When it comes to Medicare, people often have a lot of questions and wonder where to even begin. You have likely paid Medicare taxes your entire working life without realizing what it goes towards. As you get closer to using the benefits that Medicare provides, you will want to make sure you’re aware of a few key items to avoid big-time hassles and utilize your benefits correctly. The following points are not the only things to be dialed into, but they are common mistakes and misconceptions that the agents at Benefits 4 Seniors have seen over the years.
- Expecting Medicare to cover all your medical bills: Original Medicare, which consists of Part A and Part B, was created in 1965 and never intended to pay 100% of your medical bills. There are deductibles you will need to meet for hospital stays and doctor bills along with coinsurance shares after that. Paying your portion of an office visit might be affordable since Medicare picks up 80% of the cost, but having to come out of pocket 20% for surgeries and major medical bills could potentially wipe out a lifetime of savings. Medicare created Part C – Medicare Advantage plans – in 1997 to offer an alternative to Original Medicare. These plans help with cost-sharing, and each individual plan offers different benefits. In general, they have deductibles and coinsurance with an out-of-pocket maximum of up to $7500 in 2021.
- Signing up for Medicare while still working: The size of your employer can have a big impact on whether you should enroll in Medicare while still working and what parts you should utilize. If your company has less than 20 employees, Medicare is the primary payer and will provide coverage before group benefits kick in. If there are more than 20 employees, you may be able to delay Part A and/or Part B. It would definitely benefit you to speak to the benefits manager at your company to make sure you’re making the right choice. A wrong decision could wipe out a lifetime of savings.
- Not understanding enrollment periods: You might think the Annual Election Period (AEP) between October 15 and December 7 is the only time to change your plan. AEP is the time to change from Original Medicare to an Advantage Plan, switch between Advantage Plans, or make changes to drug plans (Part D). A Medicare Supplement plan can be reviewed and changed at any time during the year. Health questions will be asked, and you are not guaranteed coverage, but you’re not limited to a certain time to do this. The Initial Enrollment Period (IEP) is when you are first eligible for Medicare and can choose any plan available. This period lasts for seven months and should not be taken lightly – you may never get the chance to choose any plan from any company ever again, so choose wisely!
- Not signing up for Part D: When you first sign up for Medicare, and you don’t have credible drug coverage, it is important to sign up for a Part D drug plan. You may not even take any prescriptions at the time, but failure to sign up for a plan will cost you if you sign up for a plan in the future. You will be assessed a penalty of 1% of the national average premium ($33.06 in 2021) each month for the time you went without coverage. In three years, that amounts to a 36% penalty or $11.90 per month penalty for life. You can sign up for a drug plan during AEP each year for an effective date of January 1. Just as bad as not signing up, failure to research the best plan that fits your particular needs might put you in the wrong plan.
- Failure to review your coverage yearly: Medicare Supplements (Medigap) plans have increased in premiums every year. The plans are standardized, meaning a Plan G pays the same for every company. The only difference is the premium the company charges. Some companies want business from people turning 65, so their premiums are lower for that group. Some might have more stringent underwriting standards, so they may have lower premiums and rate increases. Advantage Plans and Part D prescription drug plans are all different, and they can change benefits and providers every year. The perfect plan for you this year may change in years to come. This is why you should review the coverage at least once per year, or have a partner like Benefits 4 Seniors to monitor the market and keep you apprised of anything you need to know.
These five mistakes are not exhaustive of what you should be aware of. Every person’s situation is different, and it’s important to have a professional review and advise you on your best path forward. Reach out to a professional at Benefits 4 Seniors to ask your specific questions and save yourself the hassle of making these slip-ups!
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