Medicare mistakes can be costly. With the various plans, enrollment periods, and coverage options, understanding how to optimize your Medicare benefits is crucial.
Avoiding financial pitfalls will ensure your healthcare needs are met without unnecessary expenses or costly consequences. Let’s look at five financial Medicare mistakes you can’t afford to make. For additional Medicare guidance, you can visit https://boomerbenefits.com/understanding-medicare/.
Missing the Initial Enrollment Period
One of the most common and costly mistakes beneficiaries make is missing their Initial Enrollment Period (IEP). The IEP begins three months before you turn 65, includes your birth month, and extends three months after.
If you do not enroll during this window and have no other creditable coverage, it can result in late enrollment penalties that last a lifetime.
For example, if you miss enrolling in Medicare Part B, you could face a 10% penalty for each year you delay, which is added to your monthly premium.
The government expects you to know when you need to sign up, so mark your calendar and ensure you enroll on time to avoid this.
Not Signing Up for Part D Coverage
Even if you don’t take prescription drugs now, not signing up for Medicare Part D (prescription drug coverage) when you’re first eligible can be a financial mistake that follows you for the rest of your life.
You’ll incur a late enrollment penalty if you go without Part D or other creditable drug coverage for 63 days or more after your IEP. This penalty is calculated by multiplying 1% of the “national base beneficiary premium” by the number of months you were without Part D or creditable coverage. This amount is added to your Part D premium permanently.
Consider enrolling in at least the cheapest and most basic Part D plan in your area to protect yourself from future penalties.
Choosing the Wrong Medicare Plan
If you choose the wrong Medicare plan, you may experience higher out-of-pocket costs and coverage that is lacking, to say the least.
There are two primary ways to receive Medicare benefits: Original Medicare (Part A and Part B) or Medicare Advantage (Part C). Original Medicare allows broader access to providers but may have higher out-of-pocket costs unless supplemented with Medigap insurance.
Medicare Advantage plans often have lower premiums and additional benefits. However, they may limit you to a network of providers, and you’ll still have some copays or coinsurance to pay for services as you go along.
Look at your healthcare needs, budget, and preferences when deciding on a plan. Compare plan options and carriers to find the most suitable plan for you.
Ignoring the Annual Enrollment Period
Medicare’s Annual Enrollment Period (AEP) runs from October 15 to December 7 each year. During this period, you can change your Medicare Advantage and Part D plans. Ignoring the AEP can be costly because plans can change their premiums, formularies, and provider networks annually.
Failing to review and update your plan could result in higher costs or losing access to your preferred doctors and medications. Although it can seem tedious, reviewing your plan’s Annual Notice of Change each year and comparing it to other available options will ensure you’re getting the best coverage at the most cost-effective price.
Monitoring Your Medical Bills
Errors in medical billing are common and can lead to overcharges. Regularly review your Medicare Summary Notices (MSNs) and Explanation of Benefits (EOBs) to help you catch mistakes and ensure you’re not paying more than you should.
If you spot an error, contact your healthcare provider or Medicare to resolve the issue immediately.
Additional Tips
Understanding Medigap Policies
Medigap (Medicare Supplements) policies can help cover costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles. When you purchase a Medigap policy during your Medigap Open Enrollment Period, you have guaranteed issue rights, meaning you can buy any Medigap policy sold in your state, regardless of your health status. Missing this window may mean having to answer health questions later on.
Reviewing Employer Coverage
If you’re still working and have employer-sponsored health insurance, you want to know how it interacts with Medicare. Depending on the size of your employer, Medicare may be your primary or secondary payer.
Coordination of benefits issues can be complex, and enrolling in Medicare at the wrong time can lead to penalties or gaps in coverage. Consult with your employer’s benefits administrator and Medicare to ensure you make informed decisions once you become eligible for Medicare.
Being Proactive Can Save You Time And Money
Avoiding these financial mistakes with Medicare requires careful planning and learning early on how the Medicare system and its rules work. Being proactive can protect you from unnecessary expenses and ensure you receive the care you need when you need it.