8 Medicare Mistakes to Avoid
by Tracy E. Hill, Ph.D.
Medicare open enrollment is quickly approaching. And we all notice that time seems to go faster the older you get so with October approaching faster than you think, let’s review some common mistakes that people make when getting set up for Medicare or changing their enrollment package.
Upon reaching the honored age of 65, you are eligible for Medicare. And Medicare can provide significant health benefits, especially to those who are no longer in the workforce getting benefits from an employer. Yet, Medicare can be quite complicated so let’s look at eight common mistakes to avoid.
- Do Not Miss Open Enrollment
Each year, the Medicare open enrollment period runs between October 15 and December 7. Although you may have already signed up during the Initial Enrollment (which is when you actually turn 65, lasts for 7 months, starting 3 months before you turn 65, and ending 3 months after the month you turn 65.). Open enrollment is for those who either missed the Initial Enrollment or want to alter their current Medicare plan or enroll in a new one. Since plans, coverage and pricing may change each year as does your medical needs, it makes sense to compare plans to get the best coverage for yourself (or loved one).
- Understand Your Out-of-Pocket Expenses
Medicare is not 100% free. Although Medicare will most likely cover a substantial portion of your health care costs, it is very likely that you may have some out-of-pocket expenses.
When comparing plans, you need to factor in and also compare premiums, deductibles, copays and any possible coinsurance expenses. These terms are explained below.
Premium: The premium is how much you pay each month for your coverage. You pay a premium even if you don’t use any health services that month.
Deductible: The deductible is what you pay for health services before your insurance starts paying. Typically, the higher the deductible, the lower your premium will be.
Copayment: After your deductible is met, the copayment is the amount you pay each time you use your medical services (i.e, doctor visits, hospitalizations, surgery, etc.).
Coinsurance: Some plans utilize coinsurance instead of a copayment. After your deductible is met, coinsurance is a percentage of the doctor’s visit rather than a set amount as described in copayment above. Coinsurance changes for each medical service provided depending on the cost of the service.
- Determine if You Need Additional Coverage
Medicare doesn’t cover all your health care expenses. Medicare is made up of Part A (hospital insurance) and Part B (medical insurance). However, it doesn’t include other necessary incidentals like eye exams, prescription drugs, hearing aids and the like.
Medicare Part D: Also known as Medicare Part D, this coverage is a good workaround to get coverage for prescription medications. Again, plans will vary in what they cover and their associated cost so it’s good to have your medication list with you when you’re comparing prescription plans.
Medicare Advantage plans: Often referred to as Medicare Part C, Part C plans are offered by private insurance companies. They combine your Medicare Part A and Part B benefits and usually include prescription drug coverage. They may also cover other services that original Medicare doesn’t, such as eye exams, hearing aids, dental care, and wellness programs.
- Individualized Plans for Each Partner
Depending on each of your health care needs, you may be better off with the same or different Medicare plans. Pick the one that’s best for each of you. They do not have to be the same plan.
- Is Your Doctor In-Network with Medicare?
Not every health care provider is enrolled with Medicare. First, make sure your current doctors are in network with Medicare, unless you’re ready to make a switch.
If you opt for a Medicare Advantage plan (C), it gets more complicated. When you enroll, you’ll choose a network type between HMO, PPO and PFFS plans described below.
Health Maintenance Organization: With an HMO plan you can only see health care providers within this network, you need to pick a PCP, and you often need referrals to see specialists. HMOs tend to be more affordable than other plans as long as your doctors are in network.
Preferred Provider Organization: PPOs offer more flexibility than an HMO. Often less expensive when it comes to in-network health care providers, but the monthly premium may be a bit more expensive. PPOs typically offer some coverage for out-of-network doctors. No need to choose a PCP and often you don’t need referrals to see a specialist saving time, money, and aggravation.
Private Fee-For-Service: PFFS plans pre-determine how much they’ll pay for healthcare services. You can go to any doctor, as long as they agree to the fees and terms of the PFFS plan. However, not all health care providers accept PFFS plans, so your options may be limited, or you may have to pay the full cost on your own. PFFS plans are typically more costly and the coverage is less than optimal.
- Understand Late Enrollment Penalties
Make sure you enroll on time. Not enrolling at the appropriate time can end up being a mistake that costs you for years to come. According to Finance Buzz, here are how some of the late enrollment penalties work:
Part A: If you didn’t get Part A coverage when you were first eligible for it, your monthly premium may go up by 10%. The penalty will apply for twice the number of years you didn’t sign up for Medicare. For example, if you didn’t sign up for two years, you would have to pay the 10% penalty for four years.
Part B: If you didn’t sign up for Medicare Part B when you were first eligible your monthly premium may go 10% for each 12-month period you could have had Part B coverage. You’ll typically have to pay this penalty every time you pay your premium for as long as you have Part B coverage.
Part D: Once 63 days pass after the initial enrollment period, you may owe a late enrollment penalty if you don’t have a Medicare Part D plan, a Medicare Advantage plan, or creditable prescription drug coverage, such as coverage from an employer or union. The penalty will be based on a percentage of what Medicare has declared as the “national base beneficiary premium” as well as how long you went without coverage.
- Think About Your Travel Plans
Planning on that perfect European tour? Make sure you have the medical coverage you need. Medicare provides coverage throughout the U.S. and its territories. However, original Medicare doesn’t typically cover medical care if you travel outside the U.S.
Certain Medicare Advantage plans will cover you if you require medical care while you’re out of the country, but some don’t. Make sure to inquire about this when shopping around for the right plan.
- Plans Change
You may think you have the best Medicare plan. However, your medical needs may change year to year as may your medications. Moreover, Medicare plans change each year as well. Make sure to take the time and shop around. What worked for you last year, may not be best for you this year.
We wish you the best of health in the years to come.
Photo credit by Ravi Patel (Toronto Canada).