Missing deadlines, delaying enrollment, or choosing the wrong plan can cost you a bundle when it comes to Medicare. Here’s a list of common mistakes new Medicare enrollees make and how to help avoid them.
Not signing up for Medicare at the right time
Timing, as they say, is everything. It’s especially important when it comes to enrolling in Medicare. As you approach 65, you will want to enroll during your initial enrollment period (IEP). This seven-month period goes from three months before the month in which you turn 65 until three months after. If you don’t sign up during your IEP, you will get another chance to enroll during Medicare’s annual general enrollment period, from January 1 through March 31 of each year. However, if you enroll at that time, your coverage won’t begin until July. And, because you enrolled late, your monthly premiums for Medicare Part B – which covers doctor’s visits and other outpatient services – will likely cost you more.
Missing the special enrollment period
If you are 65 or older, when you stop working and lose your health insurance coverage or when insurance you have through your spouse ends, you’ll need to sign up for Medicare. Medicare created a special enrollment period (SEP) that lets you do that without facing a late enrollment penalty. What many people don’t realize is that you can only use this SEP while you are covered by job-based insurance or for eight months after you no longer have job-based insurance.
Delaying enrollment when your job insurance is second in line
Even when you have job-based insurance, some employers, depending on their size, can designate Medicare as your primary health coverage when you turn 65. And if you have retiree coverage or COBRA, those are considered secondary coverage. If your job-based or other private insurance is considered secondary coverage, it will only pay for a medical claim after Medicare has paid its share. So, if your job-related insurance becomes your secondary coverage, it’s important to sign up for Medicare.
Not understanding Part B and Part D late enrollment penalties
For every 12 months that you delay in enrolling in Part B, your monthly Part B premium may be 10 percent higher. The penalty won’t apply if you have job-based insurance or are still under your special enrollment period. For every 12 months you delay signing up for a Part D plan, your monthly premium may be 1 percent higher.
Not fully comparing original Medicare with Medicare Advantage Plans
If you are eligible for Medicare, you have a choice to receive benefits through original Medicare or a Medicare Advantage Plan. The type of Medicare coverage you choose depends on factors such as your healthcare needs, the insurance your doctors accept, where you live, whether you travel often, and your financial situation.
Delaying buying a Medigap policy
Medigaps are supplemental health insurance policies that work with original Medicare. If you have a Medigap policy, it pays part or some of the out-of-pocket costs that Medicare doesn’t cover, such as your Part A hospital deductible or the 20 percent coinsurance in Part B.
The best time to buy a Medigap policy is during your Medigap open enrollment period. That six-month window starts when you turn 65 years old and have enrolled in Medicare Part B. It’s important to enroll then because during that time the insurance companies that sell Medigap policies cannot deny you coverage if you have a preexisting condition, and they have to sell you a plan at the best available rate.
Not understanding your out-of-pocket costs
Although Medicare pays the lion’s share of medical costs for its enrollees, you need to be prepared for sometimes substantial out-of-pocket costs.
Choosing a Medicare Advantage plan that doesn’t include your healthcare providers
Each type of Medicare Advantage plan has different network rules. Most plans are either health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Your costs are typically lowest when you use in-network providers and facilities, regardless of your plan.
Choosing drug coverage that doesn’t fully and affordably cover your prescriptions
Whether you’re planning to get your prescriptions covered through a standalone Part D plan or under a Medicare Advantage plan, take some time to learn about the rules, what drugs are covered and what your costs will be.
Assuming you can’t afford Medicare
If you have a limited income, you may be able to get assistance with your health costs through certain programs.