The 5 Biggest Medicare Mistakes and How to Avoid Them
No one wants to make a mistake that will cost them hundreds (or thousands) of dollars down the road if they can help it! However, Medicare can be very confusing, and even very knowledgeable people can miss things. Here are the five biggest Medicare mistakes people make, and how you can avoid them!
#1 in Our Biggest Medicare Mistakes: Missing Enrollment Deadlines
Although the government gives us all a little wiggle room around each Medicare Milestone we pass, there are certain deadlines you must mind to avoid late penalties and inconveniences.
Original Medicare Coverage Deadlines
You will need to sign-up for Medicare when you turn 65 if you are not already getting Social Security. You will be automatically signed-up for Medicare if you are getting Social Security. In addition, you will need to tell the government if you are delaying Medicare because of other credible coverage (such as an employers coverage).
You will have three months before your birthday to sign-up, the month of you birthday, and then three months after to sign-up. However, what some people do not understand, is that if you enroll after you turn 65, your coverage will not start until the first of the month after you enroll. This could lead to a gap in your health care coverage.
A NOTE ON CREDIBLE COVERAGE: Some people will delay Medicare coverage if they have a good health plan from their employer. This is usually okay, but there is an exception for small business employers to be aware of: If your employer has less than 20 employees, you will need to enroll in Medicare right away when you turn 65.
This is because when you work for a small business, their insurance will become secondary insurance and Medicare will be your primary payer. If this is the case, you will need to enroll right away in Medicare to avoid a penalty. (Also note that Cobra is not credible coverage.)
Medigap Guaranteed Enrollment Deadlines
The last Medicare Enrollment Mistake people make is missing their Guaranteed Enrollment period for a Medigap Plan. You will have six months, from the beginning of the month you first turn 65, to enroll in a Medigap plan with a guarantee to be issued a policy. If you apply after this window, you will have to go through medical underwriting. This means that companies have the right to deny issuing you a policy based on your medical history after your open enrollment is over.
It is important to remember that Medicare Advantage Plans have a different enrollment process than Medigap. The Medicare Advantage Annual Election Period is not for Medigap Plans. Which lead us right into Mistake #2…
Medicare Mistake #2: Not Understanding Medigap Plans vs. Medicare Advantage Plans
There are two main ways you can set up your Medicare Health Care Plan: Medicare Advantage (Part C) and Original Medicare with a Medigap Plan. You either have one or the other, not both. Both can be good ways to set up your health care, but not understanding how they work can lead to making on of our biggest Medicare mistakes.
We have a whole article on Medicare Advantage vs. Medigap Plans here. I suggest reading it if you are unfamiliar with the two plan types. Considerations with these plans include how you get your Prescription Drugs and how you want to budget your money. Cash flow can be different plan to plan with premium payments and out of pocket expenses to consider when making a decision. Your lifestyle needs and travel patterns also need to be considered when making a choice between MA and Medigap.
Mistake #3: Assuming Your Doctors and Drugs are Covered
We all know what assuming can lead to… mistakes! It is very important to make sure that your doctors are covered with the Medicare option you choose. The carrier will be able to help you confirm that you will be able to continue with your current doctor if you so desire. If you are working with an Insurance Agent, they will have the ability to do this for you as well.
Checking your drug options with a plan is also an important part of finding coverage. The government does make sure that at least two kinds of drugs are available per category of treatment. Moreover, carriers will have a process for you to make an exception for a drug not on its list (called a formulary). However, it makes for a smoother transition to check ahead of time to see what is covered for your specific needs.
Biggest Medicare Mistake #4: Assuming Medicare Covers Long-Term Care
It is a common mistake to assume that your Medicare coverage includes long term care – it does not. Skilled nursing facilities for recovery from a certain event are covered (and come with different co-insurances based on different plans). However, long term stays in assisted living and nursing homes are not covered. You will need to have a plan in place to cover these needs. Your planning may include:
- Long term care insurance
- IUL policies with long term care (or critical illness) riders, or
- Self-insurance (paying cash).
Another option, for those that do not have a lot of resources saved up for retirement, is to “spend down” your assets to qualify for Medicaid to help you in paying for your care. However, I would not suggest this option for those that have the means to plan ahead for the level of care they desire or those that want to pass money on when they pass.
Biggest Medicare Mistake #5: Enrolling Directly with a Carrier
Ok, follow me on this one. When you first turn 65, you are bombarded with advertisements for different Medicare plans. Sometimes, it feels easiest to just pick up the nearest postcard and give that insurance company a call. Or maybe you have done your research on your own (which is just fine!) and decide to enroll directly with the carrier you want to go with. Here is where you should stop and consider this as a mistake.
Here is the problem: when you enroll with an insurance company for one of their plans directly, you have to deal with them alone. On the other hand, when you enroll with that same company through an independent insurance agent, you now have an advocate and support system to help you work with that carrier.
Here is how an independent agent helps:
- First, if something goes wrong, you can call your agent for help! You are not on your own, and this is a big deal. As we all know, everyone can make mistakes – you, your doctor’s office, your insurance company. When these mistakes happen, you can call your agent for support and they can work with you and the insurance company to make sure you are taken care of.
- Second, rates and plans change! A good independent agent will keep on top of industry changes and plan changes for you. They can stay on top of your premium rates and what might be new or changing in your area to make sure you always have the best coverage. You will not get this level of service when you work directly with a carrier.
- Finally, you do not pay anything extra for working with an independent agent. They are still paid as an independent agent from Whichever company you are placed with at no charge to you.
Medicare Mistakes Summary
In addition to this article, another great resource is the Medicare and You book put out by the government. Since this is a large (120 page) document, we have created a Medicare and You User’s Guide for you to read and reference here.
In summary, you can avoid the biggest Medicare mistakes with a little research and a little help.
Reach out to a professional to answer any of your market specific questions and find out more about Medicare, Medicare Advantage, Medicare Supplements, and their differences here on MedicareLifeHealth.com.