Medicare mistakes can be costly. One wrong move could mean sacrificing benefits or paying more than necessary for coverage. Unfortunately, mistakes are all too common because the Medicare program is so involved. That’s why we’ve made a list of the eight most common Medicare mistakes you need to avoid.
Mistake #1: Ignore Enrollment Periods
If your 65th birthday is within the next six months, it’s time to mark your calendars! Missing your Initial Enrollment Period – the one that begins three months before your 65th birthday – will cause trouble. You’ll have to wait to enroll until the next enrollment period, which could be months away. In addition, you’ll probably be paying some penalties for late enrollment.
That’s not the only important date that needs to go onto your calendar. The Annual Enrollment Period happens every year from October 15 to December 7. This is an important time to review your current Part D and/or Part C (Medicare Advantage) plans. These two plans change every year, so use the Annual Enrollment Period to make changes for the upcoming year.
You’ll also want to know about any enrollment periods specific to your state. For instance, some states allow you to change plans for a short period around your birthday. Learn the important Medicare enrollment periods and add them to your calendar!
Mistake #2: Delay Enrollment without Creditable Coverage
Medicare is not mandatory. You do not have to enroll as soon as you turn 65, but if you don’t, make sure you have other creditable coverage in place. Without it, you’ll face penalties when you do decide to enroll in Medicare.
You can be penalized for delayed enrollment in Medicare Parts A, B, and D. The Part A penalty isn’t common since most Medicare beneficiaries enjoy premium-free Part A. The Part B penalty is a little more common, but the Part D penalty occurs quite often. (If I don’t take prescriptions, why should I get a Part D prescription drug plan? Hint: Because if you don’t, you’ll pay more for coverage later!)
You can delay enrollment into Medicare without penalty if you have other creditable coverage. This “creditable” coverage typically comes in the form of an employer-sponsored plan. Any employer who has more than 20 employees has creditable coverage. If your employer is smaller (or even if it’s not), you should check with your HR director or benefits manager to ensure your plan is creditable. Also, it’s important to know that Parts B and D have different standards for creditable coverage.
Mistake #3: Consider Only One Coverage Option
The majority of Medicare beneficiaries seek coverage in addition to Medicare Parts A and B since the two parts do not pay for 100% of your medical expenses. Your two options for additional coverage are a Medicare supplement (Medigap) or a Medicare Advantage plan.
No matter what you’ve heard on TV, the radio, on Facebook, or from your neighbor, you need to consider both options before making a decision. While they can both be great options, each has limitations, and what works well for one person may not work well for another. You must consider your unique needs when choosing the coverage option you want.
Mistake #4: Purchase a Medicare Advantage Plan for the Extra Benefits
Medicare Advantage plans are known for having extra benefits that you won’t find in Original Medicare (Parts A and B) or a Medicare supplement. While these benefits can be helpful, you should not assume every plan has them, nor should you choose a Medicare Advantage plan simply for the added benefits. In addition, there are other costs associated with Medicare Advantage plans that you would not have with a Medicare supplement.
Again, this is why it’s important to compare both types of supplemental coverage.
Mistake #5: Don’t Shop for Coverage
Whether you’ve chosen a Medicare supplement, Medicare Advantage plan, and/or a Part D prescription drug plan, shop around for coverage instead of choosing one insurance company just because you’ve heard their name.
For example, Medicare supplements have the same coverage no matter which insurance company you buy one from. The only thing the insurance company has control over is the premium. Since the benefits are always the same, why pay more with one company over another?
Medicare Advantage and Part D plans can vary greatly, but it’s still important to compare coverage and premiums across multiple carriers. Pro Tip: Use an independent insurance agent to help you find a great plan! They have no allegiance to any company and will ensure you get competitive rates.
Mistake #6: Pick the Same Plan as Your Spouse
Or your best friend, for that matter! Like we mentioned earlier, everyone has unique healthcare needs, so your coverage must fit those needs. That being said, IF you and your spouse decide to enroll with the same carrier, there are often household discounts that are applied to your premium. However, the discount should not be a determining factor in choosing a plan.
Mistake #7: Never Review Your Plans
It’s important to have your plans reviewed annually. Part C and Part D plans can change every year. The plan could change its premiums, networks, and coverage. These changes could have negative (or positive) impacts on your healthcare coverage.
Medicare supplements never change in terms of the coverage they provide. However, premiums increase with age and inflation, so you should check if other carriers could offer you a lower premium. You may need to pass medical underwriting to change plans, but some states offer guaranteed issue rights at certain times of the year.
Mistake #8: Don’t Appeal your IRMAA
The standard premium for Part B is $170.10 in 2022. However, individuals or couples who earn a high income could pay IRMAA, the Income-Related Monthly Adjustment Amount. The Social Security Administration (SSA) will determine if you must pay IRMAA by looking at your tax return two years prior. If you earned more than a certain threshold, you’ll pay more for Part B.
If you are newly retired, it’s likely you aren’t making the same amount of money as you were two years ago. In this case, you can file an appeal to get your IRMAA removed. You can file an appeal for any life-altering event, which includes retirement.
On that same note, don’t make financial moves that could throw you into IRMAA in the future!