As Hippocrates once said, “health is the greatest of human blessings,” but it often takes a back seat when life gets hectic. If you’re unaware of Medicare’s enrollment periods, you could incur extra medical expenses and delay vital health benefits.
This article lists the most common Medicare mistakes we see people make. We’re sharing them here to help you avoid falling into these same traps.
1. Assuming You Will Be Automatically Enrolled in Medicare
Some people are automatically enrolled in Medicare when they turn 65, but this is more of an exception than the rule. Unless you’ve been receiving benefits from either Social Security or the Railroad Retirement Board, you will have to enroll to receive Medicare benefits by contacting the Social Security Administration.
2. Not Signing up at the Right Time for Medicare
Probably the single most costly mistake is not signing up for Medicare when you become eligible. This date varies, depending on your birthday.
The good news is that you have a fairly generous seven-month window to sign up for Medicare benefits. This window is called the Initial Enrollment Period (IEP for short), and it includes the three months prior to the month of your 65th birthday, your birthday month, and three months after your 65th birthday month.
For example, if your birthday is June 15th, you have from March 1st through September 30th to enroll in Medicare. The enrollment window shifts to one month earlier if your birthday is on the first day of the month.
Missing the initial enrollment period results in a late enrollment penalty in the form of higher monthly premiums for Medicare Part B coverage unless you can show that you had creditable coverage through an employer-sponsored plan or your spouse’s insurance.
Even if you miss the IEP, you can sign up during the general enrollment period each year from January 1st through March 31st, your insurance won’t be effective until July of later that year, and you’ll still be subject to the penalties discussed above.
3. Missing the Special Enrollment Period
Not everyone signs up for Medicare when they turn 65, and that’s okay as long as you have other health care coverage. If you are still employed and have health insurance through your company, or you have insurance through your spouse, you don’t necessarily need a Medicare plan.
However, if that coverage comes to an end, you have a limited window to sign up for Medicare coverage. You can do so either while you still have coverage or within eight months after your healthcare coverage ceases.
The special enrollment period may also apply in the following situations:
- You relocate, and your new address is outside of your current Medicare plan’s service area
- You’ve been released from a skilled nursing center, institution, or jail
4. Delaying Enrollment in Medicare Part D
When you enroll in Medicare, you can choose to get Original Medicare as well as Medicare supplement insurance, such as Medicare Part D prescription drug coverage, a Medicare Advantage plan, or Medigap.
A Medicare Part D plan can be acquired as an independent plan or as part of your Medicare Advantage plan. Part D is a prescription drug plan that reduces out-of-pocket costs by paying for a large portion of both generic and brand-name prescription drugs.
Medicare Part D is optional – sort of. If you don’t have another form of creditable drug coverage, you will incur a late penalty when you do finally enroll in prescription coverage. The penalty increases the longer you delay.
5. Not Comparing Medicare Advantage Plans to Original Medicare
This is a big one. Original Medicare includes Medicare Part A and Medicare Part B. If you’re not familiar with Medicare Parts A and B, here’s a quick overview:
- Medicare Part A is referred to as hospital insurance. It covers hospital stays, skilled nursing facilities, and some home health care.
- Medicare Part B is what is typically thought of as health insurance. It covers doctor visits and other forms of medical care.
Most Medicare beneficiaries do not rely on Original Medicare alone because coverage is limited. Some Americans are dual eligible for Medicare and Medicaid, which allows them to have full coverage health plans without paying a monthly premium or being burdened with out-of-pocket costs.
Some lower-income Medicare beneficiaries are eligible for Medicare financial help through Medicare Savings Programs, which reduce the cost of prescription drugs, co-pays, and deductibles.
If you are neither dual eligible nor qualified for a Medicare Savings Program, you will likely need to supplement your Medicare primary coverage with private insurance or another form of retiree coverage.
However, the key here is that when you enroll in Original Medicare, you should have already evaluated which supplemental plan is right for you because the enrollment period for supplemental plans often coincides with the IEP for Medicare.
The most popular form of supplemental coverage is Medicare Advantage (also known as Medicare Part C). Approximately 45% of Medicare beneficiaries have Medicare Advantage plans and add prescription drug plans and other medical services to supplement their primary insurance.
6. Not Getting a Medigap Policy When You are First Eligible
Not everyone needs or wants a Medigap plan, but it can provide a significant safety net to keep your health care expenses in check. What many people don’t realize is that Medicare pays for only a portion of your medical costs.
When the gap between what Medicare plans pay and what your medical bills are is wide, a Medicare supplement plan like Medigap literally bridges the gap and helps make health insurance more affordable.
The best time to enroll in Medicare supplement plans like Medigap is during your initial enrollment period. In the case of Medigap, missing this window could result in additional penalties or even the denial of coverage, depending on your health status.
The moral of the story is to never miss the Medicare open enrollment period. If you have any questions about the enrollment periods or how to keep Medicare premiums affordable, contact a Medicare Advantage advisor.