Retirement is supposed to be a time to enjoy the fruits from decades of labor, but managing your health care can feel like a whole new job, says Money Talk News’ recent article entitled “5 Medicare Errors to Avoid for a Healthy Retirement.” This is no easy task because the official guide to Medicare, the federal health insurance program primarily reserved for people age 65 and older, is roughly 120 pages. This means it is easy to make Medicare mistakes. You may pay extra, or a blunder could leave you with a gap in coverage. If you haven’t enrolled in Medicare but are almost 65, avoid these classic Medicare mistakes that seniors who are already enrolled in Medicare can’t afford to make with their coverage:
- Not taking advantage of the “freebies.” Some medical services and products come at no charge for Medicare recipients—or recipients don’t have to pay anything extra, like a co-pay or meeting a deductible to take advantage of these freebies.
- Missing your annual chance to switch plans. Your Medicare plan’s coverage, costs and benefits can change every year. You have a chance during open enrollment to examine your options, make sure you’re still getting the best value and, if you want, switch your plan. During the open enrollment, it’s wise to consider the Medicare plans that are available and see what the cost will be in the coming year. You should also confirm that your favorite pharmacies, hospitals and medical providers still will accept your plan in the new year.
Before you do this open enrollment homework, however, it helps to review these resources:
- gov and its Medicare Plan Finder
- The latest annual “Medicare & You” handbook
- Evidence of Coverage document; and
- Plan Annual Notice of Change document.
- Losing in-network access. Remember that not all health care providers accept all Medicare coverage. As a result, if you go to a doctor who’s not in your plan network, you could see higher co-payments, or your insurer might refuse to pay any of the bill.
- Losing Medigap coverage. People with Original Medicare have the option to buy a supplemental policy from a private insurer, known as a Medigap policy, to cover some of the costs that Original Medicare doesn’t fully cover. If you have a Medicare Advantage plan, you can’t buy a Medigap policy. Therefore, if you decide to switch to a Medicare Advantage plan from Original Medicare with a Medigap plan, you’ll drop the Medigap plan. That can be risky. Only during your initial Medigap enrollment period (which is when you first became eligible to sign up for Medicare) are you guaranteed coverage by a Medigap plan. That is the only time when are insurance companies cannot deny you coverage or charge you extra due to pre-existing conditions. After that, insurers typically ask about your health status. Thus, based on your health and where you live, if you lose your initial Medigap coverage because you switched to Medicare Advantage, you could wind up paying a lot more for a Medigap policy, if you later decide to switch back to Original Medicare. You might even be prohibited from certain plans.
- A tax penalty for HSA contributions. If you contribute to your health savings account (HSA) while on Medicare, you may be penalized. You should stop making HSA contributions the month before your Medicare Part A coverage (which primarily covers inpatient hospital-related costs) begins, which can be as early as six months before you apply for Medicare or Social Security.
Medicare is complicated. Avoid these classic Medicare mistakes by working closely with your financial advisor and estate planning attorney. They will help craft a plan that works for your retirement.
If you would like to learn more about Medicare planning, please visit our previous posts.
Reference: Money Talk News (June 7, 2021) “5 Medicare Errors to Avoid for a Healthy Retirement”