15 Costly Medicare Mistakes That Shouldn’t Happen to You
Medicare is a godsend for all Americans as it not only helps senior citizens cope with the expenses that come with aging, it also reduces the amount of financial stress on their families. Access to affordable healthcare products and services is a privilege that U.S. citizens are lucky to have because not all countries provide this level of care and assistance.
However, if you’re not careful and do not read the guidelines that govern this system of healthcare, you could also find yourself stressing over surcharges, penalties and other otherwise avoidable fees. This is why the government is extra vigilant in offering information via print resources and online about the rules that surround enrollment and availing of Medicare and related services. It is also our duty as citizens to keep ourselves informed of the rules and yearly updates and changes to make sure that we or those close to us get the most out of Medicare.
Why Medicare Is Important and Necessary
Simply put, Medicare is a guarantee that members will be able to afford health insurance. Before it was introduced, more than 50% of Americans had zero access to health services and had no choice but live with distress (and imminent death) when all illness struck. In the past, retirees either had to clean out their bank accounts, seek welfare, ask for financial help from children or relatives, or just make do without any care at all. Now, those who are enrolled even in basic Medicare coverage know that they can access a much wider range of products and services, not just for illnesses but also for general wellness.
Medicare is not free, except for Part A coverage. Part B ($135.50/month for 2019), Medicare Advantage (custom priced), Part D prescription drug coverage (minimum $33.19/month for 2019), and Medicare Supplements (Medigap, custom priced) all come with a monthly premium. However, these fees are significantly lower than what seniors would have had to pay in case an emergency happens or if they just want to consult with a doctor for whatever reason. The scope of benefits far outweighs the monthly cost.
In short, Medicare paves the way for everyone to have access to sound health care services for treatment, prevention and overall wellness purposes. Additionally, because it is regulated by the federal government, members can rest assured that they get the same quality services regardless where they get it anywhere in the country, with others even extending as far as enjoying emergency care coverage while traveling to another country (Medigap).
At this point, it is important to note that Medicare is not just for the senior members of society. It also covers disabled persons who are usually unable to get approved for regular insurance from private providers. Other conditions that qualify a person for Medicare coverage are end-stage renal disease (ESRD) and amyotrophic lateral sclerosis (ALS).
Costly Medicare Mistakes That You Should Watch Out For and Avoid
1. Delaying Part-B enrollment
When people hit the age of 65 but are still enjoying HMO coverage from their employment, they usually opt to skip enrolling to Medicare Part B and just sign up for Part A. This is to avoid having to pay a monthly premium for something that they won’t technically be using yet because the previous employer-provided insurance coverage still exists. While this sounds like a smart move, it might not be practical in the long-term.
There is practical wisdom in being doubly insured. Medicare will shoulder expenses first and let the private insurer cover the remainder in certain cases, or the it goes the other way. After all, it’s not like you will be staying in employment for a longer period, so it’s best to get Medicare bit done as scheduled to avoid any penalties later.
2. Not taking advantage of your initial enrollment period
Your Initial Enrollment Period is the best window to apply for Medicare Part B. This is the time when you are first eligible for coverage, during which you are given plenty of leeway. Would-be seniors have seven months to sign up for Part B. These include the three months before your 65th birthday, your birth month, and the three months after it.
By delaying your Part B enrollment, you will be subjected to a late-enrollment penalty, which is equivalent to 10%+ for every 12 months that you were eligible but did not enrol. You will be required to pay this higher monthly premium until you opt out of Medicare entirely, which means that you will be paying for it for the rest of your lifetime. The savings at the start is attractive, but surely you don’t want to pay higher fees in the long run.
3. Failing to plan in advance
Choosing the right Medicare plan means exercising foresight—as in “where do you see your health going in the next 5 to 10 years?” Remember that health insurance is preparation for something that still does not exist, so if your current health status predisposes you to certain types of illnesses, you might want to consider expanding beyond Part B and then signing up for Part D prescription drug coverage.
If you are healthy now but suspect you might not be in five years, signing up for a Medicare Supplement plan also helps you prepare. If you are not pre-armed with an illness does happen, you will have to pay for expenses out-of-pocket—and they will expensive.
4. Not signing up when you are first eligible
Because not everybody retires at 65, it’s easy to skip the period when you are first eligible and decide to worry about it later. There is truth to this: you don’t really need Medicare if you are still working at 65. However, related to 1 and 2 above, not only will you risk having to pay penalties and higher premiums, you could also get turned down (if you apply for Medicare Advantage or Medigap plans) if you do not meet medical underwriting requirements. In the end, you either pay more or pay for healthcare services and products out of pocket.
5. Signing up for a plan without studying their cost and benefits
Just going on ahead and signing up for a Medicare or Medigap plan just so it’s over and done with is a huge and potentially costly mistake. If you’re unsure about the benefits or do not understand the resources provided to you, it’s best to consult with a qualified Medicare or Medicare Supplement advisor so all your cards are laid out and everything is transparent. You might still opt for the priceyer plans, but at least you know what’s coming (and are prepared) when the bill arrives.
6. You have a Medicare Advantage plan but you went out of your network
If you opt for a Medicare Advantage plan, which is provided through a private insurance agency, you will need to limit your consultations and access services with the provider’s given network of doctors, clinics and hospitals. If you are in an area where there the network is thin, you might be forced to go outside the network for convenience—and that will mean out of pocket expenses and higher charges. That said, if Medicare Advantage is your preferred route, be sure that the private insurer you sign up with has a wide network that you take advantage of from anywhere.
7. Assuming that you are covered because your spouse is
If you had enjoyed healthcare coverage from your spouse who was previously employed, it is not the same with Medicare. Spouses will have to enroll as separate entities and pay their own premiums. Assuming that you are covered because your husband or wife already has Medicare means out of pocket expenses should a medical emergency happen or even if you just want to have a wellness exam from a local clinic.
8. Failing to enroll within eight months after leaving regular employment
This is a careless but very common mistake among those who did not sign up for Medicare at 65 because they are still employed. Note that you need to enroll within eight months after you resign from your job to avoid any headaches. Otherwise, you are left with no choice but to wait until the next enrollment window (January to March, with actual coverage not starting until July 1 of the same year). This means you are not covered at all during the gap—and this could translate to out of pocket expenses should a medical emergency arise.
9. Not monitoring your Part D plan yearly
Signing up for a Part D prescription drug coverage and then keeping it on autopilot year after year can spell additional costs on your part. First, Part D plans get updated and see changes annually, so the costs will vary. Some plans will have more expensive premiums as the years go by. Also, if you initially signed up for Part D for branded medications but then decided to go for generic products later, then you might want to switch to another type of plan.
10. Buying the same Part D plan as your spouse
Medicare Part D prescription drug coverage plans charge couples separately and will not give discounts for dual purchases. That said, it doesn’t make sense to have the same coverage as your significant other, especially as you don’t really need the same medicines. Otherwise, you end up paying for something you don’t get to use and don’t really require. Part D coverage should be according to your specific needs. Who knows, yours might be significantly cheaper than your spouse’s.
11. Not choosing the right and most appropriate Medicare Supplement plan
Purchasing a Medigap plan within six months after enrolling in Medicare Part B enables you to get any plan that’s available in your area without being subjected to any medical underwriting procedure. You are guaranteed the plan of your choice. However, if you find later on that the plan you selected is not for you and decide to switch, it could be costly. Insurance providers might charge you a higher premium, or reject your application altogether.
Some insurers allow you to switch plans without undergoing a new medical exam, while some states let you change regardless of your current health status—but this can’t be assumed for all states and companies. This is why it is very important to carefully study the benefits, coverage, and cost of the Medigap plan you choose from the beginning to avoid these expensive changes.
12. Assuming that Medicare covers all healthcare products and services
Note that Medicare does not coverage vision, hearing and dental needs, unless they are medically necessary for another procedure that it covers. That said, if you have such specific needs, you will want to sign up for a separate plan from private insurers to minimize your expenses as much as possible. Otherwise, you will be forced to pay for regular fees, most of which are not retiree-friendly.
13. Not signing up for Part B coverage if you have COBRA or retiree coverage
Medicare is 65 and up’s primary source of healthcare coverage, unless you haven’t retired yet and are still enjoying insurance provided by your current employer. However, there are other types of work-related insurance that will not provide the same level of coverage: severance packages, retiree and COBRA coverages are examples. If you have these and do not sign up for Medicare Part B when you turn 65, it can mean huge haps in your healthcare access PLUS late enrollment penalties that run for your entire lifetime.
14. You forgot to stop contributions to your Health Savings Account (HSA)
If you sign up for Medicare, you can no longer contribute to an HSA. Be careful about your contributions in the period you resigned from your current job and enrolled in Medicare, as your HSA payments should be prorated according to the number of months prior to Medicare coverage.
15. Not monitoring or spreading out your gross income, making you subject to higher surcharges
Getting old doesn’t stop you from still making investments and boosting your gross income, but if you forget to spread out your totals, you could end up paying more in surcharges for Medicare. For example, if your gross income changes midway, your Part D plan could switch from a monthly premium of $13 to a whopping $74.80 just like that. Financial experts recommend spreading Roth conversions over a few years or withdrawing your cash from these accounts, instead of from the tax-deferred ones.
Still Have Questions?
Still unsure about your Medicare and Medicare Supplement choices? You may get in touch with our qualified insurance advisors to determine the best and most cost-effective options that are applicable to your health status, lifestyle and budget. If you already are enrolled in a Medicare Supplement plan and would like further guidance on how to make things more affordable, we can also help. Contact us at (800) 354-1078.
