Introduction

As a Medicare specialist, I take great pride in educating people turning 65, and retirees about Medicare and helping them choose additional coverage for the many out-of-pocket expenses that one can pay when enrolled in Medicare.  Medicare is easy for me but I realize how complex it seems for most people, AND it can be quite expensive if you don’t “choose wisely”—as if Medicare is the Holy Grail from countless movies.  In this report, I discuss seven of the most common and costly Medicare mistakes.

With something as complex as Medicare, it’s important to get advice from an expert. Friends, relatives, social workers, and inexperienced agents likely mean well, but they simply do not have the knowledge or training necessary to avoid all potential pitfalls.  That is why, we forbid (tongue planted in cheek, of course,) our clients from listening to their well-intentioned friends and family.  You can avoid these mistakes by consulting an experienced Medicare professional and since it won’t cost you a dime to do so, there’s NO reason to not do so.  

The stakes are quite high. If you miss an enrollment deadline or enroll in the wrong plan, you could end up paying thousands of dollars extra, or your doctors may not be available to you, or your drugs may not be covered, or if they are, they may be too expensive.  And, what if your plan required you to pay 20% on chemotherapy until you had paid $10,000 out-of-pocket each year? Could you afford it?

Just speak with a Medicare Specialist at Senior Moments Medicare. Our advisors are licensed, experienced, and insured independent insurance agents who act as brokers on your behalf. Unlike captive agents who are only familiar with the plans of one company, our brokers are highly trained in the plans of all companies. They are knowledgeable about the rules of Medicare and experienced in knowing what is necessary to find the best plan for every client. And best of all, our advice if FREE! We are involved in our Chamber of Commerce, involved in our Rotary club and in other non-profits in the area. We help people in our community and in 15 states. 

Medicare’s own surveys indicate that 87% of people get it wrong when they go it alone and “trial and error” is not a good way to learn about Medicare.  Get it right the first time!

**This report is not intended to cover every aspect of Medicare, but to highlight some of the most common mistakes people make. The agents at Senior Moments Medicare are not part of or endorsed by the Federal Medicare Program. They are highly trained independent insurance agents.

Mistake #1- Missing Medicare Enrollment Deadlines

Failing to timely enroll in your Medicare plan is a costly error that can result in life-long penalties and/or denial of your application for coverage. Enrolling in Medicare Part B too early can cost you thousands of dollars in premiums for coverage you cannot use, so here is what you need to know.

Initial Enrollment At 65

If you are drawing social security benefits at least 4 months before you turn 65, your enrollment for Part A (Hospital) and Part B (Medical) should happen automatically, and you should receive your card before your birthday month. If you are not receiving social security benefits when you turn 65 and not covered under a large group health plan, you must take action to enroll. You can visit your local Social Security office or save time by creating a profile online at www.ssa.gov/benefits/medicare .

There is a seven-month Initial Enrollment Period when you turn 65. This enrollment window begins three months before your birthday month and ends 3 months after.

Enrollment in Medicare consists of three different insurance plans (Medicare plus a Medigap plus Part D for drugs)….or you can choose a Medicare Advantage plan which combines all three into one plan:

·       Part A- Covers inpatient hospital care, skilled nursing (not to be confused with nursing home care), hospice care, and some home health care.

·       Part B- Covers outpatient care, medical supplies, doctors and surgeons, and preventative care.

·       Part D- Covers prescription medications.

·       Or, or you can choose a Medicare Advantage plan that combines Parts A, B and D into one plan (sometimes referred to as a Part C plan.)

Failure to sign up within the enrollment period can result in a penalty (10% per year for Part B and 12% per year on Part D) being added to your premium for each year you were not enrolled after becoming eligible—AND THIS PENALTY IS FOR LIFE.  

Example: Bob turns 65 in July, is no longer working, and has not yet drawn any social security benefits. Bob wants to be proactive and enroll in Medicare. He has a seven-month enrollment window from April 1st through October 31st. Bob contacts Senior Moments Medicare in May so his coverage can begin the first day of the month he turns 65. A qualified Medicare specialist assists Bob in signing up for Medicare and enrolling in a Medicare Part D drug plan and a Medigap insurance policy. Bob also elects to purchase a cancer insurance policy and a dental vision & hearing plan.

Annual Enrollment Period & Medicare Advantage Open Enrollment Period

Each year, there is an Annual Enrollment Period (AEP), which runs from October 15th through December 7th. During this time, Medicare beneficiaries have the opportunity to make changes to their Medicare coverage. They may switch from Original Medicare to Medicare Advantage, or from Medicare Advantage to Original Medicare. They may also change their Medicare Part D plan. There is no limit on how many times they can make changes during this period.  This AEP DOES NOT allow you to switch Medigap plans (although you can switch at any time but you must pass medical underwriting to be approved-- unless you are in your Initial Open Enrollment Period or qualified for a Special Enrollment Period, which will be discussed further…read on.)

If after selecting a new Medicare Advantage Plan during the Annual Enrollment Period you are unhappy with it, all is not lost. You will have another opportunity to switch your plan during the Medicare Advantage Open Enrollment Period (MA OEP). MA OEP runs from January 1st through March 31st.  Any changes will go into effect on the first day of the next month after you enroll. The MA OEP is the time when you can change to another Medicare Advantage Plan or to Original Medicare with or without a Part D Prescription Plan.

Late Enrollment

If Bob had missed his Initial Enrollment Period of the seven-month window mentioned before, he must wait until the General Enrollment Period (GEP) for Part B (Medical) and the Annual Enrollment  Period for Part D.  The GEP is January 1st through March 31st  and the coverage would begin on the following July 1st. (Starting Jan 1 of 2023, coverage will begin the first of the following month after enrolling.) His Part B premium would have a penalty for life equal to 10% of the Part B premium for each year he went without the coverage, but was entitled to it.

For Medicare Part D (prescriptions), Bob’s enrollment is delayed until the next Annual Enrollment period which runs from October 15th through December 7th for a January 1st effective date. Bob’s premium would be penalized 1% for every month he was entitled to the coverage, but did not have it. The penalty is permanent.

 Late enrollment in Part A (Hospital) can be done anytime after you turn 65, and there is no penalty for those who get it free. Medicare Part A does not have a premium if the beneficiary or their spouse paid Medicare employment taxes during the years leading up to Medicare. People who are required to pay a premium for Part A will have a 10% penalty. The penalty is not permanent. It would last for twice the number of years the beneficiary was eligible for Part A but did not have it.

Special Enrollment Periods

Special Enrollment Periods give beneficiaries the opportunity to enroll without a penalty. The following are some common examples that qualify you for special enrollment:

1. Bob was covered under a large group plan, which was his primary coverage. He leaves his job and loses his coverage effective January l.

a. He has 8 months to sign up for Medicare Parts A & B

b. 2 months to sign up for Part D

c. 63 days to apply for Medigap policy without having to answer health questions.

d. Note: If Bob delayed enrollment in his Medicare Part B because he had primary coverage through a group plan, he preserved his 6 month open enrollment period for Medigap. This gives him 6 months instead of 63 days to enroll in a Medigap plan without answering any health questions.

2. Bob was covered by a Medicare Advantage Plan or a Part D prescription plan and moved out of the plan's service area.

a. Bob has two months to enroll in another Medicare Advantage Plan, Part D plan, or return to Original Medicare and enroll in a Medigap policy without having to answer health questions. The two months begin the date of the move or the date he notifies his plan of the move, if later.

3. Bob is living in a Long Term Care Facility. Bob can enroll in a new Medicare Advantage Plan or Part D Plan every month. The exception would be if Bob was on kidney dialysis, in which case Fred would not be able to enroll in a new Medicare Advantage Plan.

4. Bob qualifies for Extra Help for Medicare Prescription coverage or has Medicaid. He can switch his Medicare prescription drug plan or Medicare Advantage plan each month but is not entitled to enroll in a Medigap Policy without answering health questions. Some states also have an SPAP-State Pharmaceutical Assistance Program that would allow Bob to qualify for a SEP.  

Mistake #2 - Missing the Medigap Open Enrollment Period

Medicare supplements, also called Medigap insurance, are designed to pay some of the deductibles, co-pays, and the 20% coinsurance that Medicare Parts A & B do not cover. There are 10 distinct plans, plus select plans, but the most currently popular are designated the letters F, G & N (Plan F was eliminated for people new to Medicare as of Jan 1, 2020.)  

Medicare has “standardized” these plans, which means the benefits are identical from company to company. This is due to a 1992 rule passed by the National Association of Insurance Commissioners' which standardized them to make them easier to compare. Although the benefits of plan G, for example, must be identical across all companies, there can be, and often are, vast differences in monthly premiums.

ln order to qualify for a Medigap plan, there is a one time, six month ”Open Enrollment" that occurs when you enroll in Medicare Part B or turn 65. This open Enrollment is the only time you are allowed to enroll in a Medigap policy without answering health questions, unless you qualify for a Special Enrollment Period. Once the Open Enrollment window has expired, you can be turned down for coverage, or you may have to buy a more expensive policy from a company that will accept a person with particular medical problems.

You are allowed to enroll in a Medigap policy up to six months ahead of your Part B effective date, but the coverage would begin the month your Medicare Part B begins. Alternatively, you may enroll up to six months after the month you turn 65 for the coverage to begin on the first day of the following month. You may apply for any Medigap policy you want anytime during this period without answering any health questions, and you cannot be denied coverage.

Example: Bob turns 65 July 5th and enrolls in Medicare Parts A & B with a July 1st effective date, but he forgets to enroll in a Medigap policy. Bob had a window of 6 months prior to July 1st and 6 months after the month of July. He applies for a Medigap plan in February of the following year. Bob has to answer "yes" to the health question about heart or circulatory surgery, so he is turned down for most plans. One plan will take Bob, but the premium is 100% higher than it would have been had he applied during open enrollment. Bob made a big mistake by missing the Open Enrollment Deadline for Medigap.

Mistake #3 - Enrolling in Medicare Part B To Early

Medicare Part B is primary medical coverage. If you are working past 65 and your group insurance plan has over 20 employees, you may not need Medicare Part B, because your group policy would be your primary coverage. If you enroll in Part B unnecessarily, you are paying a premium every month for insurance you do not need and you are wasting money on a premium for insurance you cannot use. What's more, by enrolling in Part B when you didn't need it you have used your six month open enrollment period unnecessarily.

Example: Bob went to the social security office when he turned 65 on July 5th 2015. Bob was ill-advised to enroll in Medicare Parts A and B. He should not have enrolled in Part B, because he was still working and had primary coverage through his employer's group plan. Three years later Bob retired due to an illness. Bob is eligible for a 63 day guaranteed issue period to enroll in Medigap without answering health questions, but not the 6 month open enrollment period, because the Open Enrollment began when he enrolled in Part B. Not only did he waste his 6 month Open Enrollment Period, Bob wasted over $4000 paying Part B premiums for coverage he couldn’t use. If Bob applies within 63 days of losing his coverage he is eligible for a Medigap plan D or Plan G. As of January 1,2020, other Medigap plans are not eligible for guaranteed issue.

Mistake #4 - Failing to Apply For The Low Income Subsidy

Medicare provides a program for people with limited income and resources to help cover their prescription drug costs. "Extra Help" bridges this gap for those who quailify, and it can greatly reduce the financial burden for those who need financial assistance. Your eligibility for extra help is based on your income and assets.

In 2020, if you are single, your income must be less than $19,140 to receive this subsidy. For a married couple, the income amount should be less than $25,860. The asset limit is $13,110 for an individual and $26,160 for a couple.

This subsidy is an often overlooked benefit that can reduce your Part D premiums, waive your Part D deductibles, and also lower your Part D co-pays.

Mistake #5 - Mistaking Medicare Advantage For Medigap

One of the most common mistakes people make is confusing Medicare Advantage plans with Medigap policies. It is important that you understand the distinction between Medicare Advantage and Medigap policies, because the benefits are quite different. Typically, the price for an Advantage plan is cheaper than that of a Medigap policy—in fact, many Advantage have $0 monthly premium-- but your out of pocket responsibility is greater. In some geographical areas and for some people, Medicare Advantage plans work great. But they are not appropriate for everyone. Remember this Rule of Thumb: "Don't Buy a plan for the premium - Buy it for the overall value which includes benefits, premiums, and provider network!"

 Understand what you are buying! Most of our clients who live in rural areas prefer to buy a Medigap policy if they are medically qualified. With Medigap, any doctor that accepts Original Medical will accept your plan.

In some areas Medicare Advantage plans are a more attractive option. These areas commonly include urban areas where there are competing healthcare systems.

 In the event that someone cannot afford or does not qualify for a Medicap policy, an Advantage plan may be the most attractive option. The Advantage Plan might be a good alternative, because co-pays are often less than the 20% (after the annual Part B deductible) that they would have to pay under Original Medicare. Also, Advantage Plans do provide an out-of-pocket limit each year. The out-of-pocket limit can be quite high - up to $ I 0,000 per year unless you qualify for Medicaid (many plans have an out-of-pocket limit of $7,550.)   And if you’re considering this type of plan, we ALWAYS want to check to make sure your doctors will accept the plan before we enroll you.  

Medicare Advantage Plans contain all the basic benefits of Medicare Parts A, B, & usually D. There are several types of Advantage plans, but the two most common to be discussed are HMOs and PPOs.

HMOs are Health Maintenance Organizations that pay fees to particular medical providers to treat plan members. Members are required to pay co-pays/coinsurance ( a % of the cost)  until they reach the annual individual out-of-pocket limit (usually $7,550 IN network.)

HMOs are generally more competitive in large metropolitan areas where several hospital systems can compete for patients. The doctors and hospitals in the plan have to agree to provide member services for a lower cost and in return the plan refers patients to the providers.

Some HMOs will require  members to choose a primary care doctor who will then provide a referral to see a specialist. The primary care doctor is responsible for overseeing the care of the patient. HMO members must see plan doctors to receive benefits, except in emergency cases. This can be a big disadvantage if your provider is not in the HMO.

PPOs are Preferred Provider Organizations. These are Medicare Advantage Plans with a network of providers, but the plan will allow you to see providers outside the network. However, going outside this network may have higher copays/coinsurance  and may exposes you to higher out-of-pocket limits.

If you opt for Medicare Advantage, you must be comfortable with the potential out of pocket costs and restrictive networks.

Mistake #6- Failure to Insure What’s Not Covered by Medicare

Do not assume that Medicare covers everything. In fact, there are several areas commonly overlooked that warrant important consideration. Here are a few areas that many not be sufficiently covered by Medicare:

1.       Cancer Treatment- Medicare’s website warns consumers that doctors may recommend services not covered by Medicare for which they would be solely responsible. Some cancer treatment drugs are extremely expensive and may not be covered or may only partially be covered. You should consider buying a lump sum cancer insurance policy in additional to your Medicare coverage.

2.       Long Term Care: Medicare covers some short term skilled nursing care limited to recovery services. This does not cover long term custodial care, such as nursing homes or assisted living. Consider Long Term Care Insurance in addition to your Medicare coverage.

3.       Deductibles, Copays, and Coinsurance: Medicare alone still requires you to pay deductibles, copays, and coinsurance for which you are responsible. For 2022 they are:

A.      Part A (Hospital) deductible is $1,556 per 60 day benefit period.

B.      Part A (Hospital) daily hospital copays beginning on day 61 or $389 and up to $778 per day on the 91st day.  There is ZERO coverage after  150 days.

C.       Skilled Nursing facility copays of $194 per day for days 21-100. No coverage after 100 days.

D.      Part B (Medical) deductible of $233 per calendar year (2022).

E.       20% coinsurance on Part B medical expenses with no limit to your out-of-pocket costs.

Medigap Insurance Policies pay most of these Medicare approved costs not covered by Medicare. Plan F pays all these listed costs in #3, whereas Plan G pays all but the $233 Part B deductible.

Medigap Select Plans are like standard plans, except you must use a network hospital to keep from paying the $1,556 Inpatient Deductible. Rural areas do not usually have network hospitals. The premiums on select plans are a little lower, but not really worth the requirement of using a specific hospital to have your deductible paid.

Medicare Advantage Plans have different benefit structures and provide an annual out-of-pocket limited to $10,000, however most plans do not have out-of-pocket limite that high. There is no insurance designed to pay the copays on Medicare Advantage Plans, and Advantage Plans are not Medicare supplemental insurance policies. Medigap policies cannot be used with Medicare Advantage plans, however there are other supplemental health policies that can help offset some out-of-pocket costs. Cancer, Heart Attack, Stroke, and Hospital Indemnity policies are available if you qualify.

Mistake #7- Not Annually Reviewing Your Medicare Drug Plan

Not reviewing your Part D coverage on a yearly basis is a big mistake that is also very frequently made. Many people assume that since their Medicare Part D prescription coverage has been good, there is no need to review or change it. Some people keep their existing Drug Plan through the Annual Election Period only to find out in January the premiums and copays have increased. Furthermore, the plan can revise covered drugs, copays, and can add new restrictions such as step therapy or quantity limits on prescriptions. Changes would have to wait until the next Annual Enrollment Period.

Our Medicare advisors use special tools to help you review, compare benefits, and choose your plan each year. We take care of the enrollment for your and assist you if there is an issue with your enrollment. Mark your calendar to contact us between October 15th and December 7th of each year to review your plan. And don’t wait until the last minute! Our clients are reminded to review annually via our websites and mail. See www.seniormomentsmedicare.com for more information.

Senior Moments Medicare specializes in Medicare, and our professional advice is free, so what do you have to lose? We utilize special tools that compare benefits and premiums of every company, and we are experienced with enrollment guidelines and limits, so we can help you avoid these costly mistakes. Our experience and awareness of these insurance plans and guidelines can save you hundreds, if not thousands, of dollars on your insurance plan and health expenditures each year. Don’t go it alone! You can avoid these mistakes and others by contacting us and allowing us to review your options for a better-- and less expensive healthcare experience. OUR HELP IS FREE!

References:

https://www.medicare.gov/pubs/pdf/ll2l9-Understanding-Medicare-part-C-D.pdf

www.ssa.gov

www.medicare.gov

www.ncoa.org