Medicare expert Melinda Caughill explains the major changes affecting Medicare Part D, Medicare Advantage, and Medigap—and what financial advisors need to know to help clients navigate increasingly complicated coverage decisions.

Medicare Open Enrollment has always been an important time for retirees to review their healthcare coverage. But according to Medicare expert Melinda Caughill, the 2027 enrollment season presents an unusually challenging environment, with rising costs, fewer insurance options, and significant changes to prescription drug coverage.

During a recent Financial Experts Network webinar hosted by Tom Dickson, Caughill explained why Medicare beneficiaries can no longer afford to put their coverage on autopilot.

Her central message was clear: The Medicare plan that worked well for a client this year may not be the best—or even a suitable—option next year.

Caughill used the analogy of a three-legged stool to describe the pressures facing Medicare. The three legs—Medicare Part D prescription drug plans, Medicare Advantage plans, and Medigap policies—are all experiencing changes that could affect coverage, costs, and access to healthcare.

For financial advisors, understanding these developments is increasingly important to helping clients protect their retirement income and make informed healthcare decisions.

1. Why Medicare Coverage Needs an Annual Review

One of the biggest misconceptions Caughill addressed is that Medicare enrollment is a one-time decision.

Many beneficiaries assume that if their current plan works well, there is no reason to revisit it. Unfortunately, Medicare insurance plans can change significantly from one year to the next.

Changes may include:

• Monthly premiums and annual deductibles
• Prescription drug formularies and copayments
• Pharmacy and healthcare provider networks
• Prior authorization and step therapy requirements
• Maximum out-of-pocket costs
• Availability of insurance plans in a particular geographic area

Even when a plan retains the same name, the benefits and costs may be substantially different.

Caughill shared an example of a beneficiary who avoided an extraordinarily large prescription drug expense by identifying coverage changes and switching plans.

The lesson for advisors: Encourage clients to review their Medicare Advantage or Part D coverage every year, particularly when they take expensive medications or have ongoing healthcare needs.

2. Medicare Part D: A $2,400 Spending Cap Doesn't Tell the Whole Story

One of the most important developments for 2027 is the annual Medicare Part D out-of-pocket spending threshold.

The Inflation Reduction Act introduced major changes to prescription drug coverage, including an annual cap on qualifying out-of-pocket spending.

For 2027, the threshold is $2,400.

While this provides meaningful protection for beneficiaries with high prescription drug expenses, Caughill emphasized an important limitation: The cap applies to covered medications, not every prescription a beneficiary may need.

If a medication is excluded from a plan's formulary and no coverage exception applies, the beneficiary may be responsible for the full cost.

Caughill discussed medications including Stelara, Xarelto, and Entresto to illustrate why beneficiaries must carefully examine drug coverage rather than assume that medications covered in 2026 will remain covered in 2027.

She also explained how the Inflation Reduction Act changed the allocation of prescription drug costs among insurers, Medicare, and pharmaceutical manufacturers.

In her assessment, these changes have contributed to substantial financial pressures on private insurance companies.

During the presentation, Caughill cited a decline in standalone Part D plan offerings from 804 in 2023 to 316 in 2027.

Fewer choices, changing premiums, and formulary restrictions make annual comparisons increasingly important.

For advisors, a client's prescription list should be a starting point when evaluating Medicare drug coverage.

3. Original Medicare vs. Medicare Advantage: Two Very Different Paths

Another major focus of the webinar was the difference between Original Medicare and Medicare Advantage.

Caughill described these as two distinct coverage paths, each with its own advantages, limitations, and long-term financial implications.

Original Medicare with Medigap and Part D

Beneficiaries who choose Original Medicare typically enroll in Medicare Parts A and B, then may add a Medigap policy and a standalone Part D prescription drug plan.

This combination generally provides broad access to physicians and hospitals that accept Medicare.

Medigap helps cover certain expenses that Original Medicare does not pay, creating more predictable medical costs depending on the policy selected.

However, beneficiaries generally pay separate monthly premiums for Part B, Medigap, and Part D.

Medicare Advantage

Medicare Advantage plans are offered through private insurance companies and generally combine Medicare hospital and medical benefits into one plan.

Some plans offer low or $0 additional premiums and supplemental benefits.

However, beneficiaries may face provider network restrictions, prior authorization requirements, copayments, and annual out-of-pocket exposure.

Caughill emphasized that the lowest-premium plan is not necessarily the most economical choice for someone who needs frequent medical care.

The best coverage depends on the individual's physicians, medications, health conditions, financial resources, and preferences.

4. The Hidden Risk of Switching from Medicare Advantage to Medigap

Perhaps one of the most consequential points in the presentation was that switching Medicare coverage paths may not be as easy as beneficiaries expect.

Many people assume they can enroll in Medicare Advantage at age 65 and switch to Original Medicare with Medigap whenever their healthcare needs change.

While beneficiaries can leave Medicare Advantage during applicable enrollment periods, obtaining a Medigap policy may require medical underwriting.

Outside certain guaranteed-issue situations, insurers may consider an applicant's health history when determining eligibility.

Someone who develops a serious medical condition could therefore have difficulty obtaining Medigap coverage later.

Caughill also explained that certain circumstances—such as an insurer discontinuing a Medicare Advantage plan—may create guaranteed-issue rights.

State laws can provide additional protections, including birthday rules that allow qualifying policyholders to change Medigap plans without medical underwriting.

However, these protections vary by state.

Financial planning implication: Advisors should help clients understand that their initial Medicare coverage decision may have consequences extending well beyond the first year.

5. Medigap Premiums: Why the Lowest Price May Not Be the Best Choice

Caughill devoted considerable attention to the rising cost of Medicare Supplement insurance.

She explained that beneficiaries should consider more than the initial monthly premium when selecting a Medigap policy.

Although standardized Medigap plans with the same letter generally provide the same basic benefits, premiums can vary significantly among insurers.

Important factors include:

• Historical premium increases
• The insurer's profitability
• The number of policyholders sharing risk
• Whether premiums are attained-age, issue-age, or community-rated
• The insurer's history in the state

Caughill explained that some beneficiaries may pay more for a familiar insurance company name even when a lesser-known insurer offers the same standardized Medigap benefits.

She also discussed why Plan G may be more attractive than Plan F for some beneficiaries, particularly when the difference in premiums exceeds the additional deductible coverage provided by Plan F.

Her recommendation was to evaluate both current premiums and the potential for future increases.

6. Where Can Clients Find Medicare Assistance?

As Medicare coverage becomes more complicated, obtaining reliable assistance is increasingly important.

Caughill reviewed several resources beneficiaries can use to compare plans.

Medicare.gov: The federal Medicare Plan Finder provides information about available plans, prescription coverage, and estimated costs.

State Health Insurance Assistance Programs (SHIP): These programs offer free Medicare counseling, although access and resources can vary.

Insurance agents: Agents can assist with plan comparisons, but beneficiaries should understand which insurers and products an agent represents.

Pharmacies: Some pharmacies can help compare prescription drug plans, although comparisons may focus on costs at that particular pharmacy.

HeyMo: Caughill also introduced HeyMo, a subscription-based tool developed to help consumers compare standalone Medicare Part D prescription drug plans.

She explained that HeyMo is designed to automate annual comparisons and evaluate prescription drug costs using information about a beneficiary's medications.

For financial advisors, these resources can help facilitate more informed discussions without requiring the advisor to become a Medicare insurance specialist.

7. Five Practical Medicare Planning Strategies for Financial Advisors

The webinar offered several actionable strategies advisors can incorporate into client relationships.

1. Make Medicare reviews part of the annual planning process. Encourage clients to evaluate prescription drug and Medicare Advantage coverage every fall.

2. Look beyond monthly premiums. Compare deductibles, copayments, provider access, prescription costs, and maximum out-of-pocket exposure.

3. Understand the consequences of the initial coverage decision. Discuss the potential difficulty of moving from Medicare Advantage to Medigap later in retirement.

4. Account for healthcare inflation. Caughill suggested considering higher healthcare cost assumptions in retirement projections, particularly given recent premium increases. These were her planning estimates rather than guaranteed future inflation rates.

5. Help clients identify reliable Medicare resources. Encourage clients to use Medicare.gov, SHIP counselors, and qualified Medicare specialists when evaluating coverage.

8. Common Questions from the Webinar

Q: Do clients really need to review their Medicare coverage every year?

A: Yes. Medicare Advantage and Part D plans can change premiums, formularies, provider networks, and coverage restrictions annually. Reviewing coverage helps beneficiaries identify potentially costly changes before the next plan year.

Q: Can someone switch from Medicare Advantage to Original Medicare with Medigap?

A: Yes, but obtaining Medigap coverage may be difficult. Outside protected enrollment periods or guaranteed-issue situations, medical underwriting may apply. State-specific protections can also affect eligibility.

Q: Does the $2,400 Part D out-of-pocket threshold mean beneficiaries will never pay more than that for prescriptions in 2027?

A: No. The threshold applies to qualifying spending on covered Part D drugs. Medications that are not covered by the plan generally do not count toward the threshold unless an applicable coverage exception is approved.

Q: Are all Medigap Plan G policies essentially the same?

A: Standardized Plan G policies generally provide the same basic medical cost-sharing benefits regardless of insurer. However, premiums, pricing methodologies, historical increases, and certain additional benefits can differ.

Q: What should a financial advisor consider when estimating future Medicare expenses?

A: Advisors should consider Part B premiums, Medigap or Medicare Advantage costs, Part D premiums, prescription expenses, and potential healthcare inflation. Caughill emphasized the importance of using realistic assumptions and revisiting projections as Medicare costs change.

Final Thoughts: Medicare Planning Can No Longer Be on Autopilot

The central message of this webinar was that Medicare planning is becoming more complicated, and beneficiaries need to be increasingly proactive.

Changes to prescription drug coverage, rising premiums, shrinking plan availability, and restrictions on switching coverage paths can have significant consequences for retirement finances.

For financial advisors, Medicare should be viewed as an important component of comprehensive retirement planning.

Helping clients understand their options, evaluate coverage annually, and anticipate future healthcare expenses can make a meaningful difference in their financial security.

The bottom line: The best Medicare decision is not necessarily the plan with the lowest premium or the most recognizable insurance company. It is the coverage that best aligns with a client's healthcare needs, financial circumstances, and long-term priorities.

About the Presenter

Melinda Caughill is a Medicare educator and consultant and co-founder of i65. She helps individuals and families understand Medicare enrollment, evaluate coverage options, and navigate complex Medicare decisions.

Learn more: https://www.i65.com/

Additional Medicare Resources

Medicare Official Website: https://www.medicare.gov/

Medicare Plan Comparison: https://www.medicare.gov/plan-compare/

HeyMo Prescription Drug Comparison: https://www.heymo.com/

Editor's note: This article summarizes the presenter's October 15, 2026 discussion. Specific 2027 plan counts, drug formulary claims, premium projections, and market forecasts reflect information or opinions presented during the webinar and have not been independently verified for this article. Medicare coverage rules and availability should be confirmed using current official resources.

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