Medicare can be tricky, but we can help you! Here are some common mistakes to avoid!
The Medicare open enrollment period has begun, so we thought it would be a great time to discuss some of the pitfalls we see beneficiaries fall into. Far too often we hear about retirees and pre-retirees who aren’t aware of how Medicare works or how to correctly utilize it as a tool for protection. Let’s go over the five most common Medicare mistakes made by those who qualify, as well as a few ways to avoid them.
- Not Understanding What It Is
Medicare has four parts: A, B, C and D. Parts A and B are usually referred to as Original Medicare, with Part A covering visits to hospitals and skilled nursing facilities as well as hospice care and some home-based healthcare. It is also free for those who qualify, which includes those age 65 and older who have contributed Medicare taxes for 10 years or longer. There are, however, monthly premiums for Part B, the portion of Medicare that covers the cost of outpatient care, such as standard visits to a general practitioner.
Parts C and D can be a bit trickier for those first signing up for Medicare. Part C is commonly known as a Medicare Advantage or Medigap plan, and these plans generally replace Parts A and B (and often Part D) with a plan through a private insurance company which gets subsidized by the government. Part C Medicare Advantage or Medigap plans can also include extra coverage like dental, vision and hearing.
Part D is prescription drug coverage, which is not included in Original Medicare Parts A and B but can be added for an additional premium amount.
No matter which plans you choose, Medicare premiums typically come directly out of your Social Security benefit, and it is important to account for those deductions when figuring your Social Security benefit into your net income.
- Overestimating Its Capabilities
Only premiums for Part A come at no cost to the insured, which still doesn’t include 2023’s $1,600 deductible for hospital visits . Part B, which beneficiaries are automatically enrolled into, comes with a standard monthly premium which will be $164.90 per month in 2023. Increasing and enhancing your coverage with a Medicare Advantage plan can also hike your rates, and the cost of Part D can increase with a penalty for missing your initial enrollment period.
When planning your retirement, it’s important to know that those with higher incomes pay more for Medicare, and there is a two-year look back on your income per your tax returns when determining how much you will pay.
It’s also important to know that Medicare does not cover long-term care. 70% of today’s retirees will need some type of long-term care, and 20% will need it for longer than five years . When the national annual median cost of a private room in a nursing home can top $100,000, it’s easy to see where the problem lies.
- Signing Up Outside the Initial Enrollment Period
You are not automatically enrolled when you qualify for Medicare at age 65, you must enroll yourself. There is a seven-month enrollment window which starts from the three months before your 65th birthday, the month of your 65th birthday and the three months following your 65th birthday. Failure to enroll during that period could cause you to incur surcharges such as a penalty for signing up for Part D prescription drug coverage too late .
- Picking the Wrong Plan
In the same way that your healthcare plan during your career probably had limited coverage, Medicare Advantage plans and Medicare Part D plans cover different providers and prescription drugs .
That’s why when you’re considering Medicare options, it’s important to have a list of your doctors and medications in hand. Consider working with a Medicare specialist who can help you choose between multiple carriers rather than going it alone.
- Neglecting to Revisit the Plan During the Open Enrollment Period
Medicare open enrollment runs annually from Oct. 15 through Dec. 7, so now is the perfect time to review your options. The open enrollment period gives Medicare beneficiaries a plethora of options in changing their coverage to tailor it to their unique circumstances.
For example, you can opt to change your Original Medicare plan to a Medicare Advantage plan, or vice versa. Furthermore, you can change your Medicare Advantage plan to a different one that offers more complete coverage for your care. Finally, it gives you the ability to customize your Part D coverage, whether you’re adding it to your current plan, removing it from your plan or changing it to accommodate your needs .
This article is for informational purposes only and not to be construed as financial or investing advice, nor is it a replacement for real-life advice based on your unique situation.