Published: Updated:
Imagine going to your regular pharmacy to pick up a needed prescription and being told your insurance isn’t valid. That’s what happened to more than 100,000 Medicare beneficiaries earlier this year. They lost their prescription drug coverage because they made two critical mistakes.
Now, Medicare drug plans are making changes for 2027 that could expose many more to that same risk. I want to help you avoid making those same mistakes.
The Medicare Annual Enrollment Period
We are at the start of Medicare’s Annual Election Period (AEP), which is also referred to as open enrollment. It runs from Oct. 15 thru Dec.7. That’s when Medicare enrollees can elect to make certain changes. They can change Medicare Advantage (MA) plans, move from Traditional Medicare to MA or vice versa, or change prescription drug plans. Any changes become effective January 1.
Medicare Advantage and prescription drug plans must send a document called the Annual Notice of Change (ANOC) to each member by Sept. 30. The document must show what changes the plan will make to premiums, copays, benefits, and deductibles for the new year beginning in January.
The notice should be your cue to find out whether your current plan is still the best one for you. If you do nothing, you will remain in your current plan under its new terms.
Too many people don’t bother to read their ANOC, which often looks like junk mail. The one I received a few weeks ago from my drug plan came folded and taped like bulk mail, not in an envelope. It’s 24 pages long and printed on what feels like cheap paper stock.
It’s not junk. You need to read it. The first critical mistake many enrollees made a year ago was ignoring the ANOC from their prescription drug plan (PDP).
An important change in one company’s drug plan
Here’s some background. During 2025, more than four million Medicare members across the country were in one of several stand-alone PDPs (not part of an MA plan) that had a $0.0 monthly premium.
That’s not a typo. A few insurance companies actually offered plans where they did not charge a premium. They can do that because of the subsidies they get from Medicare.
About two million beneficiaries were enrolled in a particular $0.0 plan with the name Wellcare Value Script. The ANOC from Wellcare Value Script said that for the year 2026, the plan would start charging a premium in a number of states. The new premium ranged from $2.70 – $9.60 per month, depending on where the member lived.
📬 Subscribe to:
Tales from Consumer Advocacy Land
Real stories. Real rescues. Real advice.
Join thousands of smart travelers and savvy consumers who already subscribe to Tales from Consumer Advocacy Land — the friendly weekly newsletter from Michelle Couch-Friedman, founder of Consumer Rescue. It's filled with helpful consumer guidance, insider tips, and links to all of our latest articles.
For their own reasons, more than 100,000 of those in that plan didn’t read or pay any attention to their notice. Since they had a plan that did not charge a premium, many likely assumed that they didn’t need to do anything to keep their zero dollar plan. So they did nothing and were automatically reenrolled in that plan for 2026.
Then January came around and premiums came due. That was when a large number of people made their second mistake. They didn’t pay their new premium. Wellcare said the company sent out additional notices and by February a majority of those who had missed a payment figured out what was happening and fixed things.
Medicare rules allow a plan to drop you if you miss two payments. Wellcare gave those who hadn’t paid for January or February an extra-month grace period until the end of March. Many people didn’t realize there was a problem because they were still able to get prescriptions filled during that grace period.
With the third missed payment, the company disenrolled more than 100,000 members.
Reenrollment rules are strict
And here is where the Medicare rules make it even worse. In many cases, the total unpaid balance was just $8.10. But paying back the missed payments did not get them reinstated in their plan. The rules make them wait until the next AEP (the one happening right now) to enroll in a plan with coverage to start next January.
As if losing their insurance isn’t bad enough, they all will have to pay a lifetime late enrollment penalty for those nine months – April through December – without coverage. For 2027 the penalty comes to $3.70 per month on top of whatever premium they pay. Plus, the penalty can increase each year because it’s based on a national average premium, which keeps going up.
More Medicare beneficiaries are at risk in 2027
Unfortunately, more Medicare beneficiaries could find themselves in a similar jam in 2027. This year again about four million Medicare members are enrolled in a $0.0 premium PDP. However, starting January 2027, all of those plans will begin charging a monthly premium.
If you or someone you care about is in such a plan, you have to do something. You have to decide whether to stick with your plan or make a change. If you stick with that plan you will have to arrange to pay your premium.
Regardless of the PDP you have, you can likely save money by comparing your existing plan with the alternatives available in the new year. I’ve written before about the importance of reviewing your Medicare drug coverage during AEP.
Related: How to save money on your Medicare prescription drug plan
The Medicare website has a good tool you can use to compare drug plans to find the one that’s best for your individual situation. Medicare has improved the plan finder tool over the last several years, making it much easier to use.
Related: Here is how to use the Medicare Plan Finder the right way
Free help is available
But if you need assistance with choosing a plan, there’s free, unbiased help available through the State Health Insurance Assistance Program (SHIP). The program operates in every state under a variety of names.
Appointments with SHIP counselors book up quickly during AEP. Make your appointment now if you want to speak with a SHIP counselor.
Another free resource is Medicare, which staffs phones 24/7 during AEP. The workers who answer the calls can help you find a suitable drug plan during the call.
Don’t let your Medicare Advantage plan surprise you
It’s just as important for those enrolled in a Medicare Advantage plan to read the ANOC. Your plan may be increasing its premium or copays. It could be reducing or eliminating a benefit. The provider network could be changing. Furthermore, the insurance companies that own the MA plans are pulling out of certain cities and counties to, as one company told investors, concentrate on “margin over members.”
I’ve been a registered Medicare counselor in the SHIP program for more than ten years. I’ve met with people who didn’t read their MA plan’s ANOC. They only realized that their doctor(s) no longer contracted with their MA plan when they were hit with a large unpaid medical bill.
Bottom Line: Read your Annual Notice of Change
Whether you’re in Medicare Advantage or Traditional Medicare with a Medicare Supplement and a PDP, it’s important to read your plan’s Annual Notice of Change. Not doing so can not only cost you money but also limit the medical care you can access.
Do You Have a Medicare Question?
If you have a Medicare question, feel free to contact me at Ask Abe here at Consumer Rescue.
