Medicare is crucial when trying to secure your retirement because private health insurance is very expensive. And if you’re in retirement without any form of insurance, you’re one medical emergency away from depleting your funds.
We had the pleasure of speaking to Roderick Spann of Senior Advisors and discussed five Medicare mistakes to avoid so that you can enjoy a worry-free retirement.
5 Most Common Medicare Mistakes to Avoid
1. Not Enrolling in Part B Under the Right Circumstances
Medicare has what is considered an “initial” enrollment period. This enrollment period revolves around a person’s 65th birthday. The period is valid during the following time periods:
- Three months before turning 65
- The month of turning 65
- Three months after turning 65
Generally, a person will enroll in the three months before they turn 65 so that Medicare begins on the first of the month that they turn 65.
If you have an employer with over 20 employees, you can remain on their group plan and not go on Medicare Part B. However, if your employer has fewer than 20 employees or you’re no longer employed, you need to enroll in Part B.
It’s crucial to enroll in Part B because it is the medical insurance portion of Medicare. Essentially, Part B covers any medical care outside of the hospital. Part A only covers your in-hospital care.
Part B covers your:
- Outpatient surgery
- CAT scans
Ideally, if you need to enroll in Medicare, do it at the beginning of the initial three-month period. Delays can lead to penalties, and you never know what may go wrong during the initial enrollment that must be rectified.
2. Ignoring Medicare Part D
Medicare has a lot of parts. For example, let’s say that you get sick, visit the doctor and are prescribed medication. Parts A and B of Medicare will not cover prescriptions. Instead, you’ll need to have Part D, which offers you drug coverage.
Part D prescription plans are all very different, and there are 25 – 30 of these plans available. Many people choose a plan recommended by a friend or coworker, but this is a bad idea because you may need specific coverage not offered in the plan.
Plans have different:
If you’re not analyzing your prescription drug coverage when choosing a plan, you can spend thousands of dollars more than necessary. For example, plans have preferred pharmacies that offer the best prices and coverage. If you don’t go to this pharmacy because it’s too far away, you may spend thousands of dollars more per year than you would on a different plan.
Analyzing your prescription drug coverage is crucial when opting into Part D.
3. Not Understanding Medicare Advantage vs. Medigap Coverage
Unfortunately, navigating Medicare is complex. Just when you think you have all the coverage you’ll possibly need, you’re presented with options for Medicare Advantage or Medigap coverage.
And these plans are worth considering because they offer additional coverage.
Before going into these coverages, let’s backtrack and discuss original Medicare.
Original Medicare is your Part A and B coverage. Under these plans, just 80% of medically necessary services are covered. You’re responsible for an unlimited 20% of coverage.
So, what can you do?
Enroll in a Medicare Supplement or Medigap plan. These two plans do exactly what they sound like: fill the gap in original Medicare. However, Medicare Advantage is Different.
Understanding Medicare Advantage
Medicare Advantage works differently from Medigap and Medicare Supplement plans. You’ll move from original Medicare to private insurance under Medicare Advantage. The main difference here is:
- Plan costs
- Choice of doctors
Original Medicare allows you to go to 99% of hospitals and 90% of providers. Advantage plans are like HMOs, where you must go to specific doctors and hospitals. These plans are regional based.
4. You Have Retiree Coverage or Employer Plans and Don’t Think You Need Medicare
Retiree coverage may not be the most cost-effective or robust as you need. Some plans have $0 premiums, and that’s something you’ll want to stay on. However, we’re seeing many retiree plans that have monthly premiums, making them less effective than Medicare Advantage or even an Original Medicare plan.
You must sit down and analyze:
- What your plan covers
- Coverage and cost versus Medicare
Again, you need to analyze every portion of your current coverage to determine whether Medicare is a good option for you.
5. Selecting a Plan Based on a Friend or Family Member’s Advice
Friends and family may not have the best insight into the right plan for you. A plan may be optimal for you and horrible for your neighbor. Unfortunately, Medicare is not a one-size-fits-all solution.
You should speak to someone in the area who is a specialist and can help you sift through the plans and options that you have available through Medicare.
It’s important to have a thorough understanding of your:
- Medical needs
- Medicare options
This way, you can then weigh the pros and cons of supplement or Medigap plans or even the different parts of Medicare.
If you’re 64 and turning 65 soon, planning for Medicare with an expert would take an hour of your time and can be extremely beneficial for your healthcare needs. A few of the questions that are asked are:
- Are you employed?
- Do you plan to retire at 65?
- Does your current insurance cover just you or others?
Once you answer all the questions, you’re presented with plans and options that will best fit your unique needs. Experts can even help and assist you with the actual enrollment process, so you know how to navigate Medicare from start to finish.
Did you spot the recurring theme with all these plans? You need to know the coverage you really need and to understand what’s available through Medicare that can help you maximize your coverage.
Roderick is a professional Medicare Agent, so if you need help with Medicare or have questions, reach out to him at (908) 481-5678 or send him an email.
If you need help with securing your retirement, schedule an introduction call with us today.