Medicare is still new to many people entering the program. It’s not a minefield exactly, but some pitfalls and traps can be costly unless you take care and avoid them.
Indeed, Medicare pays for most of your health care expenses when you become eligible. But Medicare rules can be confusing, and mistakes are costly. If you do not make the right choices to fill the gap, you can get high premiums and incur huge costs. Even worse, if you miss a critical deadline when signing up for Medicare, you could miss out on valuable tax breaks, have a coverage gap, or get stuck with a penalty for the rest of your coverage.
Here are some possible mistakes to avoid when choosing your plan, so you end up with the coverage you need without any heavy pricing.
1. Not Signing Up for Medicare at the Right Time
Timing matters! It is especially true when it comes to enrolling in Medicare. As soon as you turn 65, you become eligible to enroll in Medicare. But, first, you must register during the Initial Enrollment Period (IEP). It is a seven-month period lasting from three months before to three months after you turn 65.
Suppose you don’t enroll during your IEP (Initial Enrollment Period). In that case, you will be offered one more opportunity to enroll, i.e., during Medicare’s General Enrollment Period — from January 1 to March 31 each year. However, if you register during GEP, your coverage won’t start until July. And, because you signed up late, your monthly premiums for Medicare Part B — which includes your doctor’s visits and other outpatient services — are likely to cost you more.
2. Enrolling in Social Security too Early
When retirees enroll in Medicare, they do not need to claim their Social Security benefits to become eligible. Although they can start receiving Social Security benefits at age 62, they permanently lose a percentage of their benefits. The full retirement age is currently 66 and 10 months. For individuals born during or after 1960, the full retirement age is 67.
Even if you enroll in Medicare during your Initial Enrollment Period, it may be beneficial to wait until you reach full retirement age to claim Social Security. If you’re in a position to hold it even longer — for example, until age 70 — you can earn even more benefits.
For every month you delay between full retirement age and age 70, your Social Security benefits will increase by two-thirds percent. However, when you turn 70, the deferred retirement credit stops building up.
However, there is no benefit to wait beyond age 70. Consider your situation and decide whether delaying Social Security is right for you!
3. Delaying Enrollment When Your Work Insurance is Secondary
Even when you have insurance on the job, some employers, depending on their size, may designate Medicare as your primary health coverage when you turn 65. And if you already have another coverage like COBRA, it becomes your secondary coverage.
If your job insurance or other private insurance is considered secondary coverage, it will only pay for a medical claim after Medicare has paid its share.
Therefore, it’s essential to sign up for Medicare if your job-related insurance becomes secondary coverage. If your insurance on the job is primary, Medicare will become your secondary coverage.
The way to determine whether your job insurance is considered primary or secondary is to ask your benefits manager or HR department.
4. Considering Open Enrollment as Medicare Enrollment Period
This open enrollment period is also known as the Annual Election Period (AEP) — runs October 15 through December 7 each year. It is the time when someone already registered with Medicare can choose or change their prescription drug coverage (Part D) or how they get their Medicare benefits through a Medicare Advantage Plan like an HMO.
Many individuals can mistake distinguishing between IEP and AEP. Thus, it is necessary to keep the respective periods in mind.
Someone already enrolled in Medicare can change a Medicare Advantage plan a second time during the Medicare Advantage Open Enrollment (MAOEP) period from January 1 to March 31 each year.
5. Not Fully Comparing Original Medicare and Medicare Advantage Plans
If you qualify for Medicare, you have the option to receive your coverage through Original Medicare or a Medicare Advantage plan. The type of Medicare coverage you select depends on factors, such as your health care needs, the insurance your doctors accept, where you live, whether you travel often, and your financial situation.
Original Medicare is a traditional program offered directly through the federal government. It includes Part A, which covers hospital costs, and Part B, which covers doctor visits and other outpatient services. Most of the doctors in the country accept Original Medicare.
To pay for your out-of-pocket costs, you can buy a Medigap policy that has its separate monthly premium. Original Medicare doesn’t cover Part D (prescription drug coverage), so you’ll need to sign up for a standalone Part D plan if you don’t have any other drug plan. There is no limit to your annual spending in Original Medicare.
Medicare Advantage is a private insurance alternative to Original Medicare. These plans offer Part A, Part B, and usually Part D benefits.
They may also provide some benefits not covered by Original Medicare, such as dental care or vision care. In addition, some MA plans may also provide non-traditional services, such as paying for wheelchair ramps, meals at beneficiaries’ homes, and transportation to medical appointments.
The cost and terms of these plans may be different from Original Medicare. For example, you may need to get a referral from a primary care physician before considering a specialist’s care in your MA plan. In addition, Medicare Advantage plans have an annual out-of-pocket limit, and you can’t buy a Medigap policy when you’re enrolled in Medicare Advantage.
6. Ignoring Your Plan’s Annual Notice of Change (ANOC)
Before AEP begins, you’ll receive an Annual Change Notice (ANOC) for your Medicare Part D or Medicare Advantage plan that reflects changes to the plan, if any. The document explains the changes in the benefits or costs of your plan for the coming year. Notably, these changes can affect your healthcare and your budget.
To avoid extra cost, understand what to look for in your ANOC and the questions to help you understand several other plans to switch and what they mean to you.
If you doubt whether you can avoid any possible mistakes concerning Medicare on your own, you can reach out to our experienced licensed agents. Also, they will look after your Medicare enrollment. We can also help you find a plan that matches your medical needs and budget.
Contact us today to take the initiative and leave the rest to us!