Understanding Medicare isn’t a cakewalk. Millions of people across the United States qualify for Medicare each year and– save a rare few– don’t know how to navigate it. Educating yourself on common pitfalls is an amazing first step to making knowledgeable and empowered health decisions. As seasoned Medicare experts, take it from us: you’re doing it wrong if you’re doing any of the following…
1. Assuming You Don’t Qualify
If you’re 65 and older, chances are that you qualify for Medicare. Better yet, you may qualify for inexpensive Medicare.
Here’s why. In the United States, did you know that you accumulate Medicare credits based on the years you were employed and the taxes you paid? The longer you’re an active part of the workforce and tax economy, the more credits you earn. Earning 40 Credits automatically ensures that you won’t have to pay premiums (monthly bills) for Medicare Part A hospital services. So, there’s a chance you’ll get part of your Medicare paid simply for living your life.
You don’t need any work credits to qualify for Part B (doctors’ services, outpatient care, medical equipment) and Part D (prescriptions), provided that you’re 65+ and a U.S. Citizen or legal resident living in the U.S. for at least five years. You may also qualify for Part A benefits on your spouse’s work record.
2. Failing To Enroll in Part B When You Should
It’s critical that you sign up for Medicare at the right time. If you don’t, you risk coverage delays, late penalties, and other inconvenience fees. In fact, extra charges could be added to your bills for the rest of your life simply for signing up late. If you or your spouse have active health coverage beyond age 65 (say you remain covered by your employer), you can delay Part B enrollment without penalty until the job ends. Otherwise, you need to sign up during your seven-month initial enrollment period. That period starts three months before you turn 65, lasts through the month you turn 65, and extends three months after you turn 65.
3. Believing You Don’t Need Medicare Part B
Part B of Medicare is optional, so you are not obliged to enroll. Before you pass it up, however, it’s vital to know what it covers.
Part B of Medicare covers inpatient and outpatient care, durable medical equipment (DME), ambulance services, certain mental health-related services, select prescription drugs, and more. If these elements are significant to you, sign up for Medicare Part B at the right time.
Say you’re leaning towards not signing up for Medicare Part B because you have a separate retiree health plan that will help cover you through retirement. It’s important that you carefully check with your retiree plan to see how it fits in with Medicare. In many such plans, Medicare automatically becomes primary coverage, and the retiree plan pays only for a few services that Medicare doesn’t cover. In that case, if you fail to sign up for Part B when you’re required to, you’ll essentially have no coverage.
You may also be leaning towards not signing up for Part B because of COBRA. COBRA allows you to continue on your present employer’s health care plan for up to 18 months after your job ends, but it doesn’t permit you to delay Part B enrollment. Read that again: IT DOESN’T PERMIT YOU TO DELAY PART B ENROLLMENT. In this situation, you need to sign up for Part B before the end of your initial enrollment period at age 65 or (if your job ended after that period) no later than eight months after you stopped working. Otherwise, you’ll have to pay penalties.
4. Thinking You Must Reach Full Retirement Age Before Enrolling
For most people, the full retirement age is 66, which will gradually increase to 67 for those born after 1959. Unless you have health coverage from your own job or your spouse’s current place of employment, you must sign up for Medicare at age 65 to avoid penalties. You shouldn’t wait until you retire and are collecting Social Security benefits to enroll in Medicare.
5. Failing To Enroll in Part D Because You Don’t Take Medications
You must enroll in Part D before prescription drug needs are imminent. Some drugs cost thousands of dollars per month. Waiting to enroll could also cost additional late penalties permanently added to your Part D premiums.
6. Misunderstanding the Enrollment Period
Medicare Open Enrollment is from Oct. 15 to Dec. 7 of each year. It affects current members who want to change their coverage. However, if you’re coming into Medicare for the first time, you get your own enrollment period either around the time you turn 65 or up to eight months after extended employment, with coverage, ends for you or your spouse. If you miss your personal deadlines because you’re waiting for open enrollment, you risk delayed coverage and permanent late penalties.
7. Picking a Part D Plan for the Wrong Reasons
If you pick a prescription drug plan (Part D plan) based on its low premium, name, or hearsay, you’re taking a big risk. The best way to pick a Part D plan is to take into account the specific drugs you take or foresee taking in the future. Part D plans do not cover all drugs and copays vary widely, so it’s best to be smart and choosy.
8. Applying to Medigap Too Late
Medigap (Medicare Supplement) is extra coverage for most (or all) of your out-of-pocket Medicare expenses, such as deductibles and copays. If you’re at least 65 within six months of enrolling in Part B, you cannot be denied a Medigap plan and you cannot be charged higher premiums due to pre-existing conditions. After that time, they can do both. It’s wise to review your Medigap plan and pricing with an insurance professional every single year to account for these policies and their potential changes.
9. Failing to Read Your Annual Notice
Every September, you’ll receive a notice in the mail known as your ‘Annual Notice of Change,’ otherwise referred to as your ANOC letter.
Your ANOC letter specifies the cost and coverage changes that will impact you for the following year. You can use it to compare with other plans during Open Enrollment (Oct. 15 to Dec. 7) and switch plans at your discretion. Failing to read the notice means you’ll be stuck with whatever the changed rates and policies are for another full year, even if they aren’t the right fit for you and your circumstances.
10. Not Realizing You May Qualify For Lower Costs
If your income is limited, you may qualify for lower Medicare expenses (premiums, deductibles, copays, etc.).
Two programs may help you. Under a Medicare Savings Program, your state pays the Part B premiums and maybe other expenses. Under the federal Extra Help program, you get low-cost Part D prescription drug coverage.
So, if you’re pinching pennies and wondering if you can make Medicare work for your budget, find out if you qualify for a savings program or Extra Help. It might make all the difference!
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This article was updated on 2/20/24.