If you’ve spent any time at all researching Medicare, you’ve probably deduced that it is not the most straightforward subject to master. There are a lot of complex rules and important deadlines to be aware of, and the leading resources all seem to provide contradictory advice for navigating the Medicare system. As tempting as it might be to throw your hands in the air and give up, that course of action is not advisable. Unless, of course, you plan to continue working for the rest of your life.
As daunting as the task can be, taking the time to really understand the ins and outs of Medicare definitely pays off in the long run. If you’re approaching your 65th birthday, you’ll want to begin your research sooner rather than later in order to make the most informed decisions about the future of your healthcare. If you’re running low on time, we’ve compiled a quick list of the most common pitfalls to avoid when enrolling for Medicare.
Assuming you’ll be automatically enrolled
This Medicare misconception lands a lot of people in hot water. While most Americans will become eligible for Medicare when they turn 65, you will not be automatically enrolled for Medicare unless you are already receiving social security benefits. While this may seem like an inconvenient flaw in the system, it actually makes a lot of sense when you think about it. Turning 65 doesn’t mean that Medicare is your only option for healthcare coverage. In fact, many people will continue to work after turning 65, and they have the option to delay their coverage until they leave the workforce, or to coordinate benefits between Medicare and their employer-provided coverage. Requiring individuals to enroll for Medicare ensures that each person remains in control of the important decisions that affect their healthcare. Of course, it also means that individuals are responsible for staying on top of enrollment deadlines.
The key takeaway here? If you won’t have qualifying coverage from an employer when you turn 65, you need to fill out an application to sign up for Medicare within your 7-month Initial Eligibility Period. If you neglect to do so, you will face lifelong penalties on your Medicare Part B (and Part D) premiums. This resource can help you create your own personal Medicare timeline to help keep you on track for a smooth enrollment.
Not understanding your options
As mentioned in the previous section, turning 65 doesn’t automatically mean that Medicare becomes your sole option for healthcare coverage. If you are still working and have qualifying healthcare coverage under a group plan, for example, you may elect to delay your enrollment in Medicare until after you retire. You may also decide to enroll for Medicare while simultaneously maintaining your employer-provided coverage, which is made possible by Medicare’s coordination of benefits system.
If you do decide to drop your employer-provided coverage and enroll for Medicare, there are still more options to consider.
- Will the services covered under Original Medicare suffice, or do you have health concerns that would be better addressed by a Medicare Advantage plan, which often include vision, dental, or hearing benefits?
- Do you take any medications on a regular basis, or do you expect to take any in the future? If so, you’ll want to enroll for a Medicare Part D plan, which is the part of Medicare that covers prescription drugs, at the same time that you enroll for your Part B coverage. (Note: it’s highly likely that you will need this coverage at some point, and if you don’t enroll for it when you first become eligible, you will face permanent late enrollment penalties on your Part D premiums.)
- Do you plan to travel internationally or anticipate having a lot of out-of-pocket costs? If you have specific concerns like these, it may behoove you to look into purchasing a Medigap policy to fill in any coverage gaps.
Neglecting to enroll in a Part D plan during your IEP
If you’re not taking any medications when you first become eligible for Medicare, you may be tempted to forego purchasing a Part D plan. This instinct is totally understandable; why would you want to pay for coverage you don’t yet need? Unfortunately, neglecting to enroll for this coverage when you first enroll for Medicare will result in permanent penalties on your premiums if–or more likely, when– you do decide to enroll at a later date.
The likelihood that you will need to take at least one prescription drug on a regular basis will continue to increase as you age. In fact, 39% of Americans over 65 take 5+ prescriptions on a daily basis. For this reason, we recommend that people in this position enroll for the most affordable Part D plan as soon as they become eligible, even if their not yet in need of drug coverage. While sending in those monthly premiums may make you cringe now, it will likely save you money in the long run.
Not enrolling in the right Part D plan
If you are already taking multiple medications, you’ll need to make sure that you find a plan whose formulary covers all–or at least most– of your drugs. Every plan’s formulary is different, and pricing for your drugs can vary as well, so it is definitely worthwhile to shop around and compare the plans that are available in your area.
Falling into a coverage gap
While Original Medicare (Parts A & B) will cover most of the essential healthcare costs you can expect to incur in this next phase of your life, many people will opt to purchase a Medicare Supplement (or Medigap) plan in order to address common gaps in coverage. For example, if international travel is a major aspect of your retirement plans, you might be surprised to learn that your Medicare coverage will not follow you outside of the United States. There are, however, some Medigap plans that will cover healthcare costs accrued while abroad. Similarly, a Medigap policy could be a wise choice if you anticipate having a lot of out-of-pocket costs or excess charges. Depending on where you live, there are up to 11 Medigap plan types available, all of which offer different benefits. Learn more about each plan type, and find the one that best addresses your needs, by reading the article below.
Assuming you have to keep the same coverage forever
Enrolling for a Medicare plan is not a lifelong commitment, and the plan that works for you when you first enroll for Medicare might not be the best fit 5 or 10 years down the road. If you find that your current plan isn’t providing you with the coverage you need, you have one opportunity each year–during Medicare’s Annual Enrollment Period–to change plans or purchase new coverage. Make sure to mark this period on your calendar so you can reevaluate your options and act accordingly within the allotted window.
Assuming that one coverage solution fits all
Another mistake that newcomers to Medicare often make is to purchase the same coverage as a loved one or close friend simply because that person is happy with their coverage. While taking recommendations from those you trust is a good strategy when trying a new restaurant or choosing your next travel destination, when it comes to healthcare coverage, your needs probably won’t match up to those of your spouse, your sibling, or your best friend. This is especially true when it comes to selecting a Part D, Medicare Advantage, or Medicare Supplement plan.
Signing up for Medicare when you’re still planning to contribute to your HSA
If you have a health savings account that you want to continue making contributions to, you will need to delay your enrollment in Medicare, including Part A. While you will still be able to use the funds in your HSA, once you begin receiving Medicare benefits, you are forbidden from making additional contributions to your account. To learn more about how to handle your HSA account after turning 65, visit the article below.