Avoiding Common Medicare Issues

We see quite a few mistakes people make with their Medicare insurance plans. Many of these are avoidable by knowing the most important rules, regulations and timelines while having a good team around you.

If you’re researching your options as you near Medicare eligibility, you know there is a lot of information to sort through. We’ll discuss the most common issues we see and how to avoid them.

Medicare is a maze, but it’s not always easy to backtrack if you reach a dead-end. A wrong turn can result in enrollment delays and lifetime penalties. The most common mistake we see is people missing their personal enrollment deadlines. Everyone’s Medicare enrollment timeline is a little different and it does not always correlate with turning age 65.

Some people defer Medicare Part B because they have group health insurance available through a large employer (more than 20 employees). Others think they can defer Medicare and take COBRA instead. The first option is usually okay, the second is not. This is just one example of a so-called Medicare trap that awaits those who are eligible. In other cases, we see people enroll in and pay for Medicare Part B when they may not need to.

Part B is the gatekeeper and there is almost always a right and a wrong time to enroll. And if you do nothing, the government can automatically enroll you at age 65 if you’re already taking Social Security payments. That might be a mistake if you have creditable large group health insurance available that you plan on keeping. It’s important to know when to start your Part B with the government.

Assuming you have navigated the above satisfactorily, then it’s time to think about your supplemental insurance. Once Part B starts, then you have a six month window to buy any Medicare supplement without medical underwriting and a three month window to buy a Part D drug plan. We see a lot of mistakes here.

Many people let these windows pass thinking they can buy a supplement any time they want – or later during the yearly Open Enrollment. That’s not the case. The so-called Open Enrollment in the fall each year does not apply to Medicare supplements. Enrolling late in a Part D plan incurs lifetime penalties.

Missing your window to purchase a Medicare supplement, Advantage or Part D drug plan can cause future ineligibility (due to medical underwriting) and late enrollment penalties from the government. Everyone’s timeline will be a little different, but in almost all cases, once Medicare Part B begins the clock is ticking to purchase supplemental insurance. There are usually no free passes once your personal enrollment window has expired.

Once you’ve enrolled in Medicare and any other supplemental/replacement type plans of your choosing, your coverage cannot be cancelled… unless you don’t pay your premiums. It might seem silly to even bring this up, but it’s one of the most common issues we see. People miss their premium payments – and if the policy lapses, it can be difficult to reinstate.

Most Medicare beneficiaries have their Part B premiums taken directly from their Social Security checks. That’s easy enough. But if you’ve delayed SS, then your premiums will be billed to you quarterly. You must keep track of your Medicare premiums and pay them on time. One of our clients did not. She had to then wait for the Medicare General Enrollment Period (January 1 – March 31), reinstate her Part B for a July 1 effective date, and pay a 10% lifetime penalty on top of her normal premiums. It was not a good situation for her and there was nothing we could do to help.

Another gaffe we see all too often is the failure to pay Medicare supplement and Part D premiums on time. Most of our clients set up their policies on bank draft and have no problems. Others wish to be billed and it’s not uncommon for a payment to be missed when someone is traveling, sick or otherwise preoccupied.

The issue is once a Medicare supplement, Part D or Advantage plan lapses due to non-payment, the insured is at the discretion of the insurance company for reinstatement. If denied, then medical underwriting may be required. If the insured is unwell, then it can be very difficult to find a new policy. On top of that, late enrollment penalties can be assessed on your Part D drug insurance coverage.

No matter how you choose to pay your bills, you must keep your payments up to date. Setting things up on a bank draft is more foolproof in our opinion. Just remember to take inventory and contact the insurance company(s) if you change banks.

When you’re aging into Medicare, retiring or losing creditable group coverage, it’s time to build a team. You’ll want to consult with your human resources manager, check with state and local resources, lean on friends and family, and most importantly contact a knowledgeable insurance agent.

We see too many people try to be their own insurance agents. Most of the time, they have bad information or an incomplete picture of Medicare. Don’t try to be your own insurance agent! Just trust us on this one. It saves you no money whatsoever and will likely lead to heartburn down the road. As agents, we are not allowed to charge you any more or less than the going rate for any plans you are considering. And we know a lot more than what you might find out by reading a few articles like this one.

Those of use that have been doing this a while are extremely knowledgeable; we’re as close to experts as you’ll find. Think of us as field-guides who can show you what to do and when to do it while explaining the repercussions of a particular decision. Medicare is full of “if this, then that’s” and we can tell you how one decision will affect another.

We live in a “do it yourself” world, but there are some things that are best left to the experts. It can be difficult to learn all there is to know about Medicare on your own. Build a good team around you, find an independent agent you trust and put them in your bullpen. You can rely on their knowledge now and in the future. It doesn’t cost you a thing and you’ll be much less likely to run into problems going forward.

Medicare only goes so far. We get a lot of questions from our clients about foreign travel and long term care. We’ll discuss both, but of the two, long term care is more important. It poses the single biggest risk to any portfolio, family, estate, inheritance and so forth. In a few words, Medicare does not cover much in the way of long term care expenses.

Medicare, when coupled with most Medicare supplements, covers only the first 100 days of skilled care in a hospital, rehab or nursing home. That’s it. Medicaid only picks up the tab once you’ve depleted your assets. It’s unwise to count on either of these two programs to pay for routine long term care expenses. Skilled care is administered by a doctor, but most people need custodial care which is help with the activities of daily living. Medicare does not cover custodial care at all – or skilled care for more than 100 days. If you want this type of coverage, you’ll need to purchase a long term care insurance policy.

When it comes to foreign travel emergency Medicare, if combined with supplemental plans C, D, F, G, M or N, only pays a maximum of $50,000 lifetime after a $250 deductible has been met. This should be okay for most short trips abroad, but if you’re someone who travels abroad for long periods of time, you may want a health policy tailored to your trip. We help our clients with those as well.

Once you’ve decided whether a Medicare supplement or Medicare Advantage plan is most suitable (you can’t have both), you’ll want to explore all of your options. Too many times I see consumers gravitate toward the insurance company they had before becoming Medicare eligible. This can be a mistake.

There are several options in the Medicare markets and many policies are identical. In almost all cases, Medicare supplements offer the same coverage with the exact same access to doctors and hospitals. In other words, a Plan G is a Plan G. It doesn’t matter whether you buy from one of the big guys or a lesser known name. Many of the smaller supplement providers offer lower rates and smaller increases, however. Don’t rule out the smaller carriers just because they are new to you. You might be spending more than you need to and you can be missing out on extras like Silver Sneakers.

You should also ask your independent agent about any Medicare supplement discounts available. Let us know if you have a spouse who will soon be eligible for Medicare or if you share a household with someone. In some states this will qualify you for a 5%-12% discount even if the other person does not apply.

And you need to review your insurance on a regular basis. It may be okay to stick with your Medicare supplement for a few years, but Medicare Advantage and Part D plans usually change their coverage yearly. What works well now may not be your best option next year. If you don’t shop, then you can be in for a rude awakening when filling prescriptions or visiting doctors.

This is another good reason to have a relationship with an agent. We’ll have your information on file and also be aware of the ever-changing Medicare landscape. We can quickly see if any changes are needed or if there are policies that will save you significant dollars. We have saved some of our clients well over $100 a month without decreasing their benefits simply by replacing their older, more expensive plans. Shop once in a while, it can do your pocketbook a world of good.

Hyers and Associates is an independent Medicare supplement insurance agency. We specialize in Medigap, Advantage and Part D plans. We’ll make sure you understand all of your options while also helping you to avoid the many Medicare mistakes laying in wait. Contact us today to discuss your options, compare plans and enroll direct in the insurance that best fits your needs and budget.