Medicare is confusing. There’s no doubt about it.
The more confusing something is, the more likely it is that you’re going to miss something. Or ignore something. Or not understand something. Or make the wrong decision.
Some bad Medicare decisions will cost you either a little, or often a lot, of extra money wasted on monthly premiums or out of pocket expenses. A few bad decisions can get you trapped in a plan later on that doesn’t fit your healthcare needs because you’re not healthy enough to qualify for a different one.
No one has a crystal ball. No one knows what tomorrow may bring, or how your health insurance needs might change. So it’s best to make the best decision you can about Medicare when you turn 65.
Here are 7 reasons you’re going to make the wrong decision about Medicare when you turn 65…
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You Sign Up For Part B if You’re Still Working
If you’re covered by an employer group plan when you turn 65 you probably don’t have to sign up for Medicare Part B. You could be covered by this plan because either you’re still working or your spouse is still working.
There are 2 reasons you would need to sign up for Part B if you’re still covered under this plan:
- The employer has less than 20 employees. If you don’t sign up for Part B in this situation, you will likely get penalized later whenever you do enroll.
- Your group health plan says you should sign up. If the employer has 20 or more employees, you should ask your HR department, benefits department, or health plan administrator whether or not you should have Part B. It is unlikely that it’s in your best interest to have Part B, but it always makes sense to check with those who handle these healthcare benefits.
If you enroll in Part B when you don’t have to, you’ll be hurting yourself in 2 areas:
- You’ll be wasting money on the Part B premium each month. The default Part B premium for new Part B enrollees this year is $134 per month. If you (and your spouse) make above certain income limits, your Part B premium could possibly be double and triple this amount.
- You’ll be wasting your Medigap Open Enrollment (OE) period. You only get a 6-month OE window when you both are 1) 65 or older, and 2) on Part B for the first time. This OE period allows you to sign up for any Medigap policy “no questions asked”. If you’re covered under your group plan, you don’t need to use your OE period.
If you have Part B at this time anyway, then whenever you sign up for a Medigap plan after 6 months later, you’ll have to answer health questions. This means you could have to pay more for the plan you want or worse yet, be turned down.
Keep in mind this situation is much more likely to happen if you are the spouse of someone still working rather than if you’re still working yourself. This is the case because you’re more likely to be drawing Social Security income if you’re retired. When you draw Social Security, you’re automatically signed up for Medicare Parts A & B at 65.
How to avoid this mistake:
If you’re automatically signed up for Part B, just simply fill out the back of your Medicare card when it comes, follow the instructions, and return it. This will let you delay Part B until you’re ready.
If you’re not drawing Social Security, talk to your benefits department to see if they require you have Part B while you’re still on their group plan. If not, just don’t sign up. You’ll be able to sign up anytime while you’re still covered under that plan because you or your spouse are still working, and then up to 8 months afterwards too.
You Sign Up for Plan F
Plan F will never be the most cost-efficient plan for you when you turn 65. It’s still the most popular plan if you look at the number of people that sign up for it compared to other Medigap plans. But, those numbers are changing quickly.
Plan F has problems. Because you can get any plan you want to when you turn 65, just choose a different option. Here are the 3 problems that Plan F has that makes it too expensive:
- It’s a guarantee issue plan – This means anyone that has a guarantee issue right can also sign up for Plan F “no questions asked”. You can qualify as guarantee issue when certain situations happen after you turn 65.
This means that the average person who has Plan F has more health problems than someone who is not in a guarantee issue plan. If you have more health problems, you will be a heavier user of your health care plan. This means the Medigap insurance company has to charge more for this coverage as a result. - It’s a ‘first-dollar coverage’ plan. – Plan F picks up where Original Medicare leaves off and pays all your bills for you and long as your healthcare expenses are medically necessary. If you don’t have to pay a single dollar out of pocket when you see the doctor or get a test done, don’t you think it’s easy to run to the doctor for any reason whatsoever?
If you have a different Medigap plan that you would have to pay a small copay or deductible to see the doctor, it’ll make you think twice before going in unless you need to. This makes Plan F more expensive than other plans even with small out of pocket expenses because folks who have Plan F create more healthcare expenses, and in turn, higher premiums. - It’s going away in 2020 – Well it’s not really going away, but folks new to Medicare after 1/1/2020 can no longer sign up for Plan F. Whenever any Medigap Plan stops taking new enrollees, the group of folks that have that plan continue to get older and file more claims. To make matters worse, over time only the people that are healthy enough to switch plans and save money will do so; the less-healthy people will be trapped in the plan and cause the prices of the plans to increase like a snowball.
How to avoid this mistake:
Sign up for any other Medigap plan. Plan G is your best and closest alternative to Plan F. The only difference is that you’re responsible to pay the Part B deductible with Plan G, which is $183 for the year in 2017. EXAMPLE Plan F premiums tend to be about $200-$300 more for the year than Plan G premiums, so you’re guaranteed to save money. You may not even have to meet your full deductible for the year either.
This difference in premiums only grows larger as you grow older. This means more cost savings for you with Plan G.
You Pick the Wrong Drug Plan
There are usually over 20 standalone drug plans to pick from if you enroll in a Medigap plan. These plans can be very, very different from each other. You can easily spend several hundred dollars more every year in prescription drug plan premiums and copays by being in a plan not suited for your needs.
How to avoid this mistake:
Choose your prescription drug plan using the help of the Medicare Plan Finder. This tool will find the best plan for you based on your:
- Zip code
- Preferred pharmacies
- List of medications
If you input these three pieces of information, this Plan Finder will sort all the drug plans available to you. At the top, it will put the plan that will result in you spending the least out of pocket for that year. You can sort these results lots of different ways depending on if you use mail order, don’t want a plan with a deductible, etc.
You Sign Up for a Medicare Advantage Plan if You Manage Chronic Health Conditions
Or, if you don’t like restrictive networks. Or if you like to travel a lot around the country.
If you have one or more chronic health conditions, then you’re seeing doctors, getting tests, having treatments done, going in for surgery, etc. more often than someone who doesn’t. Medicare Advantage (MA) plans have networks you have to stay within when using that plan. This limits the healthcare providers that you can use.
Even if the out-of-network provider you see will accept your plan, you’ll pay higher rates to see them. Also, every MA plan has a potential out-of-pocket limit for you of several thousand dollars. You can be spending hundreds, if not thousands, every year in bills getting the care you need to manage your health.
And, just to make matters worse, let’s say you did change your mind down the road and want to switch to a Medigap plan. You’re likely going to have a hard time doing so because Medigap plans can turn you down later for certain health issues.
How to avoid this mistake:
Choose a Medigap plan when you first turn 65. You can get whatever Medigap plan now with no health questions. Most of these plans limit your out-of-pocket expenses to little or nothing, no matter how much you use your coverage.
You Try to Figure Everything Out Yourself
About 6 months before you turn 65, the phone calls start. Then you start to see stuff in the mail about Medicare. After a couple months, you’re getting called 3 or 4 times per day. You’ve stopped answering the phone, unless it’s a number you recognize.
You get Medicare stuff in the mail every day. You’re collecting it all in a big pile at the end of the kitchen counter, and vow you’re going to go thru it soon.
You’ve been asking friends here and there what plan they have. You ask your sister what drug plan she decided to get and why. It sounds like she’s pretty happy with it, although her health situation is a bit different than yours. She’s also 7 years older, and even lives in a different state.
So, one Saturday about 6 weeks before your birthday you finally go through your pile of Medicare mail and happen to find the drug plan your sister has. You call the number on the brochure and enroll. Then you find a brochure for a Medicare supplement from a company you recognize. You remember that the friend you golf with got Plan F and says he never pays any medical bills. So, you call this company up, ask them if they have a Plan F, and enroll in that plan.
How likely do you think it is that you chose the best plans for you specific situation? You just chose your plans based on the advice of people who share your best interest, but don’t share your health issues, age, or location. Plans differ greatly and should be chosen based on these and other factors.
At best, you’ll be overpaying for coverage you don’t need, or for coverage that leaves you exposed to higher out-of-pocket expenses than you need to pay. At worst, you’re going to be trapped in your Medigap plan indefinitely because you may not be able to change later, and a drug plan that may not cover the medications you currently take.
How to avoid this mistake:
Find a trustworthy insurance agent that represents many different insurance companies. They can help you shop for you plans based on your age, gender, location, and specific health situation. They can also answer any questions you have about Medicare and about the different plans and insurance companies.
Want to discuss your situation with a Medicare expert? Click the button to book a FREE personal 1-on-1 consultation.
You Enroll Directly With an Insurance Company
This mistake is similar to the one just before this about trying to figure out everything yourself. Instead of using an agent to help you find the best plan, you just pick a plan and enroll by contacting the plan directly. Or, sometimes folks get the recommendation from an agent, take that information and go to the insurance company direct instead of signing up through the agent.
Whether you sign up through the agent or enroll directly with the insurance company, you pay the exact same rate. So you’re not gaining anything by doing this.
If you don’t use an independent agent’s services, you lose the ability to have that advocate in your corner. Later down the road, you can call an always call your own agent with any questions you might have. If you have questions and have to call an insurance company to get them answered, be prepared for long wait times and an operator that may or may not be helpful.
An independent agent can also keep an eye on rates in the marketplace and help you find a plan with a different company that can save you money. If you enroll direct with a company, they’re never going to call you up and let you know that you can switch to their competitor and save $30 per month with an identical plan.
How to avoid this mistake:
Enroll in your plans through an independent agent, like me for instance. You can call me any time at 866-240-8639 to use my services.
You Don’t Pay Your Plan Premiums Using Automatic Payment Methods
If you don’t want to pay your premiums with automatic payment like electronic funds transfer (EFT) from your bank account, there’s a chance you can forget to pay your premium. Some companies give a 30-day grace period to pay late premiums, some do give a bit longer. But if you don’t pay your premium by the end of this grace period, your policy will be cancelled.
The easiest time to forget to manually pay your bill is when you have lots of stuff going on in your life, including medical issues. The last thing you need is to have your supplemental insurance cancelled when you need it the most.
How to avoid this mistake:
Just set up your premium to be automatically drafted from your bank account when you first fill out the application. This way your payment will automatically come out of your bank account each month on the day you choose. You won’t have to risk your policy lapsing as long as you have enough money in your account.
Conclusion
Your Medicare decision at 65 is too important to go about it without the help of a professional. It’s a lot easier for someone like me to see the potential traps and pitfalls that you can run into later, and steer you around them. Make sure you make the best decision you can when you first get on Medicare. Otherwise, you may have to deal with the consequences of the wrong choices for many years to come.