interest, but then did a double-take when he saw that his premium would be raised by $15 a month the following year. That made him look more closely at the whole document. He found the co-pays for two of his brand-name drugs would also go up, from $42 to $95 a month. So Thomas used Medicare’s online plan finder to see what he’d pay out of pocket if he enrolled in other Part D plans in the coming year. Then he switched to the one he felt would give him the best deal.