Knowing all the details of enrolling for Medicare the first time can be daunting. Here are some mistakes that first-timers make.
Medicare Mistake #1: Assuming that you do not qualify if you have not worked long enough
Earning 40 credits by paying payroll taxes at work — about 10 years’ work — ensures that you won’t have to pay premiums for Part A services (mainly hospital insurance) when you join Medicare. But you don’t need any work credits to qualify for the following if you’re a U.S. citizen or a legal resident who’s lived in the United States for at least five years:
- Part B (doctors’ services, outpatient care, medical equipment), and
- Part D (prescription drugs), provided that you’re 65 or older.
You may also qualify for Part A benefits on your spouse’s work record, or you can pay premiums for them. If you wait to sign up until you’ve earned 40 credits, you may end up paying permanent late penalties.
Medicare Mistake #2: Not enrolling into Part B at the right time
Signing up for Medicare part B at the right time is very important. If you don’t, you risk penalties added to your premiums for all future years, and delays of several months before your Medicare part B coverage kicks in.
If you or your spouse is still working and have insurance through the employer, you can usually delay Part B enrollment without penalty until the job ends. But- if the employer has fewer than 20 employees you need to sign up for part B at age 65.
You can sign up during your seven-month initial enrollment period — which includes the month you turn 65, three months before and three months after.
Medicare Mistake #3: Thinking that you do not need Medicare part B if you have retiree or COBRA health insurance from a previous employer
Having coverage through a retiree plan or COBRA does not help you avoid the Medicare part B LEP (Late enrollment penalty). You can keep your coverage through your past employer but you need to enroll into part B as well.
In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty. You’ll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each year you didn’t sign up!
Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.
Medicare Mistake #4: Thinking you must reach full retirement age before signing up
Full retirement age for most people is now 66, which will gradually increase to 67 for those who were born after 1959. But if you want to avoid late penalties, you need to sign up for Medicare at age 65, unless you have health coverage from a current employer. You don’t need to wait until you retire and are collecting Social Security benefits to enroll in Medicare.
Medicare Mistake #5: Not signing up for Part D because you don’t take any prescription drugs
Many of my clients have made the statement, “Why should I sign up for Medicare part D, I don’t take any medications?” Or, “The medications that I take are cheap.”
The reason is that you do not have a crystal ball and you can’t be sure that you will not need expensive medications at some point and time (some cancer medications are thousands of dollars a month). Part D, like all insurance, provides coverage when you need it, but doesn’t allow you to wait to sign up until the need becomes urgent.
And when you do finally enroll, you risk increased part D premiums in most cases (ask me about the exceptions). One solution: Pick the plan with the lowest premium, so you get coverage at the least cost.
The real life trouble is that you can’t go enroll into a plan the day that you get cancer or some other illness. I knew of a woman (not my client) who was diagnosed with cancer and had refused part D coverage because she was healthy. She had to pay out-of-pocket for her medications from May until January of the next year. (You can enroll into a plan between October 15-December 7 each year to start the following January.)
Medicare Mistake #6: Assuming that you can switch from a Medicare Advantage plan to a Medicare-Supplement plan when you become unhealthy
Many retirees make the comment that they will take the “Free” plan now and switch to a Medicare-Supplement plan later. Generally, the logic is that “I am healthy so why should I pay for insurance.” There are limitations as to when and how you can switch between the two platforms. It is not guaranteed that you can get a Medicare-Supplement if you have been on a Medicare-Advantage plan for more than a year. Be sure you understand the rules about switching between the types of plans.
Medicare Mistake #7: Choosing a Medicare-Advantage plan for the wrong reasons
Many people will choose a Medicare-Advantage plan for all the wrong reasons. Do not choose a MA plan because it has a $0 premium or a free gym membership. Make sure that you understand all of the costs associated with the plan as well as the network limitations.
Medicare Mistake #8: Skipping the fall open-enrollment period
Whether you have a Medicare-Advantage plan or a Medicare-Supplement + a part D plan, this step is imperative! Open enrollment for Medicare Part D and Medicare Advantage plans runs from October 15 to December 7 every year, and if you’re not reviewing your options for next year, you risk more out-of-pocket costs.
The cost and coverage can vary a lot from year to year—some plans boost premiums more than others, increase your share of the cost of your drugs, add new hurdles before covering your medications, or require you to go to certain pharmacies to get the best rates. And if you’ve been prescribed new medications or your drugs have gone generic over the past year, a different plan may now be a lower cost for you.
Medicare Mistake #9: Not comparison shopping Medicare-Supplemental companies rates
Many people choose a Medicare Supplement as their secondary insurance to Medicare. It is very important that you compare many different companies’ prices to know that you are getting a fair deal. Currently there are over 40 companies offering these plans and the prices vary greatly.
It can be overwhelming to sift through all the features, do all the calculations, and be sure that you’re making the best decision on a product that
- you just started learning about, and
- could end up costing thousands of dollars.
That’s why I am in the profession I am. I’m the expert and can walk you through all of the plans. Clients like that when they come into my office, they can rely on me to do all the math and help them understand which plan is right for their situation. My clients walk out of my office with peace of mind over their health and future financial outlook.
Medicare Mistake #10: Ignoring free help
Don’t skip out on asking for help if you need it. Government agencies like the Social Security office can help you choose a plan, but I don’t know anyone who wants to spend more time on the phone with them than they have to.
As a Medicare Insurance Broker, my job is to be the expert, providing unbiased help to seniors picking a Medicare plan. There is absolutely no cost to you. You can simply bring your prescription list and doctors’ names, and I will help you find the plan that meets your needs.
I love seeing my clients have an amazing sense of relief at actually understanding their plans and being confident that they made the right decision.
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