8 Common Mistakes Made by New Medicare Enrollees and Strategies to Avoid Them

Harvest Financial Group Wealth Management

8 Common Mistakes Made by New Medicare Enrollees and Strategies to Avoid Them

When it comes to Medicare, missing deadlines, delays in registration, or choosing the wrong plan can result in significant losses for you. Here are 8 common mistakes made by new Medicare enrollees and strategies to avoid them:

1.Failure to enroll in Medicare at the appropriate time

Timing is crucial, as they say. And when it comes to enrolling in Medicare, timing is especially critical. As you approach the age of 65, it is advisable to register during the Initial Enrollment Period (IEP) designated by the government. This phase spans seven months, starting three months before your 65th birthday month and extending three months after.

If you miss the IEP, you will have another opportunity to enroll during the Annual General Enrollment Period for Medicare, which runs from January 1st to March 31st each year. However, if you register during this time, your coverage will not begin until July. Additionally, due to the delayed enrollment, your monthly premium for Medicare Part B (covering doctor visits and outpatient services) is likely to increase. Starting from 2023, if you register during the Initial Enrollment Period, Special Enrollment Period, or General Enrollment Period, your coverage will take effect from the following month. However, please note that if you register for Part B during the General Enrollment Period, you may still be subject to penalties for late enrollment.”

2.Mishandling the Special Enrollment Period

If you are 65 years of age or older, you will need to enroll in Medicare when you retire and lose your health insurance coverage, or when the insurance obtained through your spouse terminates. Medicare has established a Special Enrollment Period (SEP) during which you can register without incurring penalties for late enrollment.

However, timing remains crucial. What many people fail to realize is that you can only utilize this SEP within eight months of either having employer-provided insurance or ceasing to have such insurance.

Please note that Medicare does not consider retiree health insurance or COBRA as employer-provided insurance. Therefore, if you have this type of insurance, you need to revisit the first point of mistakes and enroll when you turn 65 to avoid facing penalties for late enrollment

3.Failure to Understand Delayed Enrollment Penalties for Parts B and D

Delaying enrollment in Part B by up to 12 months can result in a potential monthly premium increase of 10%. However, this penalty does not apply if you have employer-provided insurance or if you are still within the Special Enrollment Period (SEP).”

“Delaying enrollment in a Part D plan by up to 12 months can lead to a potential monthly premium increase of 1%. Part D plans cover prescription drug costs. If you can demonstrate to Medicare that you had equivalent drug coverage to a Medicare Part D plan, you will not be required to pay the Part D penalty.”

“Each September, you will receive a letter from your employer or insurance plan informing you whether you have creditable drug coverage comparable to Part D. If you lose this drug coverage, you will qualify for a two-month Special Enrollment Period during which you can enroll in a Part D plan without facing penalties. However, please keep this letter as proof for future Part D enrollment.”

“Note: These penalties generally apply to all Medicare beneficiaries. However, if you qualify for the Medicare Savings Program or Extra Help program, which assist low-income seniors in paying Medicare cost-sharing expenses, and you enroll in such programs, you will be exempt from paying the penalties.

4.Failing to Properly Compare Original Medicare and Medicare Advantage Plans

If you qualify for Medicare, you have the option to choose between Original Medicare and Medicare Advantage plans to receive benefits. The choice of Medicare coverage type depends on factors such as healthcare needs, accepted insurance by doctors, residency, travel frequency, and financial status.”

“Original Medicare is a traditional plan directly provided by the federal government. It includes Part A, which covers hospital expenses, and Part B, which covers doctor visits and other outpatient services. The majority of doctors in the United States accept this insurance. To help with your out-of-pocket costs, you can purchase a Medigap policy, which has its own monthly premium. Original Medicare does not include Part D (prescription drug coverage), so if you don’t have other drug coverage, you must enroll in a separate Part D plan. Original Medicare does not have annual out-of-pocket limits.”

“Medicare Advantage (MA) plans are private insurance plans that serve as an alternative to Original Medicare. These plans provide the benefits of Part A, Part B, and usually include Part D as well. They may also offer additional benefits not covered by Original Medicare, such as dental or vision care. Some MA plans may also provide non-traditional services like coverage for wheelchair ramps, meal delivery to beneficiaries’ homes, and transportation to doctor visits. These plans may have different costs and regulations compared to Original Medicare. For example, MA plans may require you to obtain a referral from a primary care physician before receiving care from a specialist. Additionally, Medicare Advantage plans generally have a provider network within your geographic area, and the plan may not cover services from providers outside the network (except in emergencies). MA plans have annual maximum out-of-pocket limits, but once you enroll in a Medicare Advantage plan, you cannot purchase a Medigap policy

5.Failing to Understand Your Out-of-Pocket Costs

While Medicare covers a significant portion of your medical expenses, it is important to be prepared for potential high out-of-pocket costs. Here is a breakdown of the details:

Premiums: Each part of Medicare may have its own monthly premium. Most individuals do not pay a premium for Part A, which covers hospital services. You will be responsible for the Part B premium, which is deducted from your monthly Social Security benefits if you are receiving them. If you enroll in a Medicare Advantage (MA) plan or a Part D plan, you may also have monthly premiums depending on the plan you choose.

Deductibles: Before Medicare begins to pay for your care, you may have to meet a fixed amount known as a deductible. Both Part A and Part B of Original Medicare have annual deductibles, and some MA and Part D prescription drug plans have deductibles as well. Medigap policies often cover the deductibles of Original Medicare.

Copayments: These are fixed amounts you pay for specific services. For example, under an MA plan, you may have a copayment for each doctor visit or medical service, typically around $25.

Coinsurance: This refers to the percentage of the cost of services that your plan will charge you. If you are enrolled in Original Medicare, you will be responsible for 20% of the cost of services. So, if you have a blood test that costs $100, Medicare will pay $80, and you will be responsible for $20. Medigap policies also typically cover this 20% share.

Note: If you are enrolled in Original Medicare, it is important to ensure that your healthcare providers accept Medicare and participate in what is called “assignment.” This means that the provider agrees to accept the Medicare-approved amount as full payment for the services they provide. If you see a non-participating provider, they may charge up to 15% more than the Medicare-approved amount. If you are enrolled in an MA plan, it is recommended to try to see network providers, as some MA plans may not cover out-of-network care at all, while others provide limited coverage.

6. Choosing a Medicare Advantage Plan That Doesn’t Include Your Healthcare Providers

Each type of Medicare Advantage plan has different network requirements. Most plans are either Health Maintenance Organizations (HMOs), which often require referrals to see specialists and rely on primary care physicians to coordinate care, or Preferred Provider Organizations (PPOs), which have a network of doctors, hospitals, and facilities that have contracted with the plan to provide services. Your costs are typically lowest when using in-network providers and facilities, regardless of the type of plan you have.

“If you decide to enroll in an MA plan, consult with your providers to see which plans they accept. If you have any questions, contact your plan for more information. If your providers are not in the plan’s network, inquire about how much the plan will pay for services (if any) and what you may be responsible for paying.

7.Inadequate or Unaffordable Prescription Drug Coverage

Whether you are considering obtaining prescription drug coverage through a stand-alone Part D plan or a Medicare Advantage plan, it is important to take the time to understand the rules, which drugs are covered, and what your costs will be.

Ensure that your plan covers the medications you need. Each Part D plan has a formulary, which is a list of covered drugs. If your medication is not included in the plan’s formulary, you may need to request an exception, pay a portion of the cost out-of-pocket, or file an appeal.

Also, find out if your plan has any coverage restrictions (sometimes referred to as utilization management policies). Some plans may have limitations on certain drugs, while others do not. One type of restriction may require prior authorization from the plan before they will cover the cost of a specific medication. Another example of coverage restriction is step therapy, which means your plan requires you to try less expensive medications first before covering a more expensive medication that you may need.

You should also determine if the plan you are considering offers significant discounts at the pharmacy of your choice or through mail-order. Each Part D plan has a pharmacy network that includes preferred and non-preferred pharmacies. Typically, purchasing prescriptions at a preferred pharmacy results in lower out-of-pocket costs.

8.Perceiving Financial Inability to Afford Medicare

If you have limited income, you may be eligible for assistance programs to help cover your healthcare expenses.

The Medicare Savings Programs (MSP) assist with paying Part B monthly premiums and may help with cost-sharing for Medicare, depending on the specific program (MSPs come in three different types).

Extra Help is a federal program that helps pay for some or most of the prescription drug costs covered by Medicare Part D.

State Pharmaceutical Assistance Programs (SPAPs) are programs offered in some states to help eligible participants with the cost of prescription drugs.

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