10 Costly Medicare Mistakes
For those boomers who haven’t gone down the Medicare road yet, the time is likely approaching. It is required that you enroll in Medicare once you turn 65, and you can sign up as soon as three months before your birthday as long as you are eligible to be put into the federal health insurance program. Unfortunately, it is all too common to make critical errors when going through the process of signing up for Medicare or while signed up for it, especially when deciding on the best plans for your situation. Here are ten of the most costly mistakes you can make with Medicare.
1. Judging a Medicare Advantage Plan Based Solely On the Price of Its Premiums
Low or zero-premium plans may look like the most attractive way to go, as you will receive the health care benefit and pay nothing or very little up front. However, you must keep in mind that zero-premium does not mean that there won’t be any expenses involved. When you compare Medicare Advantage plans, you must look at all of the details involved in order to know all of the out-of-pocket costs. This includes coinsurance, co-payments and deductibles for services rendered.
2. Not Looking at the Quality Rating of the Medicare Advantage Plan You Choose
Heading to the Federal Centers for Medicare and Medicare Services will allow you to see the rating of each plan on a scale of one to five stars based on a plethora of data that is collected by them. The stars are an indication of how the Medicare Advantage plan is ranked based on things like members’ complaints and experiences, as well as the strength of its customer service. When you pick among the varying Medicare Advantage plans, it’s important that you find the ones that have the highest star rating to get the best service.
3. Not Enrolling in a Medicare Plan Because You Already Have a Health Insurance Plan
There are too many Americans out there who think that they can just skip signing up for a Medicare plan because they already have a private insurance plan, however this is a huge mistake.The only insurance plan that allows you to delay enrolling in Medicare is a group health plan that is sponsored through your employer and has more than 20 employees involved. Other types of coverage like COBRA cannot be substituted for Medicare. If you need to enroll in Medicare, but don’t do so on time then you will face steep late penalty fees.
4. Keeping a Part D Plan in Autopilot
Enrolling in Medicare Part D and Advantage plans will run from October 15th to December 7th each year, which is a good time to look at all the options available to you. Keep in mind that your coverage and cost can vary throughout the year, and some plans will increase their premium more than others will. This means that you should compare the plans each year in order to see if there is a better deal out there for you.
5. Buying the Same Part D Medicare Plan as Your Spouse
You will not receive a discount for choosing the same Medicare Part D plan for prescription-drugs as your spouse, and most spouses don’t need the same type of medications. Know that one plan may provide you with better coverage for prescription drugs, while another may be better suited to your spouse’s needs. It’s important that you look at the coverage that will be provided to you for your specific prescriptions that you need. Keep in mind that some plans require that you go to a specific pharmacy and so you must be prepared to go to a different one than your spouse to pick up your medications.
6. Leaving Your Network for a Medicare Advantage Plan
If you decide to receive coverage from a private Medicare Advantage plan that will cover both prescription drugs and medical expenses then you typically have to use the plan’s network of hospitals and doctors in order to receive the lowest co-payment. Some plans won’t even cover a provider that isn’t within its network. It’s critical that you ensure that your hospitals, doctors and other providers have coverage within your plan.
7. Not Switching Your Medicare Advantage Plan Half-Way Through the Year if Needed
Although open enrollment is between October and December, you can still change your plan anytime during the year if you need to. For instance, if a major life change occurs then you can switch your plan outside of the open enrollment period. You may also switch from a Medicare Advantage plan to a Medicare Part D plan anytime between January 1st and February 15th if you decide this is more optimal for your situation.
8. Not Choosing a Medigap Plan That’s Right For You
If you purchase a Medicare supplement plan before six months after enrolling in a Medicare Part B then you can choose any plan within your area even if you already have a medical condition. However, if you attempt to change plans after that time, insurers will reject you or charge you more in most states. Due to this, it’s critical that you choose your plan wisely, and do your research in order to ensure that you choose the right plan. You can find plenty of information on Medigap policies within your area by heading to medicare.gov.
9. Forgetting That There’s a Deadline to Enroll in Part B After Leaving Your Employment
If you are given coverage through an employer that has more than 20 employees then you don’t require Medicare once you turn 65. However, if at any time you leave your employment, it is required that you sign up for Medicare within eight months after leaving, otherwise you will have to wait until the following enrollment period. This means that you may end up going through several months without having health insurance coverage, and could end up with a 10% late penalty fee.
10. Making Financial Decisions That Increase Your Medicare Premium
If you are close to the income cutoff for a Medicare plan, for instance, close to making $85,000 as a single- filer or $170,000 as joint-filers then you must be cautious about making any financial decisions that would up your gross income. This could cause you to be subject to receiving a surcharge that could make the increase in income not worth it. For example, deciding to roll over a ROTH or traditional IRA or withdrawing from a tax-deferred retirement account could cause your gross income to go over the limit and cause substantial surcharges.
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