Although it’s easy to push our health care needs to the bottom of our packed to-do lists, it’s never a good idea, especially when making a mistake could cost you a lot of money — such as during Medicare enrollment.
Sidestepping a few common problems will ensure that you get the health coverage you need without paying too much
9 Common Medicare Mistakes People Make
Here are nine of the most common mistakes that experts see people make during their Medicare enrollment period:
Not Signing Up on Time
The initial enrollment period for Medicare begins three months before the month that you turn 65 and lasts until three months after your birth month. If you fail to enroll during the initial enrollment period, you’ll get another chance during the annual general enrollment period, running from the first of the year through March 31. However, your monthly premiums will cost more in penalty fees for the entire time you remain on Medicare if you sign up during the general enrollment period.
Not Enrolling in a Separate Part D Prescription Drug Plan With Original Medicare.
You should also make sure you sign up for a Part D plan or have what is known as creditable coverage – even if you don’t take any drugs. If you fail to enroll in a Part D plan, and do not have other creditable drug coverage for more than 62 days, then you will pay a penalty in the form of higher premiums for the entire time you remain on Medicare if you decide to get Part D coverage later on.
Another good reason to sign up as soon as possible: In most states, new Medicare members only have guaranteed coverage by a Medigap policy during select periods of time, one of which is the initial enrollment period. A Medigap policy provides coverage for health care expenses not covered by original Medicare, such as copayments, deductibles and coinsurance. If you miss the enrollment window, health plans can reject your application or charge you higher premiums if you have any health problems.
Not Signing Up During the Special Enrollment Period
Once you’re 65, if you retire or lose the coverage that you have through your spouse, you can “>sign up for Medicare, without penalty, during a special enrollment period. However, you can only use the special enrollment period while covered by your or your spouse’s insurance and eight months after losing this coverage.
A special enrollment period is also triggered if you moved to a new address not within your current plan’s service area or if your move has allowed you new plan options. You’ll also be able to enroll in Medicare if you’ve just moved out of an institution, such as a skilled nursing center, or been released from jail.
Not Understanding How Medicare Coordinates With Your Current Coverage
Even if you’re still working when you turn 65, it’s essential to determine how your current health insurance and Medicare will coordinate. If you’re over 65 and work at a business that employs more than 20 people (or are eligible for Medicare because of disability and work for a company that employs more than 100 people), your private health insurance will be your primary coverage. If your workplace employs less than this number of employees, Medicare will be your primary insurer, and your work insurance is considered secondary.
Not knowing whether your employer’s coverage is primary or secondary can cost you a lot of money. Casey Schwarz, senior counsel, education and federal policy at MedicareRights.org, explains that getting it wrong might “mean that your insurance that is secondary to Medicare will say, ‘We wait for Medicare to pay on the claim, and if Medicare doesn’t pay on the claim, then we don’t pay on the claim.’ So you have functionally no insurance.”
On the other hand, the insurer might say, “Well, we pay secondary to Medicare, so we’re going to pay the amount that we would be responsible for after Medicare paid.” As Schwarz explains, “Instead of having coverage where your insurance pays 80%, and you pay 20%, you’re looking at insurance where you pay 80% and your insurance pays 20%. And it could even be more than 80% because that 20% is based on the Medicare negotiated rate, so if you don’t have Medicare, the provider isn’t held to that amount.”
Not Educating Yourself On The Differences Between Original Medicare and Medicare Advantage
While more providers are likely to accept original Medicare, your out-of-pocket costs will be higher depending on your health care needs, says Shub Debgupta, founder and CEO at Predict Health, a health analytics company in Washington, D.C.
Because there is no limit on out-of-pocket expenses with original Medicare, many people enroll in a separate Medigap policy to cover the medical costs that original Medicare doesn’t. And because original Medicare does not cover prescription drug costs, you’ll also need to sign up for a stand-alone Part D prescription drug plan. You will pay a penalty if you do not have drug coverage while on Medicare and decide to enroll in Part D later.
You’ll still need to pay a Part B premium to cover doctor and other health care providers’ services — those “$0 premium” advertisements for Medicare Advantage plans are misleading. On the other hand, Medicare Advantage plans are sold through private insurance companies as an alternative to original Medicare. Medicare Advantage plans include prescription medication coverage and usually provide benefits not covered by original Medicare, such as dental and vision coverage.
In most states, you have a one-year trial period for Medicare Advantage where if you disenroll after the first year, you still have guaranteed issue rights to Medigap. After this year, however, insurers do not have to grant you a Medigap policy if you decide to switch from Medicare Advantage to original Medicare.
Unlike original Medicare, Medicare Advantage plans do have an out-of-pocket maximum. On the other hand, Medicare Advantage plans have a much more limited network of providers and may require you to get a referral from your primary care physician to see a specialist. The out-of-network maximums for Medicare Advantage plans can also be quite high and do not include costs for prescription drugs or services not covered by original Medicare. Depending on how much health care you need, your costs could be lower with original Medicare and a Medigap policy.
Individuals considering a Medicare Advantage plan should ask, “what are the utilization rules for things like MRIs, CAT scans, outpatient surgery … those are the biggies,” according to Barbara Hopkins, a Medicare educator with nearly 30 years of experience in health payer operations in Portland, Maine. She explains that “Utilization rules are ‘does it need to go through a permission phase for the health plan before they can go?'”
Joel Mekler, a health benefits professional, Medicare expert, and writer of the “Medicare Moments” weekly column in New Castle (Pennsylvania) News, says, “If an individual is very healthy and they don’t see a doctor that much, they might want to think about a Medicare Advantage plan. But if somebody sees a doctor quite frequently and if they have a chronic condition, they might want to pair original Medicare with a Medigap plan.” However, as many of us know all too well, your health can change very rapidly. It’s best to take your potential future health care needs into account when choosing the best Medicare plan for you. After all, we all have different levels of risk tolerance.
Not Checking the Insurer’s Formulary
The formulary is a list of all the medications that a plan covers. Whether you opt to enroll in original Medicare and a Part D plan for prescription coverage or a Medicare Advantage plan with drug coverage built into it, ask to see the current formulary before signing on the dotted line.
Although plans can and do change their formularies — even in the middle of the plan year — it’s good practice to regularly study the formulary of your chosen plan. After all, if you get a prescription filled that’s not on the formulary, you’ll either need to pay out-of-pocket, ask for an exception or file an appeal.
Signing Up for Automatic Renewal
The convenience of automatic renewal can come at a steep price in the case of health coverage. Your Medicare Part D or Medicare Advantage plan will automatically renew every year on January 1. However, plans can change their benefits and formularies and might even change the total you’ll pay in premiums, deductibles, copayments and coinsurance from year to year. It’s critically important that you take the time to review your plan’s Annual Notice of Change to ensure that the plan still meets your needs.
Not Reading the Small Print on Medicare Advantage Plans
Although advertisements might seem like you’re going to get a free gym membership, bathroom safety devices and home meal delivery following surgery, there are often a lot of strings attached to these perks. In fact, some plans make you pick one of the many extra benefits offered or require you to pay an extra premium or a large share of the costs for the benefit.
“I like to think of those extra services as perks or frosting on the cake,” says Hopkins. “And they’re definitely attractive, and they offer more than original Medicare offers. But for instance, for dental care, it’s probably a limited network. It’s probably a percentage of coverage. And sometimes those in-network providers for dentists come, and they go.”
“Over-the-counter items might be limited to a certain list and certain sizes. You have to understand exactly how you’re going to get your gym membership. Is it any gym? Is it specific gyms? Is it a discount?” She recommends that potential members ask how they get the add-on benefits and get a clear picture of what they look like.
Mekler adds: “What I would caution those individuals is that perhaps they might offer a grocery benefit or a gym membership, but their dental may not be up to snuff. In other words, they might have a cap on the total dental benefits, and it might be a pretty low cap. Maybe a thousand or fifteen hundred.” Plus, he notes that plans can change. “So perhaps there might be a gym membership one year, and the next year they might not offer it, but they might offer something else.”
Falling Prey to Flashy Advertisements
Regarding those commercials that most of us have seen, often featuring famous personalities selling Medicare Advantage plans, be wary.
“Unless a public service announcement comes on saying ‘This is Medicare.gov,’ they (prospective members) should be really careful about calling because a lot of people get sucked down the rabbit hole to changing their plan,” says Hopkins. “They are not representing the government in Medicare. They say ‘we’re contracted by Medicare,’ but that doesn’t mean they are Medicare. Medicare can’t do what they do in those TV ads. They can’t promote products and say, ‘call us and get more money.’ “
By avoiding these potential and all too common mistakes, you’ll be better prepared to choose the best health care options for you when it’s time to sign up for Medicare.
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