Do you know the 11 most common Medicare mistakes to avoid?
Medicare rules can be complicated and missing a deadline can be costly. It is important that you understand the options and what mistakes not to make.
Medicare has four parts. Part A, referred to as original Medicare, focuses on hospital coverage. Part B is medical coverage. Part C (also called Medicare Advantage) is a different way of putting Parts A and B into one plan, offered by private companies. Part D is prescription drug coverage.
So, what are the 11 most common Medicare mistakes to avoid?
1. Not reviewing your Part D Plan annually
Medicare Part D is a headache for many to keep on top of. But remember these key points:
• Open enrollment runs from Oct. 15 through Dec. 7 every year.
• During open enrollment it’s essential to review options because there might be changes to your current plan, meaning your cost, coverage, formularies, or Network Pharmacies may change.
• Make sure you check if any drugs you’re on have gone generic, as you might get a nice price reduction.
• Medicare also helps you to compare plans. Check out the various links on Medicare. gov for more information, guidance and price comparison tools.
• Need help? Call your local SHIP Counselor or an insurance broker who specializes in Part D Prescription Plans.
2. Picking the same Part D plan as your spouse
Not all Part D plans are alike, and just because a plan works for you it might not be the same for your spouse, who may be taking different prescriptions. Use the Medicare Plan Finder, SHIP Counselor, or Insurance Broker to determine your out-of-pocket costs on each plan. Also keep in mind that some plans require the use of specific pharmacies.
3. Going out of network on private Medicare Advantage plans
If using private Medicare Advantage plans, similar to PPOs or HMOs, you’ll need to use the network of doctors and hospitals within the plan to get the lowest copayments. Be aware that if you go out of network, there may be no coverage at all.
4. Not knowing how to switch Medicare Advantage plans anytime if needed
Even outside the annual open enrollment period, it’s possible to switch plans for life-changing events. One example of a life-changing event is you move out of the plan’s current service area. There are other times you may switch plans. A couple of examples are you may switch to a five-star plan, from Dec. 8 through Nov. 30 of each year. Also, from Jan. 1 through Feb. 14 (Annual Disenrollment Period), you can switch from a Medicare Advantage Plan to traditional Medicare plus a Part D prescription-drug plan.
5. Not considering Medigap within 6 months
Once enrolled in Medicare Part B, you have six months to buy any Medicare supplement plan in your area even if you have pre-existing conditions (and at age 65, who doesn’t?). But after six months, insurers can reject you or charge more depending on your health. It depends on your insurer’s policies.
6. Not opting for Medicare when you turn 65 (most of the time)
Forever young, so who needs Medicare? Well, you’re smart to take advantage of what the government is giving you, often for free. If you are getting Social Security already when you turn 65, you will automatically be enrolled in Medicare Part A and Part B. But if you aren’t receiving Social Security benefits, you will have to act on your own to sign up. You will have a seven-month period to sign up for Medicare, which runs from three months before the month you turn 65, the month you turn 65 and three months after. There are reasons to delay: for example, you or your spouse have a full-time job and already get health care coverage as a part of your employment benefits.
7. Not signing up for Part B if you have retiree or COBRA coverage
Again, there are many tricky steps in the Medicare signup game. Unless you or your spouse are receiving insurance through a current employer (who has 20 or more employees), Medicare is considered your main health insurance coverage. Retiree coverage, COBRA or severance benefits are NOT primary, and if you don’t sign up for Medicare, you might have gaps in coverage. You may also be subject to a Part B Enrollment Penalty and have to pay more for your Part B Premium. So pay attention.
8. Missing the Part B enrollment deadline after leaving your job
If you still have insurance through a job when you turn 65, that’s fine. Normally, you do not need to sign up for Part B but check with your Human Resources Department to see how your plan works with Medicare. However, within eight months of leaving your job, you need to sign up for Part B or you might have to wait for the next enrollment period, meaning a gap in coverage. Then there is also the possibility of a 10 percent lifetime late-enrollment penalty.
9. Ignoring income thresholds
The Standard Part B Premium amount is $121.80 (or higher depending on your income). However, most people who get Social Security benefits will continue to pay the same Part B Premium amount as they paid in 2015. The National Average Part D Premium is $34.10. These amounts go higher depending on your adjusted gross income. So if you are bringing in more than $85,000, you should check the Income Related
Medicare Adjustment Amount for Part B and the Income Related Monthly Adjustment Amount (IRMAA) for Part D. Be mindful when you are withdrawing from tax-deferred accounts that you don’t go over the income threshold if possible.
10. Not fighting surcharge changes for the year you retire
The Social Security Administration uses your tax returns from the most recent two years to determine if you are subject to an income surcharge (see above), that is, you are making more than $85,000 a year. But you can protest it if you prove life-changing events, such as divorce, death of a spouse or retirement.
11. Not minding your HSA contributions
You can’t contribute to HSAs if you are getting Medicare, but if you or your spouse have health insurance through a job (with 20 or more employees) and haven’t applied for Medicare or Social Security benefits, you still can continue to add to your HSA. That said, be careful about contributions in the year you leave your job and sign up for Medicare, as your HSA must be prorated by number of months on Medicare.
Mike Zimmer is President of Bay State Insurance Agency Ltd in Centreville. Zimmer is available to answer your questions or speak to your groups regarding Medicare, Medicare Advantage, Medicare Supplements and Medicare Part D (Prescription Plans). He may be reached at 410-758-1680.